House passes bill to exempt automakers, other firms from some financial rules

House passes bill to exempt automakers, other firms from some financial rules
Wed, Jun 12 detroitnews.com

Washington — The U.S. House on Wednesday overwhelmingly approved a bill to exempt automakers and other users of financial hedging from Wall Street regulations approved in 2010.

The bill, co-authored by Rep. Gary Peters, D-Bloomfield Township, and Michael Grimm, R-N.Y., was approved 411-12 and is designed to correct a drafting error in the Dodd-Frank Wall Street Reform act.

The Business Risk Mitigation and Price Stabilization Act of 2013 exempts Michigan manufacturing and agricultural producers from undue financial regulation, he said. Companies that use derivatives to hedge their exposure to fluctuating costs of energy, raw materials, and business expenses

“should not be subject to the same regulation actually intended to corral Wall Street greed.”

The bill — if passed by the Senate — would mean that the companies using the instruments wouldn’t have to meet certain margin requirements to use the instruments. The law is aimed at preventing Wall Street speculators from driving up the costs of commodities using derivatives. Without the bill, the rules could boost the amount of cash companies needed to put up or prevent the use of the instruments.

“Michigan has a proud heritage of building and growing the best products in the world, and I am committed to fighting for our manufacturers and agricultural producers to succeed and our middle class to grow strong again,” Peters said. “Wall Street reform was enacted to curb the excessive greed and risky practices that bankrupted our middle class not the manufacturers and farmers who built it. I served on the conference committee that helped write Wall Street reform, and I am pleased to that Congress is supporting this common-sense, bipartisan proposal to uphold the original intent of Wall Street reform, protect against market fluctuations, and invest in our continued economic growth.”

In 2011, Ford Motor Co.’s treasurer told a House committee that the company needed to reduce exposure to risks and said it was worried the company could be hindered by new rules.

In 2010, Congress included language allowing industrial companies and those with a captive finance company to continue to use the financial instruments.

Schloss said the rules could subject Ford Credit to “onerous margin requirements,” which could hike the costs of risk management

.

“Unlike swap dealers and major swap participants, most end-users do not have ready access to low-cost liquidity,” Schloss said.

Congress acted to set limits on the $600 trillion derivative market, arguing they harmed farmers and others because speculation resulted in big swings in prices.

But members of Congress said there was a legitimate need for the use by some companies.

“They aren’t speculating,” Peters said in a Detroit News interview in 2010. “They are not part of the casino-type atmosphere that we saw on Wall Street. What they are doing is legitimately hedging business

Share
Seniority Lists
Recent Posts!
Bargaining Committee

Chairman
Mike Herron
President
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Committeepersons
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

President
Tim Stannard
Chairman
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Guide
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts
GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Neil Osborne
Retiree Chair
Mike Martinez

Get Text Alerts



asdasdsd

*Standard text messaging rates may apply from your carrier