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Should Dodd-Frank Be Renamed the 'Rube Goldberg' Statute?

BY Beth Stern Fleming
July 26, 2013

You've been comfortably existing as a privately held commercial leasing company for years. You routinely cover your interest-rate exposure on your funding debt by entering into interest-rate swaps in modest amounts. You've been doing this for some time, no big deal. This year your bank or broker sends you a ton of documents and asks you to sign umpteen pages of gobbledy-gook, telling you that you might be a “highly leveraged financial entity,” which might make you a “major swap participant,” which requires your bank to follow certain procedures, and may require you to do certain things. To which you say, “what just happened?”

Why Now?

Perhaps purposely, or just fortuitously, your company has avoided any regulation by the federal banking agencies, as well as your state banking agencies, by being unaffiliated with a banking entity and by concentrating on commercial leases, engaging in no consumer business. You have enjoyed this autonomous and unregulated existence, content to concentrate on the difficult enough issues of making a profit in a tough and competitive environment. The interest-rate swaps you have had over the years cost significant money that could have been used elsewhere, but those swaps have also saved you interest rate expense, or at least provided you peace of mind that is priceless.

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