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Jul 15, 2010

TE GATA DISPATCH .- How the CFTC got power in financial regulation bill /Will Sprott's new silver fund become MorganChase's biggest nightmare?. July 15th., 2010

How the CFTC got power in financial regulation bill

By Michael R. Crittenden and Victoria McGrane
The Wall Street Journal
Thursday, July 15, 2010
WASHINGTON -- With the Senate poised to approve the most significant overhaul in financial regulations in decades, the Commodity Futures Trading Commission is emerging as a winner.
The legislation likely to pass the Senate on Thursday would make the relatively small agency -- it employs only 600 -- the top cop for the $300 trillion U.S. derivatives market. CFTC Chairman Gary Gensler tenaciously lobbied for the agency, which was fighting for its life not long ago, and successfully tapped the CFTC's congressional overseers for their support.
The agency won a variety of items on its "wish list," including power to combat disruptive trading practices and more leeway to pay whistle-blowers. Most important, perhaps, lawmakers gave the agency freedom to interpret many of the rules it is charged with writing. "They were the big winners," said Sen. Judd Gregg (R., N.H.), a member of the Senate Banking Committee.
The CFTC's new authority and Mr. Gensler's vision for derivatives regulation is causing anxiety for corporations. Critics are predicting higher costs for commercial firms and less liquidity in the swaps market.
Lawmakers, aides, and lobbyists involved in the bill say Mr. Gensler played an outsize role in shaping the new regime and was a constant presence during key moments in the legislative process.
During a grueling 20-plus hour negotiating session in late June, he hovered just behind lawmakers, and could be seen whispering to staff and negotiators as the House and Senate sought to iron out the 2,300-plus page bill.
Rep. Michael McMahon (D., N.Y.) said it was "a little unusual" to see Mr. Gensler conferring with lawmakers. But it wasn't new: Earlier this year, Mr. Gensler was on hand during a key Senate agriculture meeting to draft the derivatives bill.
"He was able to be on the Hill and explain it in layman's terms to lawmakers," said CFTC Commissioner Bart Chilton. "It was really helpful to have him up there, not just for meetings, but to be on call 24/7."
His influence was facilitated by the heads of the two agriculture panels, Sen. Blanche Lincoln (D., Ark.) and Rep. Collin Peterson (D., Minn.).
Mr. Gensler wanted to expand his agency's influence to deal with derivatives, one cause of the financial crisis. A higher-profile CFTC, meanwhile, would give Ms. Lincoln and Mr. Peterson an increased ability to influence financial policy and secure Wall Street campaign contributions. The agriculture committees have jurisdiction because of the heavy use of derivatives in agriculture.
"Once you have that power, the last thing you want to do is give it up," especially if it's a money maker for campaigns, said Meredith McGehee, policy director at the Campaign Legal Center, a nonpartisan campaign-finance advocacy group.
Ms. Lincoln's office said the CFTC is the agency best equipped to oversee derivatives. Mr. Gensler said that comprehensive regulation of the derivatives market is "essential to protecting the American public." Mr. Peterson's office didn't return a request for comment.
Mr. Peterson early on resisted colleagues' efforts to narrow the agency's scope. Both he and Ms. Lincoln argued that the CFTC, unlike other regulators, hasn't been tagged with failures in the run-up to the crisis.
Mr. Peterson, at a dinner last June with Treasury Secretary Timothy Geithner, said he opposed a CFTC-SEC merger.
Days later, the White House released its formal proposal that avoided the issue, proposing instead to "harmonize" regulation instead.
The effort to empower the CFTC continued up to the closing moments of negotiations. At the last minute, Ms. Lincoln sought to expand the range of firms the CFTC could oversee. A top Lincoln staffer, with Mr. Gensler standing over his shoulder, told lawmakers the senator was seeking a technical change. Her Senate colleagues were wary of a power-grab benefiting the agency.
"We're going to end up giving the CFTC broader jurisdiction than we intended to," countered an aide for Sen. Richard Shelby (R., Ala.), who sits on the Banking Committee.
Senate negotiators voted against her change, leading a visibly angered Ms. Lincoln and her staff to swarm Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and his aides. "It was agreed to," Ms. Lincoln exclaimed to a top Dodd staffer, before threatening to blow up the fragile agreement.
"She doesn't want to sign the conference report," the banking-committee chief of staff told Mr. Dodd. "Oh, come on," Mr. Dodd groaned, burying his head in his hands.
At an impasse, staff from the Federal Reserve, SEC, CFTC and other top agencies trooped into a nearby Senate room to resolve the dispute. Minutes later, they agreed to alter the changes Ms. Lincoln had sought, giving her some but not all of what she wanted.
"The agency comes out in good shape," Mr. Chilton said. "We really have a lot to do in these markets -- and I think that's good because they gave us the tools to do that."

Will Sprott's new silver fund become MorganChase's biggest nightmare?


10:45a ET Thursday, July 15, 2010
Dear Friend of GATA and Gold (and Silver):
Zero Hedge has some encouraging words about the new Sprott Physical Silver Trust, whose taking "a few thousands tonnes of the precious metal out of circulation is sure to create quite a few sleepless nights for [JPMorganChase's] Jamie Dimon's precious metals manipulation club, which may suddenly find itself with a massive short position covered by even less actual deliverable, bringing the much-anticipated monumental short squeeze one day closer."
Zero Hedge's comments are headlined "Will Sprott's Brand New Physical Silver Trust Become JPMorgan's Biggest Nightmare?" and you can find them here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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CNBC : Evening Brief: Goldman to Settle Fraud Case, Paying a Record $550 Million. July 15th., 2010


»click here to see the latest top stories from


Goolsbee on Senate Passage of FinReg
The Senate passed the financial reform bill Thursday afternoon. Austan Goolsbee, a member of the President's Council of Economic Advisers, discusses the legislation with CNBC.
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Stop Trading, Listen to Cramer!
Mad Money's Jim Cramer shares his stock picks and pans with CNBC's Mandy Drury.
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ABCNews Australia : Business Top stories. July 15th., 2010

REUTERS : Daily Investor Update : Wall Street recoups losses on BP and Goldman. July 15th., 2010

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Wall Street recoups losses on BP and Goldman
CORRECTED: SEC to announce major enforcement action
Wall Street reform clears Congress
Google profit misses Wall Street estimates
U.S. advisers reject Vivus fat-fighting pill
Jobless claims fall, manufacturing stumbles
KKR makes subdued NYSE debut, shares slip
U.S. judge dismisses suit filed by GE shareholders
Boeing Dreamliner delivery may slip
JPMorgan beats Street

Wall Street recoups losses on BP and Goldman
July 15, 2010 04:26 PM ET
NEW YORK (Reuters) - Stocks ended little changed on Thursday, recouping losses late in the day, led by a sudden turnaround in Goldman Sachs and BP.

Full Article
CORRECTED: SEC to announce major enforcement action
July 15, 2010 04:34 PM ET
WASHINGTON (Reuters) - Securities regulators on Thursday said they will make a major enforcement announcement, fueling talk that a deal has been reached in their lawsuit against Goldman Sachs Group Inc .

Full Article
Wall Street reform clears Congress
July 15, 2010 03:51 PM ET
WASHINGTON (Reuters) - The Congress on Thursday approved the broadest overhaul of financial rules since the Great Depression and sent it to President Barack Obama to sign into law.

Full Article
Google profit misses Wall Street estimates
July 15, 2010 04:28 PM ET
SAN FRANCISCO (Reuters) - Google Inc's revenue rose 24 percent in the second quarter but its profit fell short of Wall Street expectations, sending shares down nearly 4 percent on Thursday.

Full Article
U.S. advisers reject Vivus fat-fighting pill
July 15, 2010 04:30 PM ET
GAITHERSBURG, Maryland (Reuters) - U.S. health advisers narrowly rejected Vivus Inc's experimental weight-loss pill, saying there was not enough data to merit approval.

Full Article
Jobless claims fall, manufacturing stumbles
July 15, 2010 02:45 PM ET
WASHINGTON (Reuters) - New claims for jobless benefits tumbled to a near two-year low last week, but a modest gain in industrial output and a third monthly drop in wholesale prices in June confirmed a slackening in the economy's recovery.

Full Article
KKR makes subdued NYSE debut, shares slip
July 15, 2010 04:08 PM ET
NEW YORK (Reuters) - Storied buyout firm Kohlberg Kravis Roberts & Co made its long-awaited debut on the New York Stock Exchange on Thursday, but the start was subdued and shares traded slightly below their opening price.

Full Article
U.S. judge dismisses suit filed by GE shareholders
July 15, 2010 03:43 PM ET
BOSTON (Reuters) - A U.S. judge dismissed a lawsuit against General Electric Co on Thursday that accused the largest U.S. conglomerate of failing to warn investors of the 2008 profit drop that marked the beginning of a two-year downturn for the company.

Full Article
Boeing Dreamliner delivery may slip
July 15, 2010 03:11 PM ET
CHICAGO (Reuters) - Boeing Co said on Thursday that issues raised in its 787 Dreamliner flight tests could delay first delivery of the long-awaited carbon-composite aircraft into the first part of 2011, but the company also expects an uptick in new plane demand over the next two decades.

Full Article

NEW YORK (Reuters) - JPMorgan Chase & Co posted better-than-expected quarterly earnings on Thursday as it wrote off fewer bad loans in the second quarter, but executives warned they were uncertain about the economic outlook for the rest of the year.

Full Article