DATE: November 10, 2009
Heather Booth, Director, Americans for Financial Reform: “Americans for Financial Reform (AFR), and our over 200 coalition partners, thank Senator Cantwell for introducing legislation today to close the derivatives loophole.
Senator Cantwell calls the derivatives “a sophisticated form of gambling,” with justification. As a result she proposes legislation that will allow states to apply gambling laws to derivatives that are not regulated at the federal level. This way, either these products will be covered under the broad financial reform package or they will be covered under the state protections Senator Cantwell is proposing.
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.
Today, Senator Cantwell stood up to the big banks and for the taxpayers.
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.
Our overall goal is to have virtually all derivatives tradedon fully regulated, public, transparent exchanges that ensure capital adequacy. If there are any loopholes that the largest banks and swaps dealers fight for, Senator Cantwell’s proposal would mean they would be subject to laws as strict as those in Las Vegas covering casinos. This further names and recognizes these products for the risky betting operations that they really are.
We appreciate Senator Cantwell’s leadership and creativity and honesty, in naming the problem for what it is and proposing a solution that matches it. This is a good complement to the draft bill that Senator Dodd released on Tuesday.
We look forward to working with both Senators Cantwell and Dodd to pass these key elements of real financial reform.”
###