ABA urged the CFTC to lift the swaps clearing requirement for bank and savings and loan holding companies with less than $10 billion in assets. The CFTC’s 2012 rule already exempts end-user banks under that threshold, as well as credit unions and Farm Credit lenders of any size, but it does not contain an exemption for any bank holding companies.
Nearly 400 bank holding companies with under $10 billion in assets reported using swaps to hedge financing risk, ABA said, and more than one-third of them used swaps only at the holding company level.
ABA suggested that the lack of a holding company exemption was a legislative oversight unintended by Congress in the Dodd-Frank Act, which would give the CFTC authority to lift the requirement in this instance. Failing to do so would subject banks to “significant costs that would outweigh any potential regulatory benefit.”
Read the letter.