Washington, D.C. – July 23, 2014 – Better Markets President and CEO Dennis Kelleher issued the following statement today in response to the announcement that CFTC Commissioner Scott O’Malia will be joining derivatives industry group, ISDA:
“Killing public trust and reeking of conflicts of interest, senior government officials cashing in and influence peddling are out of control and must be limited by law.
“CFTC Commissioner O’Malia’s spin through the revolving door is a record setter: his self-promotion resignation letter was sent July 21st and the announcement of Mr. O’Malia joining ISDA, a leading derivatives industry group, as CEO was made just two days later, on July 23rd, 8 days before he even leaves the CFTC.
“This is why Americans are so disgusted with so many high ranking government officials and believe that Washington is in cahoots with Wall Street. Rather than protecting the public interest, they look like they are working for the industry in their government positions and then cashing in, getting what looks like an after-the-fact payoff from industry for services rendered while working in government.
“Those circumstances look particularly bad here. CFTC Commissioner O’Malia is joining one of the derivatives industry’s leading battering rams against the CFTC. ISDA has tried to kill much of financial reform that is so essential to protecting the American people from another financial crash.
“For example, in addition to fighting relentlessly in the rule-making process, ISDA is a lead plaintiff in two key lawsuits against the CFTC. In one, ISDA sued the CFTC to kill the position limits rule to end excess speculation and price volatility in the commodity markets, which affect the prices of everything from cereal to gas. Highlighting what appears to be a conflict of interest here, CFTC Commissioner O’Malia voted against the CFTC appealing a Federal District Court ruling that favored ISDA and was against the CFTC, which would have handed ISDA a huge victory and a quick kill of a key part of financial reform. Now, he’s going to be their CEO!
“That’s not all. ISDA is also a lead plaintiff in another lawsuit, which is attempting to prevent the CFTC from regulating overseas derivatives activities to prevent bailouts similar to the $185 billion bailout of AIG. This so-called cross-border rule is essential to protect U.S. taxpayers and the financial system from reckless overseas derivatives gambling, but ISDA is fighting to kill the rule and greatly limit the CFTC’s power and authority as well as the scope of financial reform.
“ISDA is doing this because it economically benefits its industry members who want to maximize their profits and bonuses. But, the CFTC is supposed to be an independent agency charged with implementing the law, standing up to industry’s narrow self-interest and protecting the American people from another devastating financial crash and another Great Depression. In particular, the CFTC was given the responsibility of bringing transparency, competition and regulation to what was a dark, unregulated derivatives market that invisibly incubated and spread the 2008 financial crisis throughout the world. That will cost the U.S. more than $12.8 trillion and has inflicted massive suffering across our country, which continues to this day in high unemployment, low growth, stagnant wages, tens of millions of underwater homes and so much more ongoing damage.
“The American people are not getting a big CEO-payday. They are still paying the bill for the economic catastrophe caused by Wall Street’s too-big-to-fail banks, which were — and are — all big derivatives dealers. They are all represented by ISDA and are supposed to be regulated by the CFTC.
“As the saying goes, there should be a law against it. It is past time for Congress to pass a law that requires no less than a 2 year cooling off period where senior government officials are prohibited from working, directly or indirectly, for the industries they are supposed to regulate or oversee. Cashing in and influence peddling are out of control and must be limited by law. The American public deserves no less.”
Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure thereby eliminating or minimizing the need for more taxpayer funded bailouts. To learn more, visit www.bettermarkets.com.