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In a city soaked in special interest money, being independent and speaking truth to power often is not very popular. Standing up for consumers and investors, economic, social and racial justice, and financial stability (meaning no special treatment or bailouts for the country’s largest financial firms) threatens not just Wall Street’s biggest financial firms, but also their many Washington supporters. That’s why it can be very lonely fighting against those bending or breaking the laws and rules to favor special interests over the public interest. FTX being the most recent example.
While the crypto industry generally and FTX and its former CEO Sam Bankman Fried in particular were buying dozens of people and organizations with tens of millions of dollars, we have been a leading crypto critic and vocally opposed FTX, which wanted to radically and dangerously change the structure and operations of commodity clearing houses. Recognizing how important and influential Better Markets is (having participated in more than 125 rulemakings at the CFTC alone), FTX offered Better Markets “$1 million or more,” but only if we supported its Application at the CFTC – basically a bribe. Even though that is more than 25% of our annual budget, we refused to sell out and take FTX’s money, and we continued to aggressively oppose them, including in a face-to-face meeting with Sam Bankman Fried and his team of lobbyists.
Having not stuffed our pockets with cash, we weren’t blinded by FTX’s money or riches like so many others, including blue chip venture capital firm Sequoia Capital which thought he was a “genius” and said his “intellect is as awesome as it is intimidating.” I don’t know who they met with, but we didn’t find Sam Bankman Fried very impressive. His answers to basic questions were non-responsive, weak, incomplete, and, overall, non-persuasive. We didn’t know he was running a Ponzi-scheme, misusing customer funds, or leveraged to the brink of bankruptcy, but it was quickly obvious that he was just another huckster with a dangerous and predatory proposal trying to hide behind the pixie dust of claims of “innovation.”
Being a critic of FTX and Sam Bankman Fried is pretty popular now, but it was very lonely a very short time ago. Worse, the power and influence of crypto and even FTX still continues in Congress and at the CFTC, which is still pushing FTX’s number one legislative priority! You can read more about that and the many FTX and crypto-related issues at our dedicated webpage here.
As a nonprofit organization, we are entirely dependent on the generosity of supporters like you and are deeply grateful for the support of so many of you who make what we do possible. This Giving Tuesday, please help us continue to be an independent counterweight to the financial industry.
Co-founder, President, and CEO Better Markets
From TV, radio, and print — Better Markets’ views on all matters related to finance the economy have been sought after and featured in major news outlets. Here are our top hits from November.
“Bragging about being the best toll collector on the corporate crime highway is like a police department bragging about the number of speeding tickets it gives to escaping bank robbers – that approach won’t punish, deter, or stop lawbreaking.”
“The crypto industry is following the standard playbook for advancing special interests in Washington, including using all the levers of the influence industry. One of the most pernicious parts of that is the revolving door, where former officials essentially sell out their public service by using their access and influence on behalf of their private clients.”
SEC Had a Record year for Enforcement Actions
“That need is especially strong here given the widespread violations involving senior employees. The public deserves an explanation as to why Wall Street executives and managers continue to get a pass.”
The Crypto Meltdown Coud Have Been So Much Worse
“The only reason we do not currently have a financial crisis, with a crash and with bailouts, is because regulators have withstood enormous pressure to allow interconnection and linkages between the crypto activities and the core of the financial and banking system.”
Better Markets has stood against the crypto wave and asked the tough questions. This includes voicing our opposition to FTX’s proposal to offer non-intermediated, margined clearing of Bitcoin futures products. In this fact sheet, we detail several key points about the FTX debacle.
ACTIVITIES AT THE REGULATORY AGENCIES
The Federal Reserve’s Late Friday Admission That its Policies are Risking Financial Stability Does Not Go Far Enough
The Federal Reserve’s latest semi-annual Financial Stability Report finally admitted something we have been saying for a long time—its policies are causing risks to financial stability, the economy, and the livelihoods of all Americans.
ACTIVITIES AT THE FEDERAL COURTS
Each month our legal team outlines some of the top cases we’re keeping an eye on, the Amicus “Friend of the Court” Briefs we have filed, and why everyone with a bank account, credit card, mortgage loan, or retirement loan should be interested in those cases.
With the November elections right around the corner, October is a month many Members of Congress spend back home on the campaign trail. However, there have still been important developments on Capitol Hill, including the following:
With the midterm elections behind us there is a clear view of how Congress will look in 2023. The Senate will remain with a Democrat majority, even with the Georgia runoff election results pending, and the House of Representatives has flipped to a slim Republican majority. An upcoming divided Congress will make it much harder for legislation to pass, but there is still a full agenda, including several must-pass bills that will need to be signed into law before the end of the year. November was a busy month with important oversight hearings, and many Members of Congress responding to the FTX news and addressing concerns with the wider crypto landscape.
Bank Regulators Oversight Hearings
On November 15th and 16th the Senate Banking Committee and the House Financial Services Committee conducted oversight hearings with the nation’s banking regulators: the Fed’s Vice Chair for Supervision Michael Barr, the FDIC Acting Chair Martin Gruenberg, the OCC Acting Comptroller Michael Hsu, and the National Credit Union Administration Chair Todd Harper. These are important opportunities for lawmakers to directly question banking regulators on a variety of issues that are affecting banks, banking, and Main Street families.
A major topic of discussion at the hearings was crypto and the collapse of FTX. The banking regulators responded by noting that crypto is largely separated from the traditional banking system, and highlighting their work to ensure that consumers are protected from fraud and abuse.
Members of Congress also pressed the regulators on what they are doing about climate related risks to the banking industry, strengthening of the Community Reinvestment Act to promote a fair housing market, and the impact that bank mergers can have on vulnerable communities.
Senators Press FTX for Answers
Senators Dick Durbin (D-IL) and Elizabeth Warren (D-MA) sent a letter to FTX and Sam Bankman-Fried seeking answers to how FTX collapsed. In the letter the lawmakers ask for information from FTX on how their liquidity crisis occurred with a complete accounting of any customer funds transferred out of FTX, and how an estimated $1.7 billion in customer assets went missing. Sens. Durbin and Warren have long been advocates to ensure that the crypto industry has strong oversight, and more is being done to protect consumers.
Members of Congress Respond to FTX Collapse
Following the collapse of FTX earlier this month, Sen. Sherrod Brown (D-OH), Chairman of the Senate Banking Committee, released a statement calling on regulators to look into FTX’s collapse to fully understand what could have been done and ensure that we prevent harm to consumers and protect the stability of the banking system.
Committee leadership in both the House Financial Services Committee and the Senate Agriculture Committee, which has authority over the CFTC, have called for Congressional hearings to investigate what went wrong and what more could have been done to protect consumers from FTX’s bankruptcy.
IN CASE YOU MISSED IT
In addition to being on CNN International, Dennis Kelleher was on ABC News’ Nightline to discuss the FTX collapse and crypto.