Earth Equity News

Last-Minute Changes to Waxman-Markey Opened the Door to Deregulating Carbon Futures Market. By Rachel Morris, Mother Jones, July 23, 2009. "Waxman-Markey had some good language regulating carbon and other energy derivatives. Most of it was authored by Rep. Bart Stupak of Michigan, who wanted to eliminate over the counter (OTC), or unregulated, derivatives altogether and force trading onto exchanges. His measure also called for stricter trading limits and reporting requirements so that no single operator could assume more risk than it could handle or capture so much of the market that it distorted prices. However, in the 300 pages of amendments added to Waxman-Markey just after 3 a.m. on the night the bill passed, a few new sentences materialized that placed a big asterisk on those safeguards. The final text now says that the sections of the bill regulating carbon derivatives will be overridden by any derivatives legislation that the House passes later in the year... The banking industry, especially Goldman Sachs and JPMorgan Chase, wasn't happy about the language in Waxman-Markey outlawing OTC derivatives and called for it to be removed. Eighteen members of the business-friendly New Democrat Coalition in the House proved receptive to these concerns. They wrote to Waxman and Markey to say they were 'concerned about requiring all OTC derivatives and swaps to be centrally cleared and settled.' The writers included nine members of the financial services committee, as well as some of the House's top recipients of money from the financial industry. Rep. Scott Murphy of New York and Rep. Melissa Bean of Illinois, for instance, are respectively the second and fifth leading beneficiaries of donations from the finance, insurance and real estate sector this election cycle. The New Dems point person was Rep. Michael McMahon of Staten Island, who often describes himself as representing one of the largest concentrations of financial services employees in the country. In the wake of the economic crisis, most lawmakers have refrained from conspicuously defending big banks. But McMahon has popped up on Fox News and other venues energetically attacking efforts to 'over-regulate' derivatives. 'I believe that the derivatives provision [in Waxman-Markey] is still an over-reaction to the AIG mess,' he said in a statement."