DeLauro Calls for End to Excessive Speculation & Market Manipulation

Press Release

Congresswoman Rosa L. DeLauro (CT-3), chairwoman of the Agriculture-FDA Appropriations Subcommittee, focused on Congressional action to close loopholes that may be responsible for market manipulation of the oil and gas markets and/or excessive speculation. Notably, the boost in funding for the Commodity Futures Trading Commission (CFTC) to increase staff and improve technology to help its oversight and enforcement capabilities, included in the Agriculture Appropriations bill for fiscal year 2009. And the announcement that DeLauro's subcommittee, which has jurisdiction over the CFTC, will hold an oversight hearing following the 4th of July district work period to examine the role commodities traders are playing in rising energy prices.

DeLauro spoke on the floor of the U. S. House or Representatives in support of Energy the Markets Emergency Act (H.R. 6377) expected to be passed by the House that would direct the Commodity Futures Trading Commission to use its emergency authority under the Commodity Exchange Act to restore order to the market to ensure that prices are fair.

Last week, DeLauro and Congressman Chris Van Hollen introduced legislation to squelch the rampant speculation contributing to skyrocketing oil and gas prices. The Energy Markets Anti-Manipulation and Integrity Restoration Act would curtail the explosion of unregulated trading activity currently distorting today's energy markets.

"Last October, the Government Accountability Office issued a report indicating that the Commodity Futures Trading Commission did not have the resources and the authority it needed to protect the America people. When the report was issued a gallon of gas cost on average $2.90. Today in my state of Connecticut gas costs $4.37 a gallon

"Commodities prices have increased more in the last few years than ever before. In the past, price spikes have always resulted from supply crises, but experts have testified that this time something else is happening. The supply is there, but the prices are still rising. So what is the cause?

"A big part of it is: Unregulated Speculation in our Futures Markets. Professional investors pouring billions of dollars into our commodity futures markets, betting that prices will rise. Well, enough people make that bet - and make it big enough - and their own actions have the power to drive prices up even further.

"Lately speculators have made their presence felt: Purchasing contracts for more than a billion barrels of petroleum - essentially adding eight times as much demand for oil as the US has added to its Strategic Petroleum Reserve over the last five years.

"And these days, the problem is not only the number of people making these bets, but where they are making them on unregulated markets and easy-to-find loopholes.

"We know it is the Commodity Futures Trading Commission that should be preventing both out-of-control speculation as well as direct market manipulation by interested parties with special access or information. But the sad fact is, the Commission may be partly to blame. In some cases, it has granted Wall Street banks significant exemptions from important regulations as long as they make their trades as over-the-counter swaps. Today, somewhere between 85% and 90 % of speculators do their business this way, and they have wreaked havoc with our markets, and ultimately, our prices.

"That is why today the House is acting to urge the CFTC to use its emergency powers. Congress must act decisively to close the Enron and London-Dubai "Foreign Board of Trade (FBOT) Loopholes as well as the swaps exemption.

To that end, Congressman Van Hollen and I have introduced The Energy Markets Anti-Manipulation and Integrity Restoration Act to bring oversight and enforcement to our energy and agricultural futures markets.

"And we also know that a regulatory agency cannot do its job without adequate resources and staff. In the Agriculture Appropriations bill, the subcommittee's recommendation included greater resources than the President's proposal to help the CFTC make the needed down payment to begin recovering from years of under investment. Immediately after next week's district work period, my subcommittee will convene an oversight hearing and insist that the CFTC respond to the market turmoil that is affecting families in America everyday.

"The same thing may be with food prices. Speculative bubbles emerge, regulators do nothing, consumers pay. A familiar cycle. A consistent story of failed economic leadership. Speculators are landing in commodities because they see few other places to go. The US dollar is threatened and people do not have confidence in the US economy. We are paying the price for neglecting our economic fortunes at home for seven long years and need broad and wholesale change to get back on track. We can today by empowering the CFTC to do its regulatory job."

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