Companies Push For Derivatives Exemption

MARCY GORDON

WASHINGTON (AP) — As Congress crafts legislation to impose new oversight on complex instruments blamed for hastening the financial crisis, a major sticking point has emerged over companies that use the derivatives to hedge risk.

Some lawmakers want to exempt so-called "end users" of derivatives from new capital and other requirements in the overhaul legislation. A potent coalition of about 170 companies that use derivatives — including Boeing Co., Caterpillar Inc., Ford Motor Co., General Electric Co. and Shell Oil Co. — has been lobbying Congress to say that regulation of derivatives without exceptions could severely increase costs for corporate America.

That could mean higher costs passed on to consumers and imperiled jobs, they contend.

"We are concerned that imposing clearing, margin and capital requirements on end users would significantly increase our cash requirements and costs," Ford Vice President and Treasurer Neil Schloss testified.

Echoes of support came from several members of the Senate Agriculture Committee at a hearing Wednesday.

"This has some very, very serious consequences" for farmers and other businesses, said Sen. Mike Johanns, R-Neb.

Sen. Debbie Stabenow, D-Mich., said it would be a hardship for manufacturing companies to have to divert sorely needed working capital to put up as collateral under the new requirements.