At least 40 House Democrats have joined together to beg lawmakers tinkering with the final version of the Wall Street reform bill to drop a controversial provision that could cost New York billions in lost tax revenue and jobs.
The coalition — which includes eight members of the New York delegation — is preparing to send a letter to the conference committee crafting the final bill. Their will urge the panel to dump the provision that could ban the nation’s largest banks from engaging in the risky derivatives business. Derivatives trading involves betting on the future value of assets.
The measure — championed by Sen. Blanche Lincoln (D-Ark.), chairwoman of the Agricultural Committee — appears in the Senate bill but not the House’s.
The New Democrats — an alliance of moderate party menbers in the House — are circulating a letter among their 69 members to show their opposition to the Lincoln provision. As many as 40 have pledged to sign the letter to express their opposition.
One of their arguments against the measure is that it would likely force banks to move their profitable derivatives businesses overseas.
US Rep. Mike McMahon, of Staten Island, a leading Democrat behind the push to stop the derivatives ban from going into the final bill, said it could do “serious damage” to the entire US economy.
“The Senate’s language would have the unintended consequences of actually increasing systemic risk in our financial markets by spinning off swap desks to undercapitalized corporate affiliates or shipping the entire derivatives market to poorly regulated markets abroad,” he said.