Rep. Collin Peterson, Chairman of the House Agriculture Committe, has introduced the final version of the Derivatives Markets Transparency and Accountability Act of 2009 (H.R. 977). The draft bill included an absurb attempt to ban so-called "naked" credit default swaps (though the bill was so incompetently drafted that it wouldn't actually have banned naked CDS). The final version dialed down the crazy a bit, and now simply permits the CFTC, with the President's approval, to suspend trading in CDS if "the public interest and the protection of investors so require." Even in the (highly) unlikely event that this bill ever becomes law, the only way the CFTC and the President would ever suspend trading in CDS is if there's another panic and the short-selling ban is reinstituted. The bill would also require all OTC transactions to either:
- Be settled and cleared through a CFTC-regulated derivative clearing organization (DCO) or, depending on the contract, through an SEC-regulated clearing agency; or
- Be reported to the CFTC or other approved agency.