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Democrats have taken steps to ease concerns raised by Warren Buffett about Wall Street reform’s impact on trillions of dollars in existing derivatives.
Senate Banking Committee Chairman Chris Dodd and Agriculture Committee Chairwoman Blanche Lincoln wrote that potential new capital and margin regulations meant to offset risk in some trades should not apply retroactively to existing derivatives. New requirements could have required investors and businesses to tear up existing contracts and post hundreds of billions of dollars in capital for margin requirements.
“Congress recognized that the capital and margin requirements in this bill could have an impact on swaps contracts currently in existence,” the senators wrote. “We provided legal certainty to those contracts currently in existence, providing that no contract could be terminated, renegotiated, modified, amended or supplemented (unless otherwise specified in the contract) based on the implementation of any requirement in this act.”