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CFTC Caves To Wall Street, Will Continue To Allow Cartel To Control Derivatives Market

Behold the power of finance capital. Despite shitting the bed and making us all clean it up, Wall Street will remain essentially the same as the Commodities Futures Trading Commission (CFTC) caved to the banksters and will continue to allow a cartel to control the derivatives market.

Under pressure from Wall Street lobbyists, federal regulators have agreed to soften a rule intended to rein in the banking industry’s domination of a risky market.

The changes to the rule, which will be announced on Thursday, could effectively empower a few big banks to continue controlling the derivatives market, a main culprit in the financial crisis.

Laugh or cry? Your choice. And if you don’t care now you will shortly as this practically guarantees another crash.

Forget democracy or even the basic functions of a republic as most of the citizenry oppose a deregulated Wall Street – how about basic logic? We just ran this experiment and it crashed and burned in 2008, so why run it again?

The push for competition follows concerns that a handful of select banks — JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs — control the market for derivatives contracts.

That grip, regulators and advocacy groups say, empowers those banks to overcharge some asset managers and companies that buy derivatives. It also raises concerns about the safety of the banks, some of which nearly toppled in 2008.

Do those companies sound familiar? They should.

For those who don’t know, the reason Wall Street wants secrecy and opacity is so they can juice up the fees. Example: you are an airline that wants to buy a derivatives contract to lock in fuel prices which are typically volatile. If you had a transparent market you could see competitive bids to get the best deal, but under the current system, now continuing thanks to the CFTC, you will have to deal with the Wall Street Cartel who will stand between you the airline and the fuel provider hiding information from both. And since you don’t know all the information you can’t really dispute the fees the Wall Street Cartel wants to charge you, can you?


The problem of course is that since all that information is opaque and hidden even the banksters themselves lose track of the details, an example being, I don’t know, mortgage derivatives. Smart people outsmart each other, then themselves.

Almost everyone told the Obama Administration and Congress that punting the rule-making process of Dodd-Frank to regulators like the CFTC was a guarantee that Wall Street would get its way, putting the economy in danger. Obama and Congress pretended to hear the complaint, took Wall Street’s money, and punted to the rule-making process to the regulators anyway. And viola, we have what we have today, a system that fundamentally mirrors the pre-crisis regulatory environment.

So enjoy reliving the 2008 crisis – it’s deja vu all over again.

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Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.