Lincoln's Derivatives Surprise.

Yesterday, Senate Agricultural Committee Chair Blanche Lincoln released surprisingly strong legislative language to regulate the derivatives market. (I had worried she would water it down.) While some questions still remain about drawing exemptions for end-users, on the whole Lincoln's plan is very strong; the endorsement of Sen. Maria Cantwell doesn't hurt.

While the executive branch, including White House and Treasury officials as well as chief commodities regulator Gary Gensler have been pushing hard for Lincoln to write strong language, I think the prize here goes to Bill Halter, whose primary campaign against Lincoln has been gaining steam and certainly played a role in convincing the usually frustrating Arkansas Democrat to stake out smart policy ground.

Meanwhile, Senate Republican Leader Mitch McConnell is talking some smack about how the bill "wouldn't solve the problems that led to the financial crisis. It would make them worse." That's just not true. While the Dodd bill, even assuming total adoption of Lincoln's derivatives plan, is far from perfect, it is a strong step toward a more accountable financial sector. President Obama meets with congressional leadership on this topic today, so be on the look out for more financial reform news.

-- Tim Fernholz

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