Washington, D.C. — Legislation introduced by U.S. Rep. Bob Etheridge (D-Lillington) that would help prevent gas prices from being artificially increased by manipulation and excessive speculation in energy markets failed to garner the two-thirds required for approval by the U.S. House of Representatives in a vote today.
The bill failed 276 — 151. A new vote could be scheduled for as soon as Thursday that would require only a simply majority to pass.
“I am greatly disappointed that my colleagues in the House did not join with me in this opportunity to provide some relief for families who are struggling to make ends meet while gas prices continue to sky rocket,” said Etheridge. “Today’s legislation was a non-controversial, bipartisan, straight-forward solution to one of the possible causes of high gas prices and I fail to see why any member would not support it. The American people want Congress to work together, not play politics with their pocketbooks.”
H.R. 6604, The Commodity Markets Transparency and Accountability Act of 2008, bipartisan legislation introduced by House Agriculture Committee Chairman Collin Peterson and Etheridge, was approved by the Agriculture Committee with only one dissenting vote. Because of the overwhelming support in the committee vote, the bill was brought to the House floor under suspension of the rules, a process used for non-controversial bills that requires a two-thirds vote to pass. Etheridge is working to schedule a new vote that would require only a simple majority.
The bill is the result of a series of hearings held by the Agriculture Committee earlier in July where expert witnesses testified that at least a part of the spike in energy costs could be caused by excessive speculation in futures trading. Some experts have said that curbing excessive speculation could be one of the only measures that would impact energy prices in the short term.
“We owe it to the American consumer to ensure that gas prices are reflective of true market value and are not being artificially inflated by investors seeking to make an easy buck,” said Etheridge. “We can’t allow excessive speculation on Wall Street to cause folks to suffer on Main Street.”
Etheridge is the Chair of the Subcommittee on General Farm Commodities and Risk Management of the House Agriculture Committee, which has jurisdiction over the Commodity Futures Trading Commission, the government agency that is responsible for protecting the public from fraudulent practices in commodity futures trading, including oil and gasoline.
The legislation would give the CFTC additional resources and authority to prevent manipulation and excessive speculation. Specifically it will require the CFTC to hire 100 additional staff people, it will require U.S. regulation for trades made on overseas markets, and it will provide more transparency and disclosure from investors. It will also toughen position limits, which are limits on the number of contracts one can hold on an exchange, and make it more difficult for speculators to receive a hedge exemption from these limits.
Fact Sheet
The Commodity Markets Transparency and Accountability Act of 2008
Purpose: To ensure that the recent dramatic spike in energy costs is reflective of the true market forces and is not being artificially caused by market manipulation and excessive speculation.
Problem:
· The Commodity Futures Trading Commission is currently severely understaffed. Since 2000, trading on commodity markets has increased six-fold. However, during that time, the Bush Administration let staffing levels at the CFTC fall to their lowest level in the agency’s 33-year history.
· Because overseas markets are regulated by foreign entities and not directly by the CFTC, some investors are seeking a less regulated market by trading U.S. energy commodities on the ICE Futures Europe market instead of U.S. markets. Some worry that this could be increasing volatility and raising prices on U.S. markets.
· A growing number of hedge funds and other institutional investors have turned their attention and their money to the commodity markets, viewing them as a more lucrative investment than stocks or other securities currently. As a result, questions have been raised about their role in the commodity markets.
· Over-the-counter trades, which are made off regulated markets, are not subject to the monitoring and position limits that regulated markets are.
The Commodity Markets Transparency and Accountability Act of 2008:
· Requires the CFTC to hire 100 additional full-time staff.
· Closes the “London-loophole.” Directs the CFTC to hold overseas markets accountable when U.S. energy commodities are traded on them. Ensures that foreign markets have similar disclosure requirements and position limits and accountability levels — which deter excessive speculation — as domestic markets do.
· Provides more transparency by requiring the CFTC to change its reporting of traders in energy markets to more clearly show what position and how much influence investment funds and swap dealers have in energy markets.
· Provides transparency in previously unseen over-the-counter markets, which are trades made off exchanges and are not regulated by the CFTC
· Toughens position limits, which are the number of contracts one can hold on an exchange, and creates an advisory board to recommend these limits. Strengthens the hedge exemption, which allows traders to go over the position limit, by ensuring pure speculators cannot receive the exemption.