WASHINGTON A bill to overhaul commodity futures trading, slammed by the countrys stock and commodities exchanges last week, received considerable support from the Clinton administration and the financial services industry on Wednesday.
The Commodity Futures Modernization Act of 2000 is important to the banking industry because it would make swaps contracts explicitly legal and enforceable. At the end of June, U.S. banks held swaps contracts with a notional value of more than $20 trillion.
In a speech before the Exchequer Club here, Treasury Assistant Secretary Gregory A. Baer urged Congress to act. In the final days of this Congress, we have [a] chance to make a difference and pass legislation that will modernize our laws and regulations relating to over-the-counter derivatives.
His remarks echoed similar statements by Treasury Under Secretary Gary Gensler on Tuesday evening. Speaking before the American Bankers Associations government relations council, Mr. Gensler urged lawmakers not to miss this opportunity to pass the bill.
In a letter sent to House Speaker J. Dennis Hastert on Wednesday, 10 financial services trade groups including the American Bankers Association, the International Swaps and Derivatives Association, and the Financial Services Roundtable expressed support for the law.
Enactment, they wrote, is crucial to reducing systemic risk and to enhancing innovation and the competitiveness of the U.S. financial markets.
The bill is opposed by the countrys major stock and commodities exchanges, which object to its treatment of futures based on a single equity. The bill would allow so-called single-stock futures to trade on both stock and commodities exchanges, but under somewhat different rules. Critics claim it would create competitive inequality.