Senate Ag Committee Chairman Tom Harkin (D-Iowa) introduced legislation in the Senate on Thursday that would put all futures contracts under the regulation of the Commodity Futures Trading Commission. This has been an issue of serious focus for Harkin.
He contends that transparency is the best answer to the threat posed by derivatives. He calls it the Derivatives Trading Integrity Act which also eliminates the exclusion of swap transactions from CFTC oversight, “Every swap, every derivative, in the future will have to be traded on a regulated exchange.”
Harkin points to what he calls “casino capitalism” that "has gotten out of control and continues to damage the economy."
“As a consequence, the total outstanding face value of swaps has sky-rocketed to a high of some $531 trillion by this year, that’s 8.5 times the world gross domestic product which stands at $62 trillion,” he notes.
Harkin says the transactions were created without ever being in demand, “A credit default swap, or a collateralized debt obligation. Try explaining that to some rational person.”
With Congress getting ready to adjourn, Harkin does not expect his bill to go anywhere this year, but he wanted to “test the waters.” He intends to bring it up when the 2009 congressional session begins on Jan. 6.
Source: Brownfield Network