Forces of Darkness Never Rest
Courtesy of Lynn Parramore at New Deal 2.0
Yesterday on Counterpunch, Andrew Cockburn (co-producer of American Casino) gave voice to biggest worry in the financial reform movement today, namely, that the bill creeping through Congress will leave a loophole for derivatives big enough to drive a truck through.
As Cockburn notes, it has been “the hope and aspiration of reformers, and even, professedly, of the Obama Administration, to enforce trading in such derivatives as the infamous Credit Default Swaps onto exchanges where trading activity, pricing, would be visible for all to see. That’s what Congressman Barney Frank heralded for the bill gestating in his Financial Services Committee; that’s what Congressman Colin Peterson claimed for the amendment to Frank’s bill that emerged from his House Agriculture Committee.”
But is it happening? Doesn’t look like it, due to what Cockburn has referred to as a “poisoned loophole” that would allow “‘any voice brokerage facility,’ i.e. two people talking on the phone,” to continuing doing business in the dark. There are also serious questions about what, exactly, will count as an “exchange.” A report on these concerns penned by Cockburn made the rounds on Capitol Hill, and his ideas seemed to be getting traction. But that all came to a screeching halt over the weekend. A ‘friendly veteran’ wrote to Cockburn: “…It appears the forces of darkness never rest; the House Rules Committee has posted what is likely to be the new derivatives section of the House financial reform bill.”
The upshot is this: a new definition of an ‘alternative swap execution facility” has been created, which defeats the hope of transparency and exchange-like trading. The winners? Banks like JP Morgan, which raked in a whopping $3 billion from derivatives last quarter.
Click here to read full text of Cockburn’s post.
