Anti-Derivative Regulation Lobbying “Fly-In”
Noam Scheiber reports that the major banks, working closely with the U.S. Chamber of Commerce, are orchestrating an anti-regulation lobbying fest.
“Some two dozen executives from large corporations will be descending on Capitol Hill today to make the case against over-regulating derivatives. The “fly-in” is being organized in part by the U.S. Chamber of Commerce through a group called the Coalition for Derivatives End-Users, according to the Chamber’s Ryan McKee. Many corporations use derivatives to hedge against fluctuations in the price of their inputs—for example, an airline might sign a contract to lock in future fuel prices, thereby passing the risk along to someone else. And so, on one level, it makes perfect sense that the executives and the Chamber would take an interest in derivatives legislation.
But, on another level, the pilgrimage by the so-called corporate “end-users” is a little mystifying. That’s because the legislation that’s piqued the executives’ interest—a derivatives bill that Senate Agriculture Committee Chairman Blanche Lincoln unveiled last week—explicitly exempts derivatives used in commercial activity, as in the jet-fuel example. What the Lincoln bill would regulate is the use of derivatives for more speculative purposes, like a straight-up bet between two Wall Street firms on the future price of oil.”
How out of touch is Chamber of Commerce? Is it any wonder they are losing members?
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Source:
Head Lock: The inside story of how Goldman and the banks are getting clobbered on financial reform
Noam Scheiber
The New Republic, April 20, 2010 | 12:00 am
http://www.tnr.com/article/economy/the-state-play-financial-regulation-edition
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April 20th, 2010 at 9:42 am
Banks don’t want to lose the business. Any derivative can be re-structured into exchange-traded sub components. Like the sturm und drang that decimalization would ruin the markets, then penny spreads after that. It’s all a money-making venture for these lobbyists to come up with nonsense. It’s wonderful that America’s seeing these half-baked stories
April 20th, 2010 at 10:36 am
The goal should be to protect those sectors that are too important to fail such as commercial banking, insurance, pension funds, etc. They should be required to clear any derivatives they trade on an exchange and those trades have to be genuine hedging of risk and carried on the books. Any others can trade any way they want, but no bailouts!
April 20th, 2010 at 11:58 am
Jet fuel can be hedged on an honest-to-God futures market: completely transparent and anonymous with a clearing house and margin calls.
There are a couple of brokerages putting together counter party swaps in the fertilizer trade which are basically just the opposite: price and identity known only to the parties and the broker –and convergence based on who tells the most credible lies to the industry newsletters. Sort of an Enron model.
Derivatives trading done in the dark is a slap in the face to honest investors and to Main Street. C of C out of touch? You betcha.
April 20th, 2010 at 2:01 pm
Why don’t these fat slobs just go to Vegas? If I was in charge I’d scramble some f-16′s and escort them back where they came from.
They really don’t get it. Let’s start with IRS Audits of each and every one of them, then we can move up to criminal investigations.
April 20th, 2010 at 2:06 pm
Let’s get some names here!! What are the companies that we need to start boy-cut against. Anybody going to bat for this sleazy investment bank “business” of gambling with futures and driving up cost of consumer products should be tarred and feathered – before we burn them live on the stake.
April 20th, 2010 at 2:12 pm
And while we are at it lets get the names of those Senators who are desperately trying to defend the right of Goldman Sachs and other Wall Street sleaze balls to drive o up the cost of fuel and food for main street. I say it’s not just the derivatives that needs to be brought out in the open – lets see who it is that is fighting for Wall Street against main street.
April 20th, 2010 at 2:55 pm
Main Street is under attack from by Wall Street. They are driving up the prices of food, clothes and fuel with their derivatives gambling– sucking billions of dollars out of regular people. This just at the same time as we are struggling to survive the economic disaster created by the greed and excesses of those same Wall Street scumbags. I say it is time for Main Street to get the tar and feathers out and ask every elected official if they are with us or with them.
April 20th, 2010 at 9:05 pm
I hope they all “Fly-in” on Corporate jets?
April 20th, 2010 at 10:04 pm
Perhaps I needed to add, “The details of which get leaked to the media”.