Arkansas Sen. Blanche Lincoln
released her bill for derivatives reform last week. It contains a nugget of good news for state and local taxpayers. The bill would require dealers in the oft-complex business of interest rate and other “swaps,” largely big banks like JPMorgan Chase, to hold themselves to a fiduciary standard in designing such swaps for municipalities. That is, they would have to determine that a particular customized deal is good for the client — the taxpayer — when compared to other alternatives, not just good for the bank’s bottom line.
Maybe it would prevent stuff like
[In case you are wondering why an Arkansas senator has the derivatives portfolio: Sen Lincoln chairs the agriculture committee, where regulation of derivatives — cattle futures, etc. — originated.]
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The national housing crisis is over.***
New York should worry.