The International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association are suing the Commodity Futures Trading Commission to prevent the regulators from protecting the rest of us from insatiably greedy, reckless, economic-depression causing speculators.
The rule's supporters promote the rule as the nation's best hope for protecting consumers from speculative commodities trading. Over the last few years, the financial industry has increased its speculation in the futures market. At the same time, the prices of the underlying commodities have fluctuated wildly, driving up energy costs and food prices. The rule would set limits on traders accumulating position in commodities, including energy products and metals, like oil and gold. Previously, the limits covered only nine agricultural commodities, including corn.
Check this on the Commodity Futures Trading Commission under Brooksley Born. We have all been here before:
Born and the OTC Derivatives Market
Born was appointed to the CFTC on April 15, 1994 by President Bill Clinton. Due to litigation against Bankers Trust Company by Procter and Gamble and other corporate clients, Born and her team at the CFTC sought comments on the regulation of over-the-counter derivatives, a first step in the process of writing CFTC regulations to supplement the existing regulations of the Federal Reserve System, the OCC, and the National Association of Insurance Commissioners. Born was particularly concerned about swaps, financial instruments that are traded over the counter between banks, insurance companies or other funds or companies, and thus have no transparency except to the two counterparties and the counterparties' regulators, if any. CFTC regulation was strenuously opposed by Federal Reserve chairman Alan Greenspan, and by Treasury Secretaries Robert Rubin and Lawrence Summers. On May 7, 1998, former SEC Chairman Arthur Levitt joined Rubin and Greenspan in objecting to the issuance of the CFTC's concept release. Their response dismissed Born's analysis and focused on the hypothetical possibility that CFTC regulation of swaps and other OTC derivative instruments could create a "legal uncertainty" regarding such financial instruments, hypothetically reducing the value of the instruments. They argued that the imposition of regulatory costs would "stifle financial innovation" and encourage financial capital to transfer its transactions offshore. The disagreement between Born and the Executive Office's top economic policy advisors has been described not only as a classic Washington turf war, but also a war of ideologies, insofar as it is possible to argue that Born's actions were consistent with Keynesian and neoclassical economics while Greenspan, Rubin, Levitt, and Summers consistently espoused Austrian, neoliberal, and neoconservative laissez faire policies.
In 1998, a trillion dollar hedge fund called Long Term Capital Management was near collapse. Using mathematical models to calculating debt risk, LTCM used derivatives to leverage $5 billion into more than $1 trillion, doing business with fifteen of Wall Street's largest financial institutions. The derivative transactions were not regulated, nor were investors able to evaluate LTCM's exposures. Born stated, "I thought that LTCM was exactly what I had been worried about". In the last weekend of September 1998, the President's working group was told that the entire American economy hung in the balance. After intervention by the Federal Reserve, the crisis was averted. In congressional hearings into the crisis, Greenspan acknowledged that language had been introduced into an agriculture bill that would prevent CFTC from regulating the derivatives which were at the center of the crisis that threatened the US economy. U.S. Representative Maurice Hinchey (D-NY) asked "How many more failures do you think we'd have to have before some regulation in this area might be appropriate?" In response, Greenspan brushed aside the substance of Born's warnings with the simple assertion that "the degree of supervision of regulation of the over-the-counter derivatives market is quite adequate to maintain a degree of stability in the system". Born's warning was that there wasn't any regulation of them. Born's chief of staff, Michael Greenberger summed up Greenspan's position this way: "Greenspan didn't believe that fraud was something that needed to be enforced, and he assumed she probably did. And of course, she did." Under heavy pressure from the financial lobby, legislation prohibiting regulation of derivatives by Born's agency was passed by the Congress. Born resigned on June 1, 1999.
The derivatives market continued to grow yearly throughout both terms of George W. Bush's administration. On September 15, 2008, the bankruptcy of Lehman Brothers forced a broad recognition of a financial crisis in both the US and world capital markets. As Lehman Brothers' failure temporarily reduced financial capital's confidence, a number of newspaper articles and television programs suggested that the failure's possible causes included the conflict between the CFTC and the other regulators.
Born declined to publicly comment on the unfolding 2008 crisis until March 2009, when she said: "The market grew so enormously, with so little oversight and regulation, that it made the financial crisis much deeper and more pervasive than it otherwise would have been." She also lamented the influence of Wall Street lobbyists on the process and the refusal of regulators to discuss even modest reforms.
An October 2009 Frontline documentary titled The Warning  described Born's thwarted efforts to regulate and bring transparency to the derivatives market, and the continuing opposition thereto. The program concluded with an excerpted interview with Born sounding another warning: "I think we will have continuing danger from these markets and that we will have repeats of the financial crisis -- may differ in details but there will be significant financial downturns and disasters attributed to this regulatory gap, over and over, until we learn from experience."
In 2009 Born, along with Sheila Bair of the FDIC, was awarded the John F. Kennedy Profiles in Courage Award in recognition of the "political courage she demonstrated in sounding early warnings about conditions that contributed to the current global financial crisis". According to Caroline Kennedy, "...Brooksley Born recognized that the financial security of all Americans was being put at risk by the greed, negligence and opposition of powerful and well connected interests... The catastrophic financial events of recent months have proved them [Born and Sheila Bair] right." One member of the President's working group had a change of heart about Brooksley Born. SEC Chairman Arthur Levitt stated "I've come to know her as one of the most capable, dedicated, intelligent and committed public servants that I have ever come to know", adding that "I could have done much better. I could have made a difference" in response to her warnings.
In 2010, a documentary film Inside Job further alleged that the crafting of derivatives regulation was flawed from the Clinton administration on. Along with fellow whistleblower, former IMF Chief Economist Raghuram Rajan, who was also aggressively rebuked by the economic establishment, Brooksley Born was cited as one of the marginalized voices arguing that financial derivatives increase economic risk.
(Source: Brooksley Born. (2011, December 8). In Wikipedia, The Free Encyclopedia. Retrieved 19:39, December 11, 2011. Link above.)
I remember when that was going down. I couldn't believe how utterly stupid all the "conservatives" were being (still are; certain of them anyway) with all of their anti-New Deal policies and practices.
The only way for Barack Obama to even begin to redeem himself while in office includes taking up the mantle of Franklin D. Roosevelt and the New Deal. He must embark upon a New New Deal that will make FDR's pale by comparison. He must get the American people to give him the Senate and House that will take it to the banksters on Wall Street and elsewhere.
It's far from the only thing he must do, and it's no Christian solution; but if he's going to be the President of the US and be the leader of the most powerful secular force on the planet, then it's the least he can do in using any power whatsoever.
Naturally, I want the Christian Commons over all of it, but I speak out knowing that the rest of the world thinks in terms of the lesser of evils. If you are on that page, the banksters are as far from the lesser of evils as it gets. Mammon is their first love.
They need to repent of it; but if they don't (and they aren't so far that I can see), then a secular, coercive government is useless even under it's own letter (laws) unless it stops them completely and ASAP!