Senate banking committee Chairman Christopher Dodd, D-Conn., and Senate Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., reached an agreement that could force banks to spin off their derivatives-trading operations. Under the proposal, banks that keep their derivatives-trading desk would be ineligible for federal aid from the Federal Reserve and the Federal Deposit Insurance Corp. "Derivatives, when properly used, are an effective tool to manage the risk businesses face. The bill, by requiring divestment, will ironically increase the risk businesses face or will drive the transactions overseas," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable.

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