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Naturally a trader opportunistically - positioned can earn big profits as the market goes down. Does it seem as any small wonder how well -positioned these firms and investors could have been for the certain fall in the inflated oil and commodity prices they knew was coming once H.R. 6124 was enacted? Through their political alliances and lobbyist connections, insider knowledge was close at hand. Many of the principal players in positions of policy making and shaping within the government and the firms are the very some ones benefitting the most. Perhaps speculative trading for them had morphed from one of chance to one of certainty gaining on the way up by virtue of CFMA 2000 and on the way down by the graces of H.R. 6124.
Over the past year these firms have been struggling for their financial lives. Yet recently it was reported by the Wall Street Journal that Morgan Stanley will spend $2.5 billion to purchase the Smith Barney unit from Citigroup, “…a few months ago, Wall Street firm Morgan Stanley was scrambling to survive. Now it is rebuilding with a ban.”
We have covered a great deal of ground here addressing many of the questions I raised except for a few which are; what has become of the investigations “60 Minutes” mentioned? Are they underway, and what progress have the federal agencies made? If abuse is found or known, is anyone going to be held accountable? Or are there just too many big time players involved? And what has become of the change in rule-making procedure Wendy Gramm forced through with the CFTC in 1993?
I suspect foul play and based on the “60 Minutes” broadcast I am not alone. Regardless of the reasons or the potential magnitude of any fallout an independent investigation is called for and should be vigorously undertaken. If not already begun then we must demand it. We must press our elected officials to leave no stone unturned and to hold any firm and or individuals found of illegal conduct to full account. Consumers from around the globe deserve nothing less.
Footnotes:
60 Minutes “Did Speculation Fuel Oil Price Swings”
Sunday Jan 11, 2009
View and read 60 Minutes transcript: http://www.cbsnews.com/stories/2009/01/08/60minutes/main4707770.shtml
Commodity Clash: http://www.govexec.com/features/1097s6.htm
The CEA is set forth at Title 7, Chapter 1 of the U.S. Code, and the regulations there under are set forth at Title 17, Chapter 1 of the U.S. Code of Federal Regulations, http://www.cftc.gov/files/ogc/comex060601.pdf
H.R. 707, "Futures Trading Practices Act," 102nd Congress, signed by President Bush October 28, 1992.
http://catalog.gpo.gov/F/G7N62RRBSIAUSDUTFTG6RHY7IB989V3ITJG81RJ3H9XLBBDC2A-70090?func=full-set-set&set_number=001420&set_entry=000018&format=999
http://thomas.loc.gov/cgi-bin/bdquery/z?d102:h.r.707:
The Dangers of Deregulation: http://www.cftc.gov/opa/speeches/opaborn-5.htm
Blind Faith: How Deregulation and Enron’s Influence over Government looted billions form Americans: http://www.citizen.org/documents/Blind_Faith.PDF
The Enron Loophole, CRS Report for Congress: http://assets.opencrs.com/rpts/RS22912_20080707.pdf
Appropriations Bill HR 4577
http://thomas.loc.gov/cgi-bin/bdquery/z?d106:H.R.4577:
HR 5660-Text of Commodity Futures Modernization Act attached to HR4577
http://thomas.loc.gov/cgi-bin/bdquery/z?d106:H.R.5660:
Complete Text of Legislation as passed by both Senate and House becoming law, beginning on page 367
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_public_laws&docid=f:publ554.106.pdf
HR 4577 Senate Vote Record:
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=2&vote=00171
HR 4577 House vote Record: http://clerk.house.gov/evs/2000/roll603.xml
http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000
Enron Wholesale Services http://www.usdoj.gov/enron/exhibit/03-21/BBC-0001/OCR/4592.001.TXT
Closing the loophole:
HR 6124: http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR06124:@@@R
http://en.wikipedia.org/wiki/Enron_loophole
Sections recommended to be repealed:
SEC. 103. LEGAL CERTAINTY FOR EXCLUDED DERIVATIVE TRANSACTIONS.
http://thomas.loc.gov/cgi-bin/query/F?c106:1:./temp/~c106wE0q64:e41660:
SEC. 106. TRANSACTIONS IN EXEMPT COMMODITIES:
http://thomas.loc.gov/cgi-bin/query/F?c106:1:./temp/~c106wE0q64:e49279:
Sovereign Wealth Funds: http://en.wikipedia.org/wiki/Sovereign_wealth_fund
