It’s entirely possible the road to financial reform took a detour through Arkansas last night. Incumbent Sen. Blanche Lincoln eked out a win in her Democratic primary. But it’s her position as the chairwoman of the Senate Agriculture Committee that’s most relevant here. Lincoln used that post to get a controversial provision inserted into the Senate financial overhaul bill last month — a ban on banks trading in derivatives. House and Senate leaders announced last night they’re hoping for a final vote on the bill by the end of the month, so Marketplace looked into what Lincoln’s win might mean for reform.
By Nancy Marshall-Genzer
Lincoln’s battle cry during the primary campaign was that she would stand up to banks and special interests. Her victory speech last night was right on message.
“The vote of this senator is not for sale and neither is the vote of the people of Arkansas,” said Lincoln.
During the campaign, Lincoln told voters she was tough on Wall Street, and her derivatives proposal is tough. Banks would have to spin off their profitable derivatives trading desks. The language made it into the final Senate financial reform bill. But now that legislation has to be merged with the House bill. And the post-election buzz is, despite Lincoln’s victory, her derivatives provision won’t make it into the final bill.
“House, Senate, White House, Treasury, Federal Reserve — everyone is pretty well on the same page that this provision is going to be removed,” said Chris Krueger, a policy analyst with Concept Capital.
But don’t count Lincoln out yet. She’s a member of the Conference Committee that will merge the House and Senate financial reform bills.
“Lincoln’s view on derivatives will certainly shine through, throughout the course of the Conference Committee,” said Patrick Hughes, vice president of Height Analytics. “She is viewed to be among the top authorities on this issue in the Senate.”
Lincoln wrote much of the Senate bill’s language on derivatives. She’s behind another provision that would force derivatives dealers to put their clients’ interest first. And the dealers would have to make pricing information public.
Janine Parry teaches political science at the University of Arkansas. She says Lincoln has every incentive to keep up the anti-Wall Street rhetoric.
“You don’t have to understand what a derivative is to understand that she’s staking out a position for Main Street over Wall Street,” said Parry. “This is the drum she’s beating.”
A drum Lincoln hopes will be heard all the way to Arkansas.
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