Financial Accounting Standards Research Initiative

Jeremy,

Certainly banks try to do this for loans and deposits – keep a relatively balanced amount of debt and receivables and make money off the spread. Also, banks might acquire derivatives to offset some of the inbalances from lending long-term but borrowing short-term (deposits).
What I think Congress is worried about is banks selling derivatives to other parties. True, if banks always sold both sides of the contract at the same time (e.g., I only sale a fixed for floating swap if I can find another customer who wants a floating for fixed swap of the same notional), then theoretically their positions offset and they have no risk. In practice, they generally cannot enter into paired transactions simulataneously. Also, they face counter party risk – they cannot collect the gain from one counter party to pay off the loss to the other counter party.
I am not saying that I agree with the proposed rules. But I do see risk in being a derivatives dealer.