I wrote this last Thanksgiving but not only is it still relevant, it is still going on. NO resolution, NO overhaul. Are we surprised? From 2013:
The turkeys are squabbling….the big turkeys that is. This Thanksgiving battle is not pilgrims versus Indians, but the big banks suing the regulators.
JPMorgan Chase, Goldman Sachs and their other compadres are fuming over far-reaching new rules passed in the wake of the financial crisis. So guess what, they plan to haul the Commodity Futures Trading Commission to court.
The banks, represented by industry lobbying groups, plan to sue the CFTC for violating rule-making procedures when it proposed new Dodd-Frank era regulations.A source familiar with the matter said that lawsuit, led by the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association, is “imminent.”At issue are new rules spearheaded by outgoing CFTC Chairman Gary Gensler, which some bank officials have described as a parting shot at Wall Street.
According to Bloomberg:
The banks grouse that the proposals would grant the CFTC oversight over complex international swaps deals — even if a US institution has a minor or passing role in the transaction.
“[The proposed rules] could adversely impact market liquidity and the ability of end-users to manage their risks,” an ISDA spokesman said in a statement.
“Market participants and international policy-makers are extremely concerned about the impact of the CFTC’s cross-border guidance and related recent advisories,” the spokesman said.
SIFMA and the CFTC did not return calls for comment.
One source said that the lawsuit seeking to block implementation of the rules, which could kick in before year-end, would likely be filed in either Washington, DC, or Manhattan federal court.
The suit will claim that the CFTC overstepped when it proposed the rules without giving industry participants a chance to weigh in first during a comment period.
“This rule is simply a work-around by Gensler that he’s trying to get through as he’s headed out the door,” said on industry official familiar with the looming lawsuit.
The new rules would force derivatives dealers to seek clearance of complex derivatives through both European and US platforms instead of one platform as is currently the norm.
Bank officials argue the move would ring up additional costs and create unnecessary duplication.
I say let’s free up the court system and have them pull the wishbone.