Sunday- Obama's Plan calls for oil crackdown ending Enron Loophole

[Ichingcarpenter]

With the cost of gas a top issue in the presidential campaign, Sen. Barack Obama (D-Ill.) on Sunday will announce a plan to crack down on oil speculation by tightening regulations on energy traders.
The announcement is further evidence an Obama administration would take an activist, populist approach to regulating business.

Obama wants to close a loophole in federal law that exempts some energy traders from regulations that govern other exchange-traded commodities. Democrats call this “the Enron loophole,” because it benefited the Houston energy-speculation firm that collapsed in an accounting scandal.

The Obama campaign accuses Phil Gramm – the former U.S. senator from Texas, who’s now a McCain campaign co-chair and economic adviser – of helping insert the exemption. Gramm's wife, Wendy, was a member of the Enron board of directors.

http://www.politico.com/news/stories/0608/11252.html
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Here is the text of an announcement Barack Obama will relase later today calling for a crackdown on "excessive energy speculation":

CHICAGO — Senator Barack Obama today announced his plan to crack down on excessive energy speculation and fully close the “Enron Loophole” to ease the impact skyrocketing gas prices. The Enron Loophole was created by McCain campaign co-chair Phil Gramm at the behest of Enron — just one example of the special interest politics that put the interests of Big Oil and speculators ahead of the interests of working people. And the American people have seen the results: record corporate profits while Americans pay record prices at the pump.

“For the past years, our energy policy in this country has been simply to let the special interests have their way — opening up loopholes for the oil companies and speculators so that they could reap record profits while the rest of us pay $4.00 a gallon,” Senator Obama said. “My plan fully closes the Enron Loophole and restores common-sense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future.”

Barack Obama: Cracking Down on Excessive Energy Speculation to Ease the Impact of Record Oil Price Increases

Our economy is reeling from a historic run-up in oil prices. The price of crude oil has climbed from under $50 a barrel to an all-time high of nearly $140 in less than 18 months. American consumers are feeling the impact of these record prices at the gas pump, the grocery store, and in everyday purchases as well. At a time when families are already struggling with soaring healthcare costs, stagnant wages and record declines in housing values, these record energy prices are turning the middle-class squeeze into a devastating vice-grip for millions of families.

Barack Obama understands that while many factors are contributing to record oil prices, we must do everything we can to help ease the burden on struggling families in the near term while putting in place policies like conservation, development of alternative fuels and investments in new technologies to reduce our dependence on foreign oil and reduce oil consumption by 35 percent, or 10 million barrels, by 2030. He is particularly concerned that unregulated energy speculators may be distorting the market by making excessive bets on the future price of oil. Independent experts across the political spectrum have argued that excessive speculation in oil futures is contributing to high energy and food prices. Barack Obama understands importance of a vibrant oil futures market to help producers and buyers hedge against swings in the price of oil. But he believes that when an absence of common sense rules allows a few energy lobbyists and speculators to undermine the public confidence in the integrity of the market , we need common sense changes to restore market fundamentals so they work for working families. Today, he called for stepped-up oversight of energy markets to help stabilize oil prices and ease the burden of high energy prices for American families.

The Obama Plan to Crack Down on Excessive Energy Speculation

Ø Fully Close the “Enron Loophole”: One of the reasons our energy market is particularly vulnerable to excessive speculation is the so-called “Enron Loophole.” This provision was slipped into law by Senator Phil Gramm in late 2000 at the behest of Enron lobbyists to exempt some energy traders from the regulations and public protections applicable to exchange-traded commodities. As a result, the Commodity Futures Trading Commission (CFTC) is unable to fully oversee the oil futures market and investigate cases where excessive speculation may be driving up oil prices. This regulatory gap is dangerous because: 1) the absence of government oversight has the potential to facilitate abusive trading or price manipulation. And 2) the failure of a large derivatives dealer could trigger disruptions of supplies and prices in energy markets. As President, Barack Obama will go beyond the changes included in the recently-passed Farm Bill and fully close the Enron loophole by requiring that U.S. energy futures trade on regulated exchanges. He will call for new, disaggregated data on index fund and other passive investments to increase transparency and oversight of the growing number of institutional investors participating in commodities futures markets. And he will support legislation directing the CFTC to investigate whether additional regulation is necessary to eliminate excessive speculation in U.S. commodities markets, including higher margin requirements and position limits for institutional investors.>>>>>snip more

http://www.politico.com/news/stories/0608/11253.html

[Coexist]

1. .

[WhiteTara]

2. nice! n/t

[Ichingcarpenter]

3. I thought so too! n/t

[flpoljunkie]

4. Thank you, Barack Obama!

[RamboLiberal]

5. K&R - I was hoping since KO's report this week Obama would

make this an issue!

[truthisfreedom]

6. Read this too...

Greenberger: Well, the reason it's hard to figure out is about 30 percent of our crude oil energy futures are traded in what is called a dark market -- that is a market that was deregulated in December of 2000 at the behest of Enron. Prior to that legislation being passed, all energy futures traded in the United States or affecting the United States in a significant fashion were regulated by United States regulators under a very careful regime that had been perfected over about 78 years and many observers believe that because those markets are not being policed, malpractices are being committed and traders are able to boost the price virtually at their will.

Ryssdal: You're not really telling me that seven years on, we're still paying the price for Enron, are you?

Greenberger: Well, this has been called the "Enron Loophole" and there are many legislators working very hard to close that loophole. There is tremendous concern about this on Capitol Hill and on a bipartisan basis, people are drafting legislation to try and get a handle on this and not eliminate speculation, but bring the speculation under the kind of time-tested controls that were used until Enron had its way and amended the law to escape traditional tested regulation on speculative activities.

http://marketplace.publicradio.org/display/web/2008/06/16/cftc/