Oct. 20: The US Senate Agriculture, Nutrition and Forestry Committee will hold a hearing in Russell Senate Office Building Room 328-A at 9:30 a.m. on financial derivatives' possible role in the wider economic crisis. Witnesses have not been announced.
Why it matters: The committee has been expected to take up legislation to increase the Commodity Futures Trading Commission's staffing, authority and responsibilities in regulating energy commodities. The notice indicated that its chairman, Tom Harkin (D-Iowa), has broadened the focus from curbing excessive speculation so crude oil prices won't be as volatile to the impacts of speculation on the overall economic meltdown.
Harkin and two other Senate Democrats, Carl M. Levin (Mich.) and Jeff Bingaman (NM), introduced a bill on Sept. 25 which would establish position limits in all agricultural and energy commodity markets, regulate over-the-counter trades in an effort to close the so-called swaps loophole, require foreign exchanges trading US commodities to adopt similar position limits, and require the CFTC to adopt limits to prevent traders who use futures markets as position hedges from taking bigger positions than other participants.
Harkin, Levin and Bingaman put their bill in an energy trading context when they introduced it. But with the hearing scheduled a little more than two weeks after Congress passed and US President George W. Bush signed into law a multi-billion dollar economic bailout, and barely two weeks before the November elections, it could provide an early look at bigger financial market reforms which could materialize.
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