Wednesday, March 25, 2009

Who Would Have Thought C&T is about the Money???

US Lawmakers, Fearing CO2 Market Crisis, Drafting Tough Rules March 24, 2009: 01:24 PM ET

A few titillating tidbits from the article sent to me by a dear friend. Please read the whole article. I have been around politics for 30+ years and it is always about the money....!!@! See my previous C&T blogs and let me know what you think. I have no interest in your feelings. They have, after all, gotten us into this mess!

WASHINGTON - (Dow Jones) - "Fearing another financial meltdown under a proposed multi-trillion-dollar greenhouse gas trading program, U.S. lawmakers are drafting legislation for strict regulation of the nascent market."

Wall Street banks, hedge funds and institutional investors are under a rain of public indignation and regulatory scrutiny for their role in the current financial crisis. Many legislators are concerned that creating a carbon market may simply give the same players a new opportunity for manipulation and hazardous trading.

"This is a disaster in the making," warned Rep. Greg Walden, R-Ore., ranking member of the House energy subcommittee on oversight and investigations. "If you like the bubbles of the technology market and the housing market, I predict you'll love the bubble that will come from the cap-and-trade market."

A cap-and-trade law would create a market - including for derivatives of emission allowances - for carbon emissions and would multiply trading opportunities for emitters, traders, brokers and investors.

Cutting A Fat Hog "I attended a recent meeting of an organization interested in [climate change legislation], and guess who it was," Rep. John Dingell, D-Mich., said at an energy forum last week. "It was a bunch of good-hearted Wall-Streeters ... getting ready to cut a fat hog."
Many of the most exuberant, enthusiastic advocates of cap-and-trade are some of the same major institutional investors that were involved in the housing and commodity markets, said Walden, the congressman from Oregon.

"Take, for example, the Regional Greenhouse Gas Initiative, or RGGI, a cap-and- trade system in the northeastern states. According to the list of qualified bidders, among those who wanted to buy credits were a raft of investors that aren't major emitters - trading units of Barclay's Plc (BCS), Goldman Sachs (GS) , JP Morgan Chase & Co (JPM), Merrill Lynch, now a unit of Bank of America (BAC) , and Morgan Stanley (MS)."

One of the biggest advocates in the U.S. Climate Action Partnership, a group that lobbies Congress for cap-and-trade legislation, had been American International Group (AIG), whose controversial financial products unit precipitated the near-demise of the insurance giant.
"Starting with Enron and now the current financial meltdown, energy markets have been a target-rich environment for people to take advantage of the futures price and the physical price," said Sen. Maria Cantwell, D-Wash.

"We don't need to solve our carbon problems by creating another fiscal crisis because we have a trading platform that has lots of holes and ends up being exploited," she said.
Preemptive Regulation Cantwell, who chairs the Senate energy subcommittee, declined to give details but said she's drafting legislation that would prevent manipulation or cash-rich market participants from cornering the market.

In the House, Rep. system of these markets to the nth-degree," said Inslee on the sidelines of a climate conference.
Henry Waxman, D-Calif., is developing a cap-and-trade proposal that will include prophylactic provisions, said Rep. Jay Inslee, D- Wash.
"We have to have the most aggressive, ambitious, fool-proof regulatory "We're not going to allow derivatives to ruin these markets as they have others," he said.

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