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H.R. 992, Swaps Regulatory Improvement Act 1 (May 20, 2013)

handle is hein.congrec/cbo11142 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE COST ESTIMATE May 20, 2013 H.R. 992 Swaps Regulatory Improvement Act As ordered reported by the House Committee on Financial Services on May 7, 2013 H.R. 992 would allow certain financial firms to retain financial portfolios containing swaps while remaining eligible for assistance from the Federal Reserve and Federal Deposit Insurance Corporation (FDIC). A swap is a contract between two parties to exchange payments based on the price of an underlying asset or change in interest, exchange, or other reference rate. Swaps can be used to hedge or mitigate certain risks associated with a firm's traditional activities, such as interest rate risk, or to speculate based on expected changes in prices and rates. Enacting this legislation could affect direct spending and revenues; therefore, pay-as-you- go procedures apply. However, CBO estimates that any impact on the net cash flows of the Federal Reserve or the FDIC over the next 10 years would not be significant. Under current law, federal assistance is not available to any swaps dealer or major swaps participant registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission. Federal assistance includes access to any Federal Reserve credit facility and discount window (with some exceptions) and FDIC deposit insurance and guarantees. This prohibition does not apply to a major swaps participant that is an insured depository institution (IDI) or an IDI acting as a swaps dealer for hedging purposes or for swaps involving bank-permissible securities. (Such swaps include those that reference interest rates, currencies, government securities, and precious metals. Examples of non-permissible swaps include equity swaps, commodity and agriculture swaps, energy swaps, and metal swaps excluding gold and silver.) Under current law, IDIs that do not meet these exceptions must push out their swaps portfolio to a separately capitalized affiliate if the firm is part of a financial holding company, or cease these activities altogether.

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