How the Dodd-Frank Act Could Impact Your Weekend

On a Friday like today, most folks are looking forward to a relaxing, fun-filled weekend away from work and the myriad of regulations with which we have to comply.  Now, it looks like the new financial reform regulations may have an impact on our leisure time activities.  What you say?  How could that be?  Well, according to an article this week in the Wall Street Journal, the Dodd-Frank Act could force companies who use derivatives to hedge commodity price fluctuations to provide cash collateral on the transactions.  If that happens, then the cost will be transferred to the consumer in the form of higher prices.  One company that anticipates price increases is MillerCoors LLC.  Here’s what the head of risk management at MillerCoors had to say according to the Wall Street Journal.

Craig Reiners, director of risk management at beer giant MillerCoors LLC, said the derivatives rules were designed to reduce threats to financial stability, whereas companies such as his “pose no systemic risks.” If end users aren’t shielded, the rules “would have a very harmful effect on our risk-management of the business and for that matter ultimately the cost of a six-pack of beer.” MillerCoors uses over-the-counter derivatives to hedge against price volatility in areas such as aluminum, hops and energy.

So, as you head out to a sporting event or simply plan to kick back with a cold beverage in your back yard this weekend, beware of the possible negative and unintended impact to your wallet as a result of financial reform.

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About Wheelhouse Advisors
Wheelhouse Advisors LLC is the publisher of The ERM Current™, an online publication and blog dedicated to providing the latest updates on current trends in Enterprise Risk Management & Control. Wheelhouse Advisors provides cost-effective Enterprise Risk Management & Control solutions to both large and mid-size corporations. To learn more about Wheelhouse Advisors, please visit our web site at www.WheelhouseAdvisors.com.

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