Comment Text:
March 28,2011
Gary Gensler
Chairman
Commodity Futures Trading Commission
1155 21st Street, NW
Washington, DC 20581
Jill E. Sommers
Commissioner
Scott D. O'Mailia
Commissioner
Michael Dunn
Commissioner
Bart Chilton
Commissioner
Dear Commissioners,
As the Executive Director of the Nation's oldest and largest investor coalition whose mission is building a more just and sustainable world by integrating social values into corporate and investor actions, I applaud the Commission’s efforts to implement the Dodd-Frank Act as thoroughly as possible, especially reforms aimed at limiting excessive speculation in food and energy commodities.
As the pioneer coalition of active investors with an enduring record of proactive corporate engagement, members of the Interfaith Center on Corporate Responsibility (ICCR) understand that many factors contribute to today’s highly volatile commodity prices. That said, ICCR's over 300 members, representing well over $100 billion in invested assets have been convinced by the dozens of studies done by members of respected institutions such as Princeton, MIT, Citigroup, the Petersen Institute, the University of London, Yale, UNCTAD, the FAO, and the U.S. Senate; studies that clearly demonstrate that excessive speculation is an important factor and bears considerable responsibility for inflated prices for consumers around the world. Although this impact is most profound for vulnerable populations in developing nations, its impact cannot be dismissed here in the United States where childhood obesity is a national crisis to which skewed food prices contribute.
Every member of ICCR, whether faith-based or secular, believes that investors bear a special responsibility to operate under the cautionary principle and "do no harm." The excessive speculation experienced in recent years is neither productive nor beneficial to the common good, nor does it benefit most long term investors and the needs of their ultimate beneficiaries. On behalf of this long standing coalition, I urge the Commission to implement the proposed rules regarding aggregate speculative position limits to prevent excessive speculation. At this time of fragile economic recovery, we cannot allow speculators to unduly affect our food and energy prices.
Congress called for exemptions from these limits for bona fide hedgers. I ask that the Commission define that term in the strictest sense possible, limiting exemptions to businesses that deal in physical commodities and use markets to hedge commercial risk in those commodities. Banks, hedge funds, private equity and all passive investors in commodities should not be deemed as bona fide hedgers. Institutions hedging price directional bets such as commodity index swaps, Exchange Traded Funds and Exchange Traded Notes also should not be considered as bona fide hedgers.
In speaking on behalf of ICCR members, who as fiduciaries and people of faith have had a profound influence on policies promoting justice and sustainability in the world; I support and your efforts to encourage robust limits to excessive speculation by taking full advantage of the new authority incumbent in the Dodd-Frank Act.
As we have in the past, ICCR members stand ready to discuss any aspect of this comment letter and encourage you to contact us with any questions or further clarification required.
Sincerely,
Laura Berry
Executive Director
Interfaith Center on Corporate Responsibility
[email protected]
