Important Clarification of U.S. Financial Regulatory Reform: Exceptions to Derivatives Push-Out Provision Intended to Apply to Non-U.S. Banking Organizations

Sullivan & Cromwell LLP - July 16, 2010

U.S. Senator Blanche Lincoln, in a colloquy with Senate Banking Committee Chairman Christopher Dodd, sought to correct a “significant oversight” in the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” or “Dodd-Frank,” that may otherwise prevent uninsured U.S. branches of non-U.S. banks from relying on important exceptions to the derivatives push-out requirements imposed on depository institutions and U.S. branches and agencies of non-U.S. banks. In her colloquy, Senator Lincoln, the author of the push-out provision, stated that the exclusion of uninsured U.S. branches of non-U.S. banks was an oversight, and that these uninsured branches should be allowed to take advantage of these exceptions from the push-out requirements as if they were insured depository institutions.