October 13, 2011
We need Public Exchanges for drading of Derivatives, Swaps, CDOs and other financial instruments and Clearinghouses for the confirmed transfer of funds. Companies can still trade in derivatives, they just have to use their own profits to do so, and not consumer FDIC insured savings and federal loans at preferred rates. Wall Street banks, insurance companies and hedge funds place everyones life savings at risk when gambling in a $466.8 Trillion derivatives market.
The total combined notional amount outstanding of interest rate, credit, and equity derivatives at June 30, 2010 was $466.8 trillion
Regulate and tax all trades for derivatives, swaps and CDOs and make their assets and ownership transparent. Wall Street should not be allowed to use consumer FDIC insured assets to control commodity prices and have the ability to manipulate the price of oil, wheat and other commodities. That gouges consumers and hurts legitimate businesses such as airlines, truckers and farming companies that need stable prices and raises the price for gasoline at the pump by roughly $1.50/gallon.
When Gasoline reached $4-$5/gallon at the Pump in 2008 and then again in the spring of 2011 it was and is not because of supply and demand it was and is due to oil commodity derivative speculation of banks and investment funds including Goldman Sachs, J.P. Morgan Chase and Morgan Stanley. The CFTC reported that when oil prices climbed in 2008 to more than $140 a barrel, Wall Street speculators dominated the oil futures market. Goldman Sachs alone bought and sold more than 860 million barrels of oil in the summer of 2008 with no intention of using a drop for any purpose other than to make a quick buck. A single Wall Street equity fund: United States Oil Fund was able to gain rights to nearly a quarter of all oil deliveries for a month. ExxonMobil Chairman Rex Tillerson, testifying before a Senate panel this year, said that excessive speculation may have increased oil prices by as much as 40 percent.
Oil commodity speculation by Hedge funds and Wall Street Banks Goldman Sachs, J.P. Morgan Chase and Morgan Stanley that neither take delivery of or use oil, raises the price by 30-40% for drivers, airlines, farmers and truckers that need and must buy the oil. When trading in derivatives for legitimate industries that must use the products it's fine, but when Wall Street banks and hedge funds do it for the sole sake of raising prices to take a profit, it's gouging.
There is ample evidence to support strict regulation of derivatives and commodities by the SEC and CFTC, while protecting consumers and legitimate businesses that need to take delivery of and use commodities.