The Coalition to Protect Competitive Markets, a broad-based coalition from the financial services industry, issued the following statement in response to yesterday’s vote in the Senate to proceed with consideration of S. 3268, the bill introduced by Senate Majority Leader Harry Reid to restrict investor participation in the commodity markets:
“The Coalition to Protect Competitive Markets is committed to working with lawmakers to address concerns asserted about the impact of speculative participation in commodity markets. We believe that additional funds should be appropriated to ensure that The Commodity Futures Trading Commission (CFTC) has the resources it needs to conduct proper oversight of the commodity markets, but we caution lawmakers against rushing forward with restrictions on investors that may harm our economy and undermine the ability of American citizens, including millions of baby boomers saving for retirement, to diversify their holdings and offset losses in equity, fixed income and real estate markets.”
“The restrictions under consideration in the Senate will simply drive commodity trading overseas, rather than providing long-term solutions to our energy needs. Reducing liquidity in the U.S. markets will make it more expensive for bona fide hedgers such as oil refiners and airlines to protect themselves from volatile prices.”
“There are solutions to high oil and gas prices. Preventing investment in the U.S. commodity markets isn’t one of them. As the Interagency Task Force on Commodity Markets determined in its Interim Report on Crude Oil, fundamental supply and demand factors offer the clearest explanation for the recent crude oil price increases. The Task Force also found that financial participation has not produced systematic changes in price over the past five years. Given a lack of supporting data and the consequences that limitations on free markets would have on the competitiveness of U.S. markets, we urge the Senate to focus on addressing the prevailing market dynamics driving prices higher.”
The Interagency Task Force on Commodity Markets includes the Securities & Exchange Commission, the U.S. Treasury, the Board of Governors of the Federal Reserve System, the Federal Trade Commission, the CFTC and the Departments of Agriculture and Energy. The press release issued by the Task Force on its Interim Report on Crude Oil and the actual report itself can be found at the following links:
http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5520-08.html