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Comment for Proposed Rule 75 FR 63732

  • From: Molly Peterson
    Organization(s):
    Cal Berkeley Democrats

    Comment No: 26445
    Date: 11/17/2010

    Comment Text:

    As a student, the current economy is frightening. Job prospects are slowly improving, but as long as the economy remains unstable, there’s always the fear that thing will regress. The Wall Street reforms that our government recently passed will help to stabilize the economy, but only if these reforms are not weakened during the regulatory example.

    The rules for the derivatives market is a perfect example. The reform bill was passed with a single provision for the ownership of the clearinghouses that help to regulate the market. This provision, the 20/40 Rule, protects the integrity of these clearinghouses by preventing the possibility that they be bought out by big banks. It achieves this by limiting the total share of ownership that big banks can hold to 40%, and by not allowing any single interest to own an individual share greater than 20%.

    The commission is currently considering an alternate rule, the 5% Rule. But this rule would not be as effective, because it fails to limit the total ownership shares that can be held by big banks. Big banks have already shown that they cannot be trusted to make responsible trades in this market, and government intervention was required to keep many of them solvent. If they controlled these clearinghouses, the whole point of this new requirement would be lost.

    We have a chance to shape the future of Wall Street right now, but we need to do so by heeding the mistakes of the past. The 5% Rule would allow the mistakes of the past to be repeated, so it must be eliminated in favor of the 20/40 Rule.
    Thank you for your time.

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