Incoming House Ag Committee Chairman Hires Lobbyist to Kill Derivatives Reform
According to ThinkProgress, incoming Frank Lucas (R-OK) announced the hire of Ryan McKee as the senior staffer to oversee the Commodity Futures Trading Commission (CFTC). Of course, what this signals is an all out attack on the regulations of the very vehicles that caused the financial crisis and and sub prime mortgage scandal.
While businesses use derivatives to protect themselves against sudden, unexpected commodity price hikes, perhaps untold trillions of dollars worth of derivatives were sold over the last decade in the so-called dark market. This dark market is one in which the buyer never knows the actual market worth of a product, relying upon the honesty and advice of their broker. As many businesses are learning – and recent news reports state – the derivatives market, controlled as it is by a few large firms, may not be providing the best prices to their customers.
The CFTC, in the new Financial Reform legislation, has the responsibility to oversee the setting up and trading on the new derivatives exchange to insure honesty and open competitiveness in pricing so buyers know the real value of their purchases. Originally, some businesses feared supporting this legislation, expecting their prices to be hiked in the future or because of expected broker retaliation for supporting the legislation. But recent reports indicate more businesses who buy commodity derivatives favor the clearinghouses and exchange as a way to know if they’re getting the best price or if the price is being hiked by a broker attempting to make more profit for his company at the expense of the buyer.
As the new rules go into effect, GOP members of Congress are determined to defang, if not overturn, the new reform legislation. Just as with the new PPACA, the CFPC funding measure was left out of the Continuing Resolution just passed by the lame duck Congress. By not increasing the needed funding, the CFPC will not be able to carry out its regulatory functions under the new law – which is exactly what the large trading houses and hedge funds on Wall St want. No regulatory oversight leaves them free to do whatever they want, as we’ve seen so clearly during the last two years in the housing and municipal derivatives debacle which has bankrupted thousands of families as well as costing municipalities all across the country and countries such as Iceland and Greece billions of dollars.
The meme used to be that whatever is good for Wall St. was good for American businesses and America. However, that’s no longer the case as this recession, the continuing foreclosure fiasco, and the growing number of ponzi schemes and insider trading scandals exemplify.
The bad guys will always go where the money is, and right now that’s Wall St. Without good rules and alert, honest regulators the bad guys – or the merely incompetent egotists – will raid the market, causing another financial crisis from which the United States – and the world – may not be able to recover. As a financial writer whom I follow often writes, Congress – both Dems and GOP – is as corrupt as Wall St., and in protecting Wall St. from sensible regulations they are setting the country up for another fall if not complete economic destruction.
American voters who turn a blind eye, either through ignorance or political ideology, to the GOP plan to roll back or eliminate the recently enacted – though far from adequate – financial reforms need to wake up to the severe hazards being posed by a Wall St funded GOP to their financial freedom and security.
Call, write, and email your Congress members that rolling back financial regulations is not in your best interests and you will not support them if they choose to eviscerate the modest regulations enacted in the financial legislation.
Tell them financial regulation is not a left or right, Democrat or Republican, issue but an American financial safety and security issue.
A few days ago, incoming Agriculture Chairman Rep. Frank Lucas (R-OK) announced the hire of Ryan McKee as the senior staffer to oversee the Commodity Futures Trading Commission. McKee is currently a lobbyist working for the U.S. Chamber of Commerce’s division dedicated to deregulating complex derivatives products. In her new role working for Lucas, McKee will be liaising with regulators in charge of implementing new rules under the Dodd-Frank Wall Street reform law to overhaul the over-the-counter derivatives market.
As ThinkProgress reported, the Chamber, which is funded by AIG, JP Morgan, CitiGroup, and other financial interests, took the lead role in fighting to defeat Wall Street reform efforts. Last year, the Chamber organized a conference call with other financial industry lobby groups and bank lobbyists to coordinate their efforts. As Tim Fernholz reported, McKee made clear that she was fighting to “kill” financial reform:
“We want to make sure that we hold all the Republicans and are able to influence enough Democrats to have a working majority to kill this thing outright or modify it to the point where it’s palatable to the business community,” Jason Matthews, the Chamber’s director of congressional affairs, told the callers. Ryan McKee, a senior director at the Chamber’s Center for Capital Markets, was even more direct in response to a question from an caller: “We’re fundamentally trying to kill this,” she said.
To undermine the new rules created by the Dodd-Frank law, the Chamber recently launched a new website dedicated to smearing the [popular] new Bureau of Consumer Financial Protection [CFTC].
The Wonk Room’s Pat Garofalo has noted that Lucas and other Republicans on the Ag Committee have already signaled that they will seek to delay implementation of new derivatives regulations. Republicans raised eyebrows recently by proclaiming that they intend to “serve the banks” rather than regulate them. By hiring bank lobbyists like McKee to oversee reform, it’s clear Republicans plan on fulfilling that promise to undermine reform.
* Bracketed information is mine.