November 16, 2010
One of President Obamas major reforms, The Wall Street Reform and Consumer Protection Act, HR4173, was passed to ensure that transparency and accountability exist within the derivatives market. As your commission conducts the rulemaking process, please ensure that the many actors that caused our recent economic collapse, the hedge funds, Big Banks, and others, dont water down the regulations so the derivative market is allowed to once again derail Americas economy.
The Wall Street Reform Act requires creates clearinghouses that all derivatives must pass through to be sold. These clearinghouses were created to ensure that an independent third party monitored derivative transactions and created both accountability and transparency over derivative transactions. But the independence of these clearinghouses is under attack by the Big Banks and Hedge Funds they are lobbying to gain control of these clearinghouses through the implementation of the 5% rule.
Through the implementation of the 5% Rule, Big Banks working in concert could gain ownership control of the clearinghouses that the derivative transactions pass through. This would allow the wolves to guard the henhouse. This is simply unacceptable.
The 20/40 Rule follows the intent of HR4173 by limiting the ownership of a clearinghouse by any number of big banks to 40% overall, which prevents them from holding a controlling interest in any clearinghouse. The 20/40 Rule will ensure that the clearinghouses are independent and the derivatives transactions that pass through them will be monitored in a transparent manner.
Please dont allow a repeat of the financial debacle created by the Big Banks and Hedge Funds through their manipulation of the derivative market. Ensure that the derivatives market is monitored by independent clearinghouses, which are not owned and operated by the Big Banks. Uphold the 20/40 Rule and get rid of the 5% Rule being lobbied by the Big Banks.