The House passed the Swaps Regulatory Improvement Act that would reduce restrictions under section 716 of the 2010 Dodd-Frank Act.
"Section 716 requires financial institutions to 'push out' almost all of their derivatives business into separate entities," said Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, during a speech on the House floor Wednesday. "This not only increases transaction costs, which are ultimately paid by the consumers, it also makes our financial system less secure by forcing swap trading out of regulated institutions."
Section 716 of the reform law requires banks to spin off risky swaps out of depository institutions to subsidiaries and affiliates.
The bill passed the chamber by a bipartisan vote of 292-122.
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