Chamber, manufacturers lobby to kill anti-Wall Street derivatives measure

The country’s biggest manufacturing and business interests are urging senators to kill financial legislation requiring Wall Street banks to spin off their derivatives desks.

The U.S. Chamber of Commerce, National Association of Manufacturers and Business Roundtable, among other groups, are urging the Senate to drop the requirement.

The provision has quickly developed into one of the most contentious parts of legislation aimed at regulating the multitrillion-dollar market for financial derivatives, which some blame for exacerbating the financial crisis. Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) first proposed the “spin-off” provision. Bank analysts say it could lead banks to raise tens of billions of dollars to capitalize their derivatives operations.

The business groups are part of the Coalition for Derivatives End-Users, which sent a letter to the Senate yesterday outlining its opposition to the provision.

The provision could hurt business and commercial end-users by, “reducing or eliminating available counterparties,” with which to do derivatives deals, the coalition argued in the letter. Banks dominate the derivatives industry, with five banks accounting for 97 percent of the total face value of U.S. market.

Banks and financial trade associations have been lobbying aggressively to remove the provision. Sens. Mark Warner (D-Va.) and Kirsten Gillibrand (D-N.Y.) have raised concerns about the measure and its impact on the derivatives market.