Today, Senator Bernie Sanders sent a letter (pdf) to the Chairman of the Commmodities Futures Commission Gary Gensler criticizing the commission and the propsed new rule to limit speculative trading of crude oil, gasoline, heating oil, and other commodities the commission is expected to vote on tomorrow.
Unfortunately, if recent reports in the media are correct, the final rule on position limits, as currently drafted, will do little or nothing to lower prices and it will not eliminate, prevent or diminish excessive speculation as required by the Dodd-Frank Act. At a time when the American people are experiencing extremely high oil and gas prices, this would be simply unacceptable.
As you know, the Dodd-Frank Act required the CFTC to finalize rules on position limits no later than January 17, 2011. If the CFTC had done its job and obeyed the law, consumers would have received real relief at the gas pump during the past nine months, particularly during the summer driving season. Unfortunately, this did not happen.
The bottom line is that we have a responsibility to ensure that the price of oil is no longer allowed to be dirvn p by te same Wall Street speculators who caused the devastating recession that working families are now experiencing.
This is not the first time Sen. Sanders has clashed with Gensler who was appointed to his current position by President Obama in 2009 following a stint as Undersecretary of the Treasury in 1999 - 2001 and Assistant Secretary to the Treasury in 1997 - 1991 and 18 years at Goldman Sachs. So, jump over the squiggle for more.
Ken Silveerstein, writing for Harpers in March 2009 (and others elsewhere) reported on Senator Sanders' efforts to block President Obama's appointment of "derivatives cheerleader" Gary Gensler to the Commodity Futures Trading Commission. According to Silverstein, Sen. Sanders placed a hold on Gensler's nomination along with the following statement:
While Mr. Gensler is clearly an intelligent and knowledgeable person, I cannot support his nomination. Mr. Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of A.I.G. and has resulted in the largest taxpayer bailout in U.S. history. He supported Gramm-Leach-Bliley, which allowed banks like Citigroup to become “too big to fail.” He worked to deregulate electronic energy trading, which led to the downfall of Enron and the spike in energy prices. At this moment in our history, we need an independent leader who will help create a new culture in the financial marketplace and move us away from the greed, recklessness and illegal behavior which has caused so much harm to our economy.
Who wouldn't find that reason enough to oppose Gensler's appointment to oveersee the development of rules to regulate the $600 trillion over-the-counter derivatives market? Nevertheless, Gensler's appointment was approved, and now Sen. Sanders is in the position of fighting rules he finds weak and "totally unacceptable."
Sen. Sanders is calling for, among other things, the Commission to "[e]nd the absurdity of treating financial institutions like Goldman Sachs and Morgan Stanley the same as bona-fide hedgers by requiring bank holding companies, investment banks, and hedge funds engaged in proprietary oil trading to be classified as speculators and register with the CFTC" rather than allowing major financial institutions to be exempt from the rules. Also, he's calling for any investor to hold no more than 5% of the deliverable commodity rather than the 125% reportedly allowed in some situations under the new rules. Furthermore, he wants to see new rules implemented sooner than 2013 as reportedly proposed.
Finally, for completely different reasons, Sen. Sanders is joined by Republicans in opposing the new rules Gensler's commission is expected to finalize. Of course, being Republicans, they want the new rules weakened rather than strengthened. For their tired and worn out reasons, check out this article by Alexandra Alper for Reuters, but remember, these are the same people who enabled a standard of lawlessness (aka deregulation) for the 1% different from the laws the 99% are required, for the good of our society, to follow.