WASHINGTON (Reuters) - Two U.S. Democratic lawmakers on Thursday asked giant banks including JPMorgan Chase & Co (N:JPM) to explain how they will manage swaps trading activities after lawmakers weakened rules for those operations at the end of 2014.
The U.S. Congress in December scaled back a portion of the 2010 Dodd-Frank Wall Street oversight law that would have forced banks to spin off much of their swaps trading into new units separate from their traditional deposit-taking businesses.
The request to the chief executives of JPMorgan, Bank of America Corp (N:BAC), Citigroup Inc (N:C) and Goldman Sachs Group Inc (N:GS) was issued by Senator Elizabeth Warren, who last year led Democratic opposition to removing the swaps rule, and Representative Elijah Cummings, also a Democrat.
The measure to weaken the swaps rules passed as part of a federal government spending package despite strenuous opposition from Warren and others.
Warren, from Massachusetts, and Cummings, of Maryland, on Thursday asked the four banks for the total values of both their derivatives businesses and any swaps they would have been required to "push out" before the rules changed.
"The omnibus bill passed after intense lobbying from the financial industry," the lawmakers wrote, referring to the spending bill.
The letters, which were posted online, asked for a briefing from the bank CEOs by Feb. 19. They also requested copies of any requests to regulators for more time to push out swaps activity and asked how the banks would now decide which trades to make.
The lawmakers said the four banks they wrote to had more than 90 percent of bank-held derivatives contracts.
Cummings, the top Democrat on the House of Representatives' government oversight panel and Warren, the top Democrat on a subcommittee of the Senate Banking Committee, have worked together before on financial services issues.
Warren, a longtime backer of tougher regulation of Wall Street, has argued that the swaps rule rollback would make banks less safe and make way for more changes to the Dodd-Frank law.
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Big banks said pushing out swaps trading to subsidiaries would be expensive because they would need additional capital for those units, and they argued it would not make them any safer. Some regulators and former lawmakers involved in writing Dodd-Frank agreed.