posted
The Commodity Futures Modernization Act of 2000 or CFMA (H.R. 5660 and S.3283) is United States federal legislation which repealed the Shad-Johnson jurisdictional accord, which had banned single-stock futures in 1982. The legislation also provided certainty that products offered by banking institutions would not be regulated as futures contracts. This act was incorporated by reference into H.R. 4577, an omnibus spending bill. It was passed by the 106th United States Congress and signed by President Bill Clinton on December 21, 2000; the legislation thus became law as a part of H.R. 4577 - Public Law 106–554, §1(a)(5).
The act has been cited as a public-policy decision significantly contributing to Enron's bankruptcy in 2001 and the much broader liquidity crisis of September 2008 that led to the bankruptcy filing of Lehman Brothers and emergency Federal Reserve Bank loans to American International Group[1] and to the creation of the U.S. Emergency Economic Stabilization fund.
Legislative history The "Commodity Futures Modernization Act of 2000" (H.R. 5660) was introduced in the House on December 14, 2000 by Rep. Thomas W. Ewing (R-IL) and cosponsored by Rep. Thomas J. Bliley, Jr. (R-VA) Rep. Larry Combest (R-TX) Rep. John J. LaFalce (D-NY) Rep. Jim Leach (R-IA) and never debated in the House.[2]
The companion bill (S.3283) was introduced in the Senate on December 15, 2000 (The last day before Christmas holiday) by Sen. Richard Lugar (R-IN) and cosponsored by Sen. Peter Fitzgerald (R-IL) Sen. Phil Gramm (R-TX) Sen. Chuck Hagel (R-NE) Sen. Thomas Harkin (D-IA) Sen. Tim Johnson (D-SD) and never debated in the Senate.
The Republican leadership of the House incorporated "The Commodity Futures Modernization Act of 2000(H.R. 5660)" by reference, as Section 1(a)(7), in a long and complex conference report to the 11,000 page long "2000 omnibus budget bill" formally known as "The Consolidated Appropriations Act for FY2001(Labor, Health and Human Services, and Education Appropriations Bill) (H.R. 4577)." 157 Democrats and 133 Republicans voted for the appropriations bill. 51 Republicans and 9 Democrats opposed the appropriations bill vote results in the house. The Senate version passed by "Unanimous Consent." President Clinton signed it into Public Law (106-554) on December 21, 2000.
Enron loophole
The Commodity Futures Modernization Act of 2000 has received criticism for the so-called "Enron loophole," 7 U.S.C. §2(h)(3) and (g), which exempts most over-the-counter energy trades and trading on electronic energy commodity markets. The "loophole" was drafted by lobbyists for Enron working with senator Phil Gramm[3] seeking a deregulated atmosphere for their new experiment, "Enron On-line."[4]
Several Democratic legislators introduced legislation to close the loophole from 2000-2006[5][6] but were unsuccessful.
In September 2007, Senator Carl Levin (D-MI) introduced Senate Bill S.2058 specifically to close the "Enron Loophole" [7] This bill was later attached to H.R. 6124, the Food, Conservation, and Energy Act of 2008, aka "The 2008 Farm Bill". President Bush vetoed the bill, but was overridden by both the House and Senate, and on June 18, 2008 the bill was enacted into law.[8]. One specific reason behind its introduction was to address the record high oil prices of the 2000s energy crisis.
The prohibition on single-stock futures and narrow-based indices that had been in effect until the passage of this act was known as the Shad-Johnson Accord because it was first announced in 1982, as part of a jurisdictional pact between John S.R. Shad, then chairman of the U.S. Securities and Exchange Commission and Phil Johnson, then chairman of the Commodity Futures Trading Commission.[citation needed]
obviously this is a wiki article and as such should be considered a starting point...
i don't think there's any question that this was a significant contributing factor to the current crisis..
Gramm and Leach were involved in this bill and the Gramm-Leach-Bliley Act what repealed Glass-Stegall....
Gramm's wife Wendy Lee Gramm was, from 1985 to 1988, Gramm head of the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA). In 2002, OIRA solicited public recommendations for regulatory reform. Mercatus made 44 recommendations.
Gramm also serves as chair of the Texas Public Policy Foundation and a director of the Independent Women's Forum, a conservative women's group. She has sat on the boards of Enron Corporation, Iowa Beef Processors, Invesco Funds, Longitude, the Chicago Mercantile Exchange, and State Farm Insurance Companies.
most importantly? she headed the Commodity Futures Trading Commission from 1988 to 1993. After a lobbying campaign from Enron, the CFTC exempted it from regulation in trading of energy derivatives.
-------------------- Don't envy the happiness of those who live in a fool's paradise.
IP: Logged |
While he supported the first Gulf War in 1991, Leach voted against the authorization to use force against Iraq in 2002. He was one of only six House Republicans to vote against the resolution.[2] Once the Congress committed to war, however, he held that it would be folly to assume it could be funded with tax cuts and therefore he was the only Republican to vote against the 2003 tax cut.
Leach's position on the abortion issue upset activists on all sides. He supported the right of choice except during the third trimester but also held that public funding represented a complicit infringement on the values of too many Americans to be defensible. A supporter of stem cell research, he believed little could be more pro-life than invigorating science to advance cures to extend and ennoble life itself.
Leach played a pivotal role in the House's investigation of the Whitewater scandal. In the 1980s he had objected to political misjudgments that lengthened and deepened losses in the savings and loan industry. Accordingly, he felt there should be accountability outside and within the financial services industry. Because criminal referrals had been lodged by a federal agency against President Clinton, his wife, and their partners in a real estate venture for their role in the failure of a modest-sized Arkansas S&L, Leach as chairman of the House Banking Committee held four days of hearings (all in the same week) on the causes and consequences of the failure. While federal taxpayer losses (approximately $70 million) associated with this particular S&L were not as large as with bigger institutions around the country, no S&L anywhere failed with a higher percentage of losses relative to assets than the one in Arkansas.
In the end, the Independent Counsel brought more than 50 criminal convictions related to the failed S&L, including cases against Clinton’s successor governor, Jim Guy Tucker, and his business partners in Whitewater.
Leach believed in the appropriateness of public disclosure but never thought the crimes surrounding the failure of the Whitewater-tied S&L should have been considered in an impeachment framework because the Constitution precisely holds that the impeachment process relates to acts committed in federal office. Like many in Congress, he was surprised that the Justice Department chose to refer certain sex-related charges to Kenneth Starr, the Whitewater Independent Counsel, and even more so when Starr chose subsequently to refer certain of them to the Congress. But in what he described as a close judgment call, Leach voted for the article of impeachment that related to felonious lying under oath.
posted
yeah there's smoking guns lying all over the place..
people say this was the "perfect storm"
nobody beleived all this "bad stuff" could happen at once, yet it did.
don't forget all those Enron people were scattered through the banks after Enron collapsed.. the banks then went into trading oil heavy too...
Barclays was a big player, they made a margin call on one of their trading customer/partners, SemGroup, and Sem Group lost 2.5 billion dollars shorting oil...
to rack up $2.5 billion in losses Semgroup would need to have shorted 50 million barrels of crude oil at $100, then lost roughly $50 on each barrel....
they were leveraging and so was everybody else at way too high a level.... and who exended that leverage? people that didn't even have the money to lend
that's how all the money dispappeared...
-------------------- Don't envy the happiness of those who live in a fool's paradise.
IP: Logged |
UBBFriend: Email this page to someone!
Printer-friendly view of this topic
