Dr. King and Economic Justice ~ Financial Reforms Could Have Prevented Economic Crisis

Commodity Markets Oversight Coalition, Americans for Financial Reform Call for Reforms that Could Have Prevented Economic Crisis and Commodities Bubbles

Washington – The Food, Conservation and Energy Act of 2008 provides a beginning framework for an ongoing dialogue for financial reform. Black Agriculture in the 21st Century seeks to marry our ancient agricultural heritage with future scientific mathematical financing to provide greater access to “give us our daily bread and specialty crops from the farm gate to the dinner plate.”

The spirit of Rev. Dr. Martin Luther King, Jr. birthday shares his comments to the proposed necessary changes, “True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring.”

Nationwide advocates for financial reform have formed a powerful partnership with business interests ranging from heating and motor fuels retailers to cotton marketers, and trucking companies to airlines, and this new alliance is calling on Congress and Federal Regulators to bring derivatives out of the shadows and into the daylight.

"The biggest banks and financial services companies have tried to paint the battle over financial reform as a fight against business and free enterprise. This alliance with some of the most important business groups in the country shows how clearly this is not the case," said Heather Booth of Americans for Financial Reform. "Business that use derivatives for legitimate management of risk are hurt along with the rest of the economy when big banks are allowed to make reckless bets that must be paid off by the taxpayers."

Need for Congressional Action

"If Congress is serious about fixing the economy and creating jobs, it's time for them to get serious about controlling the casino that has become our commodities markets," said Sean Cota, owner of a small family-run heating fuel business in New England and a representative of the Commodity Markets Oversight Coalition.

"Unchecked speculation leads to volatile markets and higher prices for oil, natural gas, wheat, and other commodities. That hurts businesses and consumers." Under current law, certain kinds of complex financial transactions take place with no transparency and without any Federal oversight. These include the credit-default swaps on mortgage -backed securities that fueled the housing bubble and brought down AIG.

While big banks claim they support reform, they are working to ensure exemptions from any real accountability and from requirements that their trading be conducted on transparent environments.

Americans for Financial Reform and the Commodities Markets Oversight Coalition
want to close these loopholes. "Any exemptions from exchange trading or clearing should be restricted to bona fide commercial hedging of physical commodities by end-users and customized or specialized contracts that cannot be traded or cleared.

Hedge funds, private equity funds, exchange traded or index funds, and other speculators should not fall under any end-user exemption," according to their joint statement.

CFTC Position Limits Commended

The coalitions today also announced support for a proposed rulemaking at the U.S. Commodity Futures Trading Commission that would help prevent Wall Street speculators from cornering the market. “New CFTC Chairman Gary Gensler and his fellow Commissioners are commended for their recognition of the importance of preventing excessive speculation,” said Jim Collura, a spokesman for the Commodity Markets Oversight Coalition. “But this new rule would not extend to foreign and over-the-counter trading, which is why Congressional action is so important.”