The SEC and CFTC adopted a final rule today that is a sellout to industry. That’s right: it’s a sellout to the very industry that
– caused the financial collapse just a few years ago;
– almost caused a Second Great Depression;
– required trillions in bailouts from taxpayers, the US Treasury and the Fed; and
– caused and continues to cause trillions of dollars in costs to everyone due to exploding debt and deficits, unemployment, foreclosures and so many other costs (collected here).
Don’t take my word for it. Just read this New York Times article: “Regulators to Ease a Rule on Derivatives Dealers.” It spells out the sad, sorry tale.
As that article (and others) make clear, this rule is an indefensible defeat for financial reform. It is also a poster child for the pernicious effect of industry’s army of lobbyists and the influence that the financial industry has at the regulatory agencies. The agencies’ duties are to enforce the law and protect our financial system and the economy from the reckless and risky activities of an industry that has proved time and again that it simply cannot control itself. This rule does the opposite: it protects the industry and puts everyone else at risk.
Tellingly, there is no independent factual or data-based reasons to support this one-sided, anti-reform rule. The changes made from a sensible proposed rule to this final rule result from little more than baseless, biased and self-interested industry assertions and claims. This should concern anyone who doesn’t want the industry’s hands in the taxpayers’ pockets when they look for more bailouts in the future.
Creating loopholes and gutting the law only puts taxpayers and the treasury at risk of more bailouts. Transparency and oversight are essential to taming the unregulated “anything goes” mentality and operations of the dark $700 trillion derivatives markets, which were at the core of the last financial crisis. Rather than shining a light on those activities, these agencies are giving the green light for market players to continue with business as usual. Dark, unregulated markets are in no one’s interest, other than predators.