Comment Text:
Submitter Info:
First Name: Donna
Last Name: McKee
Mailing Address: P.O. Box 129
City: Lederach
Country: United States
State or Province: PA
Postal Code: 19450
Organization Name: Citizen, Member Americans for Financial Reform
Dear Chairman Gensler:
Re: End-User Exception to Mandatory Clearing of Swaps (RIN 3038-AD10)
The big Wall Street "banks"/hedge funds and their allies are trying to carve out an exception for themselves from the transparency requirements of Dodd-Frank that would throw important trading back into the shadows. Specifically, they are calling for exemptions from the clearing and margin requirements of the Act for a very broad array of companies. This would be a serious mistake and would effectively nullify the intended effect of the Act.
Dodd-Frank already contains an exception for legitimate end-users, such as airlines and farmers, who are doing commercial hedging as part of their business from clearing and exchange trading requirements. This is not what the Wall Street money center banks do. Their use of derivatives is, essentially, to hedge their reckless speculation, i.e., gambling, that puts our entire economy at risk for another meltdown. It is not legitimate and should not be permitted. This trading must be brought out of the shadows and into the light of day.
We must not broaden this narrow, common-sense exception to include financial and commercial institutions that want to gamble in the derivatives markets. Doing so would allow systemically important companies to enter into risky trades in a market with zero transparency and accountability.
It is exactly this kind of murky "shadow banking" that led to the meltdown two years ago - as everyone who is paying attention to our present financial situation well knows. I urge you to implement Dodd-Frank, as written, and do not give in to the pressure to weaken the legislation in the rule-making process. If anything, it should be strengthened and extended to include any other "shadow", off-the-books operations, such as private equity, to bring their trading into the light of day as well, not weakened.
Thank you for considering my comment on this matter of critical importance to our economic recovery!
