WASHINGTON – Sen. Elizabeth Warren, D-Mass., and Rep. Elijah Cummings, D-Md., are urging regulators to bolster new swaps rules in the wake of a controversial rollback of a provision of the Dodd-Frank Act last year.

The lawmakers estimated, based on data collected by the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, that the largest banks are now able to keep roughly $10 trillion in derivatives within their depository institutions. Congress neutralized a rule that would have required banks to instead "push out" those swaps into subsidiaries in a major budget bill last December. Warren and Cummings have been investigating the impact of that change, pressing regulators and the banks for details.

"The information we have obtained from regulators provides the first estimates of the size of the loophole created by the Section 716 repeal, showing that it will allow federally insured banks to continue trading trillions of dollars of risky swaps using taxpayer-backed funds," they wrote in Tuesday's letter.

The lawmakers added that the Commodity Futures Trading Commission and the Securities and Exchange Commission should enact strong margin rules to provide an additional backstop for the derivatives market.

"While the Dodd-Frank rollback and the weak margin requirements imposed by prudential regulators have created new risks for taxpayers and the financial system, your agencies are in position to mitigate these risks," they said. "We ask that the final rules you put in place mitigate the risks posed by uncleared swap activities by imposing strong margin requirements for swaps between bank affiliates and other entities under your agencies' authority."

Warren and Cummings also asked the Government Accountability Office to investigate the impact of the swaps provision rollback. They argued that regulators have not fully examined the implications of the change and potential risks to the system.

"The failure to assess the impact on banks and the economy of the repeal of Section 716 raises critical questions about whether federal policymakers are sufficiently attentive to the risk posed by nearly $10 trillion of risky swaps now primarily held-and allowed to be traded and held on an ongoing basis-by a handful of the country's largest, FDIC-insured banks," Warren and Cummings wrote on Tuesday.

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