Commodity Cops get the ax

1 post / 0 new

Obama launched an investigation into price manipulation especially regarding oil, gas prices began retreating, and republicans want to cut the CFTC budget. republicans-are-taking-cops-derivatives-beat probably a coincidence, but I doubt it.

http://www.thenation.com/blog/168331/republicans-are-taking-cops-derivatives-beat

in case the first link fails

As noted, the CFTC also oversees the oil futures markets, in which speculators can easily monkey with the global price of gasoline. The St. Louis Federal Reserve found that speculation in oil markets was the second-largest factor in the past decade’s price increases, behind demand.

Yet the CFTC has a relatively tiny budget, compared to other regulatory agencies, and has grown only 10 percent since the 1990s. This is despite a massive explosion in the size of the products it regulates—Representative Sam Farr of California estimates that the CFTC budget represents six seconds of trading on the derivatives market.

And now, the budget cuts planned by Republicans. They are remarkable given that Wall Street regulation and high gas prices are volatile elections issues, but Democrats think Republicans believe nobody will notice.

“The [Dodd-Frank] legislation is too popular to repeal, but one can kill it by not funding it. It’s a death by a thousand nicks,” said Farr at least week’s news conference. “The president’s ask isn’t that much money, but without it, it can cripple the regulators. Make no mistake about this, the swap dealers don’t want it to be regulated.”

The proposed budget cut is also astonishing given the massive risk that unregulated derivatives pose to the financial system, demonstrated quite clearly less than four years ago.

“There’s one question every American should ask,” said Representative Gerry Connolly. “Given the meltdown that occurred in 2008, given the fragility of the world economy, given the fact that so many European banks hold too much European sovereign debt, given our recent economic performance numbers when you look at a [derivatives market] margin…valued in excess of $600 trillion—unregulated, with this action, what could go wrong with that?”

douglaslee's picture
douglaslee
Joined:
Jul. 31, 2007 4:01 pm

Latest Headlines

As Obama talks of climate change in Alaska, oil giant Shell readies drills in the Arctic

And in 2041, the Antarctica could be opened up just as the Arctic has been

Scott Walker: Building a wall at the Canadian border might be "legitimate" idea

It's not just the southern border: Wisconsin Gov. Scott Walker says it's "legitimate" to discuss building a wall separating the United States from Canada, as well

Malaysia's democracy is in worse shape than we thought

Malaysia's ethnic groups, and thus Malaysia itself, are looking more and more divided

Thomas Edison Was Right About Solar Power

Famed inventor Thomas Edison brought us electric lights, phonographs, movies, and even the first research and development laboratory.

But in 1931, he also was one of the first promoters of renewable energy - especially solar.

Powered by Drupal, an open source content management system