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Geithner gives some companies pass on new rules
WASHINGTON – Treasury Secretary Timothy Geithner has decided to let companies continue to trade certain contracts used to guard against swings in currency values outside regulators' view.
New rules require that many such trades happen more transparently, on exchanges where regulators can see them. But Geithner is exempting certain contracts used by companies to hedge currency rates.
The new financial overhaul law authorized Geithner to carve out such an exemption to stricter regulation.
Business groups argue that tighter oversight of such contracts would be costly and unnecessary. But critics, including some regulators, counter that the whole market for financial contracts called over-the-counter derivatives should face stricter supervision.
The value of derivatives hinges on an underlying investment, such as currencies, stocks or mortgages. Speculators who used over-the-counter derivatives helped fuel the 2008 financial crisis.
Sen. Carl Levin, who pushed for tighter regulation after the crisis, said Geithner's decision might open the door for lax oversight in the future.
http://news.yahoo.com/s/ap/20110429/ap_on_bi_ge/us_geithner_financial_overhaul
WASHINGTON – Treasury Secretary Timothy Geithner has decided to let companies continue to trade certain contracts used to guard against swings in currency values outside regulators' view.
New rules require that many such trades happen more transparently, on exchanges where regulators can see them. But Geithner is exempting certain contracts used by companies to hedge currency rates.
The new financial overhaul law authorized Geithner to carve out such an exemption to stricter regulation.
Business groups argue that tighter oversight of such contracts would be costly and unnecessary. But critics, including some regulators, counter that the whole market for financial contracts called over-the-counter derivatives should face stricter supervision.
The value of derivatives hinges on an underlying investment, such as currencies, stocks or mortgages. Speculators who used over-the-counter derivatives helped fuel the 2008 financial crisis.
Sen. Carl Levin, who pushed for tighter regulation after the crisis, said Geithner's decision might open the door for lax oversight in the future.
http://news.yahoo.com/s/ap/20110429/ap_on_bi_ge/us_geithner_financial_overhaul