Risk Capitol

18 May 2010 By James Pethokoukis

So much so that banking masters of the universe care about local races in Kentucky or Arkansas, where today s primary is a referendum on derivatives regulation. Despite perfect trading days in the markets, shifting political fortunes could bring huge changes to business models.

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Democrats Arlen Specter of Pennsylvania and Blanche Lincoln of Arkansas face strong tests in primary elections. Also, a Senate race in Kentucky between a Republican establishment favorite and a conservative "Tea Party" activist will test the strength of that loosely organized movement.

The three primary election battles highlight the biggest day of voting so far in a year when opinion polls find a sour voter mood fueled by distrust of Washington and worries that neither party is doing enough to rescue the economy and restrain government spending.

In Arkansas, twoterm incumbent Lincoln is in a heated primary race with Lieutenant Governor Bill Halter, who has been backed by labor unions unhappy with Lincoln's failure to support a bill making it easier to organize workplaces.

During the debate on an overhaul of financial regulations, Lincoln introduced a tough bill to force investment banks to dump their derivatives businesses in what critics called an overture to the left.

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