Key Senator Endorses Cantwell Stand on Tough Restrictions on Derivatives Trading
In a letter to U.S. Senator Maria Cantwell and three other senators today, Sen. Blanche Lincoln (D-AR), chair of Senate Agriculture Committee said she favors transparency and strict controls in trading of derivatives, the complex financial instruments that played a major role in the financial crisis of 2008. The letter from Lincoln came in response to a bipartisan letter organized in February by Sen. Dianne Feinstein (D-CA) and signed by Cantwell and Sens. Feinstein, Dorgan and Snowe, advocating tough restrictions on derivatives trading. Senator Lincoln's views are particularly important as the Agriculture Committee has jurisdiction over derivatives trading, which in many cases involves financial instruments based on commodities including agriculture products.
"Senator Lincoln has come out with the strongest proposal to date of any of the committee chairs working on financial regulatory reform," said Senator Cantwell. "As the daughter of a farmer, she knows the difference between farmers legitimately hedging and Wall Street speculators cooking up toxic assets. It looks to me as though Sen. Lincoln is proposing a real stare down of Wall Street."
Abuses in the trading of these instruments hurt farmers, factories and other users of commodities while temporarily resulting in huge profits for Wall Street speculators. The issue of controls over derivatives is a key part of the debate over financial regulatory reform legislation. The House passed reform legislation in December and the Senate is expected to begin debate on the legislation this month. To date, Senator Cantwell has been concerned that none of the legislative proposals under consideration impose sufficiently tough restrictions on derivatives trading. Senator Cantwell looks forward to working with Senator Lincoln and her colleagues on the detailed legislative language.