“The CFTC’s action today on cross border application of the U.S. swaps rules is a disappointment and fails to adequately protect the American people from having to again bail out Wall Street and its unregulated or under-regulated overseas activities. The action today narrows the scope of the rules, carves out entire areas of application and delays key decisions for six months or more,” said Dennis Kelleher, CEO of Better Markets, a nonprofit organization that promotes the public interest in the financial markets. “Wall Street and its army of lobbyists will use the additional time to continue their war on financial regulation that may hurt their profits, but which will protect the American people from having to bail them out again,” Mr. Kelleher said.
“Just four years ago, Wall Street and its overseas activities almost caused the collapse of the global financial system. Those reckless, largely unregulated actions caused trillions of dollars in damage to the U.S. and inflicted economic wreckage across our country, much of which continues to this day,” said Mr. Kelleher.
“Few actions are more important to preventing that from happening again than the CFTC’s cross-border application of U.S .financial reform rules,” Mr. Kelleher said. “In today’s global electronic derivatives markets, getting financial reform rules in the U.S. right is only part of the battle. If the rules don’t also apply overseas, then U.S. firms will just move their businesses to unregulated off shore markets and avoid the rules that protect U.S. investors, markets and economy,” Mr. Kelleher said.
“If the damage done from unregulated or under-regulated financial activities overseas stayed overseas, that would be fine. But the near collapse of the financial system in 2008, as well as more recent events, proves that isn’t what happens. The off shore derivatives activities of AIG, Lehman Brothers, Bear Stearns, Citigroup, JP Morgan Chase and so many more have demonstrated that, when things go wrong, the U.S. taxpayers are going to be paying the bill,” Mr. Kelleher continued.
“The U.S. government and U.S. taxpayers stopped the last crisis and bailed out the global financial system. It wasn’t London or Brussels or Berlin or anywhere else. It was the U.S. That isn’t to say no one else did anything. They did, but the U.S. was in the lead, carrying the load and — without the U.S. doing that — the global system would have collapsed. That is almost certainly likely to happen next time as well and that is why U.S. financial reform rules must apply overseas if the derivatives activities that pose very serious risks to U.S. investors, markets or the economy are to be limited,” said Mr. Kelleher.
“Too often, international consideration has resulted in a race-to-the-bottom, with Wall Street and its allies playing countries and regulators against each other,” Mr. Kelleher observed. “That has to stop. Given that U.S. taxpayers are at risk for billions of dollars in bailouts and trillions of dollars in damages, the U.S. must lead a race-to-the-top, with strong, comprehensive financial reform rules that apply to overseas activities that threaten the U.S.,” Mr. Kelleher concluded.
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.