According to the Huffingtonpost, Cantwell and Feingold are supposedly filibustering financial reform. It was believed that Sen. Cantwell was voting against cloture because of her glass steagall amendment of which, I'm a fan of.
No, it appears she voted against the bill today because of a problem that was "discovered" by the huffingtonpost.
Feingold and Cantwell vote against Financial bill
Here is Cantwell's statement:
But one of the strongest pieces of the bill is coming under scrutiny because of what Americans for Financial Reform claims is a giant loophole:
Standard contracts and those not involving so-called “commercial end users” — firms like Coca-Cola and General Electric that use derivatives as insurance against currency and interest-rate fluctuations, for example — will be required to go through these clearinghouses.
The problem, however, is that there’s apparently little consequence if firms evade the requirements, according to the email sent to a Banking Committee staffer by Americans for Financial Reform, an umbrella organization of consumer advocacy, public affairs and union groups arguing for reform. Some of these potential loopholes were first identified by Zach Carter of AlterNet.
“[T]here is no consequence for counterparties who enter into uncleared swaps even after a finding by the [Commodity Futures Trading Commission] or [Securities and Exchange Commission] that the swaps must be cleared,” the email reads. The bill “does not prohibit the use of uncleared swaps and, even more egregious, expressly states that no swap can be voided for failure to clear.”
h/t Firedoglake: Ddayen
This issue seems pretty serious. Unfortunately it isn't. It was hyped up by the huffingtonpost on tuesday in this article. Instead of pointing out the flaw in the proposal, let me just link to the top of the article at first. I'm going to attach the first five paragraphs:
The pending financial reform bill in the Senate may not accomplish President Barack Obama's goal of reforming the unregulated derivatives market, potentially wasting the nation's best opportunity to fix a broken financial system and tarnishing the legacy of those claiming to clean up the markets.
A section of the bill dealing with derivatives, financial instruments that transfer risk, contains a major loophole, according to an email from a consumer-advocacy organization to the Senate Banking Committee obtained by the Huffington Post. The loophole is wide enough to undermine the whole effort to reform a part of the financial market -- those derivatives traded between financial firms, like AIG, outside of any government oversight -- that's largely blamed for worsening the financial crisis.
"The derivatives market is where a lot of the big, risky financial bets by companies like AIG took place," Obama said on April 16. "There are literally trillions of dollars sloshing around this market that basically changes hands under the cover of darkness. When things go wrong, as they did in AIG, they can bring down the entire economy, and that's why we've got to bring more transparency and oversight when it comes to derivatives and bring them into a framework in which everybody knows exactly what's going on, because we can't afford another AIG." The president added that he would veto legislation that "does not bring the derivatives market under control."
The financial regulatory reform legislation, which is being shepherded through the Senate by Banking Committee Chairman Christopher Dodd (D-Conn.), attempts to rein in the OTC derivatives market by mandating that most trades go through a clearinghouse, a facility that executes trades for parties that are required to post collateral and mark their positions daily to prevailing market prices. So, rather than two financial firms trading with each other -- with no oversight -- they'd now have to go through this central point. It would shed more light on the market and allow for government regulators to more effectively police it, reformers and Obama administration officials argue.
Standard contracts and those not involving so-called "commercial end users" -- firms like Coca-Cola and General Electric that use derivatives as insurance against currency and interest-rate fluctuations, for example -- will be required to go through these clearinghouses.
The problem, however, is that there's apparently little consequence if firms evade the requirements, according to the email sent to a Banking Committee staffer by Americans for Financial Reform, an umbrella organization of consumer advocacy, public affairs and union groups arguing for reform. Some of these potential loopholes were first identified by Zach Carter of AlterNet.
h/t huffingtonpost
It took FIVE WHOLE PARAGRAPHS OF FLUFF before the actual substance of the article was gotten. Normally if you're trying to catch the reader's attention, you put the most important information at the top. So the problem is that there is a belief that firms that evade requirements would have "little or no consequence" without this loophole being plugged. The problem? This issue is already fixed in law.
- No person shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify any book, record, or account described in paragraph (2).
h/t CEA Section 5
There's already a problem solving this issue. So here we are. Feingold's motivations are a little less clear. He says he wants it stronger but doesn't detail what he wants, but I'm fairly sure this isn't the problem. If Cantwell withheld her vote because of Glass Steagall this would be admirable. But making up problems will only make things worse.