U.S. senator seeks to strip 'loophole' from commodities bill

A U.S. senator who advocates for stronger financial regulation on Thursday sought to strip the key part of a bill authorizing the work of the country's commodities and swaps regulator, the Commodity Futures Trading Commission.

Senator Sherrod Brown, a Democrat from Ohio, filed an amendment to legislation that the Agriculture Committee was scheduled to finalize on Thursday. It would block a key component of the bill allowing farmers, ranchers and energy providers to hedge their operational risks with derivatives.

But Brown said the bill was written in a way that also would give exemptions on rules on swaps to big companies and financial players.

"It's clear that this bill is all about helping Wall Street traders and big energy companies like Koch Industries under the guise of helping farmers," he said in a statement provided exclusively to Reuters. "We've already seen Wall Street use community bankers as an excuse to roll back oversight on their risky behavior and now they are using farmers as cover."

With Republicans controlling the Agriculture Committee, Brown's amendment was unlikely to pass.

The 2010 Dodd-Frank law strengthened oversight of swaps in order to prevent a repeat of the risky bets that contributed to the financial crisis that began in 2008. Republicans have said that rules the CFTC put in place to carry out the law have spread regulation into areas outside of finance, which Congress did not intend.

Under standard procedures, senators file amendments to a bill during a "mark up" hearing and the committee votes on each one before approving a final bill that then goes to the full chamber.