House panel OKs derivatives reform

WASHINGTON, Oct. 15 (UPI) -- The House Financial Services Committee Thursday approved legislation that would regulate the U.S. market for financial derivatives.

The panel agreed to sent the bill out of committee on a 43-26 vote, with one Republican, Rep. Walter Jones of North Carolina, joining all Democrats, The Hill reported.

The derivatives regulation bill is one of several measures President Barack Obama's administration and congressional allies are pushing to reshape the financial system.

The derivatives legislation would bring transparency to the huge market that many blame for aggravating the Wall Street crisis last year and contributing to the downfall of American International Group, The Hill said.

The bill would move most trades in derivatives -- complex financial instruments used to hedge risk -- onto a public exchange if the trades are between financial institutions. Committee Chairman Rep. Barney Frank, D-Mass., included an exemption for companies, or "end-users," that are not dealers and use derivatives to hedge risk for commercial purposes, the Washington publication said.

Frank said he hoped to complete his committee's review of legislation that would create a new federal agency, the Consumer Financial Protection Agency, next week. The agency would be charged with setting the rules for consumers and banks and would have the power to enforce rules and build on credit card reform enacted this year.