FOR IMMEDIATE RELEASE
DATE: October 14, 2009
AFR: House Bill On Derivatives Is Not Enough;
All Transactions Need to Be Transparent
Washington, DC – Americans for Financial Reform released the following statement following the House Financial Service Committee mark-up on Derivatives.
Heather Booth, Director, Americans for Financial Reform: While we appreciate the work Chairman Frank is doing to bring financial reform legislation to the floor, Americans for Financial Reform, and our 200 coalition members, support opening up the derivatives markets with exchanges and insisting on tough prohibitions against fraud, manipulation, and excessive speculation. The draft and proposed amendments do not meet the necessary standards of transparency and accountability. It does not do enough to protect taxpayers and our economy.
Unregulated derivatives trading was a major cause of the economic crisis and loss of homes, jobs and retirement savings. But the big Wall Street firms who make tens of billions of dollars from these trades – and then left the taxpayers to clean up their mess – want to continue with business as usual.
The big banks are throwing their weight around Congress, to get it to look the other way and let Wall Street continue these practices. According to data from the Center for Responsive Politics (CRP), the four largest banks alone contributed $16.9 million to federal political campaigns and spent $23 million lobbying in 2008.
We cannot continue to have an unguarded henhouse, or hardly better, the fox guard the henhouse. Real reform requires that virtually all derivatives trading be conducted on fully regulated, public, transparent exchanges that ensure capital adequacy. Regulations must subject all marketers of derivatives instruments to registration, business conduct rules, complete record keeping, and strict capital adequacy requirements. In addition there need to be tough prohibitions against fraud, manipulation, and excessive speculation. Sadly, the House bill, in its current form, fails to meet these basic standards.
Americans for Financial Reform will now work to strengthen this bill in order to achieve real reform of the opaque, highly leveraged transactions that exposed our economy to systemic ruin, our citizens to the loss of jobs and homes; and burdened taxpayers with the unfair and unsustainable role of backer of last resort before it reaches the House floor.