Vol. 37, No. 3
Stop Wall Street offensive against reform
Read this letter, addressed to members of Congress and signed by Maryknoll and other faith-based and human rights organizations, which urges Congress to stand up for transparency and accountability in the financial markets and support the full funding level of $308 million for the Commodity Futures Trading Commission (CFTC) in the President’s proposed 2013 budget.
Happy with their victory of passing the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which contains a number of strong reforms, many civil society organizations moved on to other battles. Yet in order to actually become law, the details of the Dodd-Frank Act must be defined by regulatory agencies. During this interim process, Wall Street financiers stepped up their lobbying efforts, and now are able to claim success: None of the significant reforms in Dodd-Frank have been implemented, and most are being watered down or are even in danger of being thrown out.
One key reform – limiting the amount of speculation in food and energy futures markets – would help lower and stabilize world food and energy prices. Congress stressed the importance of this change and gave only six months, rather than the standard one to two years, for the Commodities Trading Futures Commission (CFTC) to implement this rule. Despite the urgency, the CFTC was not able to define the new rule until last October, more than a year after the passage of Dodd-Frank.
Even though the limit is ridiculously high (no single investor can own more than 25 percent of an entire commodity market at one time), Wall Street has sued the CFTC to reject the limit. That case is now being considered in federal court. A number of amicus briefs in favor of the law have been filed by senators and market analysts. If Wall Street's attempt is successful, it could have negative repercussions for other reforms like the Volker rule, which prevents banks that are insured by the federal government to trade in dangerous derivatives.
Wall Street seems to be following the same plan that polluting industries used against the Clean Air Act. Even though the law was passed in the early 1990s, industry was able to hold up its implementation through a series of lawsuits. Now, more than 20 years later, many important parts of the Clean Air Act have yet to be applied. If Wall Street is able to delay the financial reforms, there is little doubt that another global financial and economic crisis will result.
House Republicans have joined the fray, introducing a number of bills aimed to weaken Dodd-Frank reforms by providing more exemptions and other loopholes to the rules.
Underfunding regulatory agencies is another strategy to weaken the financial reforms: If the improvements are actually implemented, the CFTC will be responsible for regulating hundreds of trillions of dollars instead of the many billions of dollars it now controls. In light of the larger workload for the CFTC, the administration has called for an increase for the agency's budget, from $205 million to $308 million, a difference that would not even be a rounding error in the larger government budget. The proposed House budget would actually cut the agency's current budget.
Faith in action:
Call or write your legislators telling them not to be penny wise and pound foolish – 1) fully fund the CFTC at $308 million in order for it to help stabilize food and energy prices; and 2) do not vote for any bill that grants more exemptions from Dodd-Frank reforms.
For more information, visit Stop Gambling on Hunger.§