Poor Bernie Sanders. Vermont's independent senator is understandably vexed by the failure of the CFTC to implement new rules governing derivatives trading, which includes oil market futures. This regulation is required by the Dodd-Frank financial "reform" act. The Wall Street Journal reports the latest development in New Financial Rules Delayed.
WASHINGTON—U.S. regulators, behind schedule in finalizing key rules mandated by last year's financial-regulatory overhaul, agreed to delay a host of new requirements scheduled to hit the $600 trillion derivatives market next month.
The move offers temporary relief to banks, companies and investors who have worried their use of derivatives—sometimes-complex financial products used to hedge risk or speculate for profit—could run afoul of regulation. Certain parts of the Dodd-Frank financial law automatically take effect July 16, though regulators have yet to issue final rules in affected areas.
On Tuesday, the Commodity Futures Trading Commission [CFTC] offered a six-month reprieve. It delayed until as late as Dec. 31 the effective date of requirements such as business-conduct rules and registration requirements, which affect those who use and trade derivatives.
The delay comes amid wrangling over a financial-regulatory landscape that is in some ways largely unchanged since the 2008 financial crisis. Regulators are so mired by the process of writing rules triggered by Dodd-Frank that some of the most vulnerable areas of the financial system haven't been addressed...
"There have been suggestions to delay implementation of the derivatives reforms included in the Dodd-Frank Act. That is not what today's proposed order is," CFTC Chairman Gary Gensler [shown top left] said at a commission meeting. "Instead, it provides the time necessary for the commission to complete the rule-making process to implement the Dodd-Frank Act."
A financial-regulatory landscape that is in some ways largely unchanged since the 2008 financial crisis. When the senate passed the final version of Dodd-Frank, the main method by which reform was not implemented was to pass the buck to regulators, who could then dilly-dally for years and years before coming to non-decisions about putting new rules into place. Footdragging is a time-honored way of doing nothing. As a procrastinator, I know all about how this works.
Bernie is livid about the delay because of the role speculation has played in jacking up oil prices. And I can certainly understand why. When it comes to the price of oil, I like to know what the market thinks the "real" price is based on supply & demand considerations alone. There is always a lot of noise in the short-term price, but there is no doubt that the oil markets have become financialized, just like everything else in this Great Land Of Ours. Bernie believes trading paper barrels shouldn't be driving up prices at the pump, and I agree with him.
The Daily Ticker interviewed Sanders, who wants to pass a new law to get regulators to comply with the current law
... Vermont Senator Bernie Sanders is sponsoring the End Excessive Oil Speculation Now Act.
"The price of gas at the pump is outrageously high. Many people had thought this had something to do with supply and demand, that's not the case," Sen. Sanders tells me in the accompanying video. "It has everything to do with Wall Street speculation."
Rather than reinventing the wheel, the legislation, which has 5 co-sponsors, seeks to force the CFTC to impose regulations required by The Wall Street Reform and Consumer Protection Act.
"One of the reasons people are losing faith in the political process is even when we occasionally do something to represent working people, then that law is not implemented," Sen. Sanders says. "The reason for this legislation is to say [to the CFTC], 'you haven't done it, you were supposed to in mid-January. You're in violation of the law and we're going to make you do it.' We are going to have speculation limits."
This suggests what is called in philosophical circles an infinite regress. Bernie can pass a new law to get the CFTC to comply with the current law, which the CFTC can then ignore, and then Bernie can pass another law to get the CFTC to comply with the second law which requires them to comply with the first law, which the CFTC can then ignore, and then Bernie can pass a third law requiring the CFTC to comply with the second law ... and so on.
As usual, I have only one thing to say to Senator Sanders—
Good Luck, Bernie!
Here's the video.
Bernie's a pretty easy target at DOTE. The suffering honest guy who believes change is possible. I've been thinking about some of your enduring points Dave, especially (1) your characterization of some thinkers/writers as having "religious" views, (2) the tendency of people to need good outcomes (I think Gail brought up "normalcy bias"), (3) the observation that corruption is at the heart of our present situation. I listen when people I read, that make sense, have enduring points to make - I think these are yours. These points are exceptional descriptors of our world today - any body concerned about our future should look hard at your points rather than going off into a dream world of collapse, should we all be so lucky to have sudden collapse. Thanks for staying the course with your blog.
Posted by: JC | 06/21/2011 at 04:55 PM