Senate Agriculture Committee Chairman Blanche Lincoln is expected to unveil derivatives legislation Friday that is likely to go far beyond previous attempts to rein in such products.
The bill, according to a Senate aide familiar with it, would prohibit any swap entities — including dealers, major swap participants and security-based swaps — from benefiting from federal assistance, including loans from the Federal Reserve Board's discount window, deposit insurance and debt guarantees.
It is unclear whether the provision will stick, but if it does it would force many major financial institutions to wall off or divest their derivatives trading units.
The panel may vote on the bill next week and then fold it into the broader regulatory reform legislation, but even some Democrats view Lincoln's measure as too onerous.
