Dodd-Frank calls for regulation of swaps. The Treasury just announced that its final determination is that foreign exchange swaps are exempted from the definition of "swap" and are not to be regulated under Dodd-Frank:
The final determination exempts foreign exchange swaps and foreign exchange forwards from the definition of "swap" under the Commodity Exchange Act ("CEA"). On October 28, 2010, the Treasury previously solicited public comment on a wide range of issues relating to whether foreign exchange swaps and foreign exchange forwards should be exempt from the definition of the term "swap" under the CEA (75 FR 66426). The notice of proposed determination seeking to exempt foreign exchange swaps and foreign exchange forwards from the definition of the term "swap" under the CEA was published on May 5, 2011 (76 FR 25774).What's particularly noteworthy about this is that the Federal Reserve did a lot of its propping up of foreign banks during the financial crisis via foreign exchange swap lines. Izabella Kaminska at FT wrote last year:
Some believe that of all the emergency facilities initiated by global central banks in 2008 the most helpful was in fact the introduction of unlimited FX swap lines.Some things you just need to keep in a dark place---no mid-level snooping bureaucrats around this arena, where the big boy government operators like to play.