Meeting Date:
Wednesday, June 15, 2011
CFTC Staff:
Terry Arbit
David Aron
Kathleen Banar
Mark Fajfar
Julian Hammar
Steve Kane
Somi Seong
Rose Troia
Organization(s):
Wells Fargo
Sullivan & Cromwell
External Attendees:
Darek DeFreece (Wells Fargo)
Randall Reed (Wells Fargo)
Barry Taylor-Brill (Wells Fargo)
David Gilberg (Sullivan & Cromwell)
Additional Information:
The meeting covered various issues related to the ECP definition. Wells Fargo expressed a concern that middle market borrowers would not be permitted to hedge in certain cases and that Wells Fargo might, as a result, scale back its lending to those customers if Wells Fargo cannot enter appropriate hedges in connection with its loans. The scenarios discussed in the meeting all related to who can be an ECP in connection with interest rate swaps hedging loans in various circumstance. Wells Fargo advanced the following solutions: (1) joint and several liability among entities that are ECPs and non-ECP entities should be an acceptable structure; (2) ECP borrowers and non-ECP guarantors should be permitted; and (3) non-ECPs providing collateral to support the interest rate swap obligations of ECP borrowers/counterparties to interest rate hedges should be acceptable.
