The Wall Street Journal reports that seven banks have received extensions on complying with the rule that would require them to “move risky swap activities into separate affiliates.”
The Office of the Comptroller of the Currency granted the two year extensions to Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., HSBC Holdings PLC, Morgan Stanley and U.S. Bancorp.
The rule, which required banks to move their risky swaps trades to affiliates that were not covered under the “federal deposit insurance and the Fed’s discount window,” was devised by Blanche Lincoln, the previous Senate Agriculture Chairman.
The extension has faced criticism from some proponents of the Dodd-Frank Act. Senator Sherrod Brown (D-OH) stated, “Three years ago, the Congress made a decision that Wall Street should not gamble with taxpayer money… We shouldn’t have to wait for another financial crisis for regulators to finish the job.”
Representatives from the industry have said that the extensions would allow other regulators to finalize their Dodd-Frank rules regarding swaps. These banks’ confusion on rules would have made the task of creating or moving swaps into new entities difficult.