US Senator Plans To Bar Funds From Commodities
SAN FRANCISCO (MarketWatch) -- The head of the Senate's government affairs committee Wednesday unveiled a series of restrictive proposals aimed at financial speculators in commodities, including one that would place an outright ban on big pension funds buying agricultural and energy futures.
The three legislative ideas from Connecticut's Joe Lieberman, which the independent senator plans to discuss at a hearing June 24, count as the most drastic efforts yet from lawmakers targeting potential culprits behind high oil and grain prices.
The most severe would prohibit private and public pension funds with more than $500 million in assets from investing in agricultural and energy commodities traded on a U.S. futures exchange, foreign exchange or over the counter, according to materials provided by Lieberman's office.
A second plan would direct the Commodities Futures Trading Commission to establish total limits on the share of the commodity market held by financial investors.
A third proposal would direct the futures regulator to impose speculative-position limits on any stakes not related to real hedging activities, an action that could limit the commodities-swaps activities of big investment banks such as Goldman Sachs Group and Morgan Stanley.
"We are not, as some continue to argue, witnessing the ebb and flow of natural market forces at work. We are instead seeing excessive market speculation at work and that is why our government must step in with new laws to protect our economy and our consumers," said Lieberman in a statement.
Lieberman will most likely introduce legislation with Sen. Susan Collins, R-Maine, after the July 4 holiday recess, said a staff representative of Lieberman. That legislation could incorporate some or all of these proposals, depending on feedback from witnesses at the hearing, as well as the public.
Investment banks and pension funds aren't waiting for that forum to make their anxiety about Lieberman's proposals known. A statement penned by six influential trade groups, including the Securities Industry and Financial Markets Association, the Financial Services Roundtable and the Investment Company Institute, warned that efforts to bar financial investors from commodities markets could "substantially harm the ability of Americans to protect themselves against inflation."
Well they would say that wouldn't they, where would they be without their profits from oil and grains now their other markets have gone tits up?
The three legislative ideas from Connecticut's Joe Lieberman, which the independent senator plans to discuss at a hearing June 24, count as the most drastic efforts yet from lawmakers targeting potential culprits behind high oil and grain prices.
The most severe would prohibit private and public pension funds with more than $500 million in assets from investing in agricultural and energy commodities traded on a U.S. futures exchange, foreign exchange or over the counter, according to materials provided by Lieberman's office.
A second plan would direct the Commodities Futures Trading Commission to establish total limits on the share of the commodity market held by financial investors.
A third proposal would direct the futures regulator to impose speculative-position limits on any stakes not related to real hedging activities, an action that could limit the commodities-swaps activities of big investment banks such as Goldman Sachs Group and Morgan Stanley.
"We are not, as some continue to argue, witnessing the ebb and flow of natural market forces at work. We are instead seeing excessive market speculation at work and that is why our government must step in with new laws to protect our economy and our consumers," said Lieberman in a statement.
Lieberman will most likely introduce legislation with Sen. Susan Collins, R-Maine, after the July 4 holiday recess, said a staff representative of Lieberman. That legislation could incorporate some or all of these proposals, depending on feedback from witnesses at the hearing, as well as the public.
Investment banks and pension funds aren't waiting for that forum to make their anxiety about Lieberman's proposals known. A statement penned by six influential trade groups, including the Securities Industry and Financial Markets Association, the Financial Services Roundtable and the Investment Company Institute, warned that efforts to bar financial investors from commodities markets could "substantially harm the ability of Americans to protect themselves against inflation."
Well they would say that wouldn't they, where would they be without their profits from oil and grains now their other markets have gone tits up?