Noam Scheiber reports that the major banks, working closely with the U.S. Chamber of Commerce, are orchestrating an anti-regulation lobbying fest.
“Some two dozen executives from large corporations will be descending on Capitol Hill today to make the case against over-regulating derivatives. The “fly-in” is being organized in part by the U.S. Chamber of Commerce through a group called the Coalition for Derivatives End-Users, according to the Chamber’s Ryan McKee. Many corporations use derivatives to hedge against fluctuations in the price of their inputs—for example, an airline might sign a contract to lock in future fuel prices, thereby passing the risk along to someone else. And so, on one level, it makes perfect sense that the executives and the Chamber would take an interest in derivatives legislation.
But, on another level, the pilgrimage by the so-called corporate “end-users” is a little mystifying. That’s because the legislation that’s piqued the executives’ interest—a derivatives bill that Senate Agriculture Committee Chairman Blanche Lincoln unveiled last week—explicitly exempts derivatives used in commercial activity, as in the jet-fuel example. What the Lincoln bill would regulate is the use of derivatives for more speculative purposes, like a straight-up bet between two Wall Street firms on the future price of oil.”
Head Lock: The inside story of how Goldman and the banks are getting clobbered on financial reform
The New Republic, April 20, 2010 | 12:00 am