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Monday, November 30, 2009

Senator Cantwell opposes "casino capitalism"

Senator Maria Cantwell (D-WA) plans to make it harder for Wall Street to gamble with the public’s money. As the House of Representatives wraps up work on its financial reform bill, the Senate is crawling ahead with its own measure. Not too impressed with the House bill, Cantwell and two other senators introduced legislation this month to regulate what Cantwell sees as a continuing danger to the American economy, the derivatives market, or what she calls:
A cash cow hidden from public view and run with less oversight even than actual casinos.
You’re familiar with derivatives. You probably know them as “mortgage-backed securities” or “credit-default swaps.” These complicated investment vehicles were at least partially responsible for the financial crisis we’re now in and current attempts by Congress to regulate their use are looking weak. What could be affecting lawmakers' judgment? According to Cantwell:
Look no further than the powerful lobbying arm of the financial services sector, which has spent at least $220 million this year lobbying Congress to stave off new rules to prevent another collapse. That is over $500,000 in lobbying for every member of Congress, which might help explain why, to date, nothing has been fixed in our porous financial regulatory system. Americans want to know when Congress will put an end to the Wall Street's secret off-book gambling schemes and restore our capitalist system by requiring real transparency and true competition.
Cantwell's legislation would repeal a section of a 2000 law, the Commodities Futures Modernization Act, that exempted derivatives from regulation under state gambling laws. (Yes, this investment scheme is so reckless that gambling laws apply.) By repealing this exemption, state gambling regulators and attorneys general are free to examine derivatives trading and use their powers to protect the public from any unscrupulous activity.
The legislation Cantwell, Wyden and Sanders proposed today sends the message to derivatives dealers that if they somehow succeed in preserving regulatory loopholes at the federal level, they will still face tough regulatory oversight at the state level.
Within hours of introducing her legislation, Wall Street was already pushing Cantwell to abandon her plans. But Senator Cantwell isn’t willing to let “casino capitalism” bring down the American economy a second time. Let's bring derivatives out of the dim casino and into the sunlight of public scrutiny.

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