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BNA news (subscription) has reported that Alan Fu, of Prudential Financial Services, sent an email to the Treasury Department in which he highlights a possible effect of the Financial Services Reform bill currently before the Senate. Fu wrote that:
“All versions of financial reform newly require a large part of the ‘over the counter’ derivative market to be entered into, traded and cleared through clearinghouses. This requirement potentially forces such contracts into section 1256, requiring contracts which had never been marked to market or produced taxable capital gain/loss to radically change their tax treatment.”
With many amendments left to debate, it will be interesting to see how this issue is ultimately addressed.
The Federal Reserve stands to gain substantial new authority under financial reform legislation, despite increasing skepticism from lawmakers in both parties over the central bank’s unchecked powers over the U.S. economy.
The chairman of the Senate Banking Committee on Tuesday unveiled a sweeping regulatory reform bill that would strip the Federal Reserve of nearly all of its power to oversee banks, setting up a possible clash with the Obama administration, which has argued for the central bank to play a pivotal role in addressing financial threats.
Obviously, there are a couple of issues left to be resolved.
