Better Markets President and CEO Dennis Kelleher was asked to testify at a key Senate hearing on June 25, when he reminded lawmakers that America’s top five gigantic, derivative-dealing banks must be properly regulated, serve Main Street instead of threatening it, and never again get taxpayer bailouts.
Almost everything you buy (gas, cereal, coffee, etc.) is connected to derivatives, about 90% of which are controlled by the five biggest Wall Street banks. If those gargantuan derivatives-dealing banks are not properly regulated, then they play with the prices that hardworking Main Street Americans pay for almost everything. They make the prices bounce up and down. This so-called “volatility” is great for Wall Street bonuses, but incredibly bad for consumers, farmers and the real economy that makes the goods and services that people want and need.
Derivatives were at the core of causing and spreading the catastrophic 2008 financial crash, when all of those gigantic banks and derivatives dealers got trillions in taxpayer and government bailouts. That’s why Warren Buffett called derivatives “weapons of mass financial destruction.”
Speaking before the Senate Committee on Agriculture at their hearing on “The State of the Derivatives Market and Perspectives for Reauthorizing the Commodities Futures Trading Commission (CFTC),” Kelleher opened by reminding everyone that, when thinking about the CFTC, they should be thinking about the lessons of the crash and avoiding more taxpayer bailouts of Wall Street’s derivatives dealers. You can read his opening statement here.
If you really want to know a lot about the state of derivatives and why regulating them properly is so important, you can read Kelleher’s full written testimony here. If you want to watch the full hearing and see the senators and other witnesses, that can be viewed here.