President Barack Obama announced today a new proposal to help Americans at the pump by reining in excessive Wall Street speculation.
Obama’s proposals include funding for more “cops on the beat” to better monitor market activity, increasing authority at the Commodity Futures Trading Commission, raising penalties for illegal manipulation, requiring oil traders to finance transactions with more of their own money, and creating stricter penalties for illegal market manipulation.
Obama said these initiatives would prevent Wall Street speculators from artificially driving up gas prices:
We can’t afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher — only to flip the oil for a quick profit. We can?t afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick. That?s not the way the market should work.
Mitt Romney, who has repeatedly blamed Obama for gas prices, slammed the one initiative that could truly ease gas prices in the short-term ? unlike Republican calls for increased drilling. He called the president’s proposal a “gimmick” to “dramatically increase federal regulation.”
Romney dismisses oil speculation. But even ExxonMobil CEO Rex Tillerson admitted last year that Wall Street speculation adds as much as $70 to a barrel of oil.
McClatchy reported in March, “While tension over Iran has ratcheted up over the last few months, the price of oil and gasoline has leaped far beyond conventional supply and demand variables. Financial speculators are piling into the market, torquing the Iranian fear factor into ever higher prices.” Speculators made up 64 percent of the market last month.
Romney’s response is also out-of-step with the American public, since 54 percent want the U.S. to crack down on excessive speculation, according to a Hart Research poll. His campaign, however, is bankrolled by oil companies and Wall Street, with $750,000 from Big Oil donors and nearly $15.2 million from the financial industry.
At a meeting between media and conservative legislators today, Tea Party firebrand Rep. Louie Gohmert (R-TX) shared his opinions on Mitt Romney, his party’s presumed presidential nominee. Gohmert is a bit apathetic, if not outright disdainful. According to Dave Weigel at Slate, Gohmert said of Romney, “whether you’re liberal, or whether you’re very conservative, you ought to be excited, because he’s been on your side at one time or another.” Realizing that the reference to Romney’s prodigious flip flopping may be problematic, Gohmert tried to smooth things over. “So I’m not completely understood,” he said. “I’m not as excited as I am desperate.”
Responding to a mother who caught her 14-year-old daughter “engaged in unsavory acts” with a female friend, Pat Robertson said today that she probably “doesn’t know what her sexuality is” but “it’s unlikely at that age that she has homosexual tendencies.” If the mother wants to “revert” her daughter’s behavior, Robertson believes she should prevent her from seeing her friend anymore and explain to her what the Bible says. Watch it:
Contrary to Robertson’s belief, studies show that young people are often aware of their sexuality by early adolescence even without any sexual experiences, occurring on average between the ages of 9 and 11. (HT: RightWingWatch.)
The House Ways and Means Committee has announced plans to mark up legislation that would reduce the deficit by $53 billion between 2013 and 2022, following instructions in the GOP’s budget. Republicans are hoping to cut the Affordable Care Act’s subsidies by $43.9 billion over the next decade, making coverage less affordable for many middle class Americans. The provision would require people to “pay back insurance subsidies if the government determined they received too much based on their income threshold.” Other provisions would repeal social services block grants to states and require Social Security to claim child tax credit, amounting to an estimated savings of $7.6 billion.– Fatima Najiy
Wall Street banks have pushed to water down and already-weakened version of the Volcker Rule, which bans banks from engaging in risky proprietary trades with taxpayer-backed funds. The banks fought the rule before it became law under the Dodd-Frank Wall Street Reform Act and have kept the fight up since, arguing that the rule would hinder their ability to compete or to lend to businesses.
Roger Vasey, who ran Merrill Lynch’s global debt markets for six years, feels differently. In an editorial published in the Wall Street Journal, Vasey disputed that the Volcker Rule would damage the banks’ ability to make profits and said it was “necessary to correct a mistake that poses a danger to our economy.” That mistake, Vasey wrote, was the 1999 repeal of the Glass-Steagall Act, which prevented government-insured banks from engaging in the risky practices the Volcker Rule would now limit:
The Volcker Rule?part of the Dodd-Frank financial reform law?is necessary to correct a mistake that poses a danger to our economy. [...]
The number and complexity of various financial vehicles has grown over the years, but the principle remains the same. If the potential loss from a bank’s overall position across its securities holdings cannot be projected accurately under various deteriorating market conditions, and effective limits on that position established and monitored accordingly, that position should not exist.
And no financial institution with explicit or implied taxpayer support should be in the proprietary trading business.
Vasey’s experience at Merrill Lynch is a “case in point” that banks can be successful without proprietary trading, he argues. Despite taking “minimal risk,” Merrill Lynch was highly profitable, particularly on the desk Vasey managed. At the time, Merrill operated without government-insured deposits and “avoided taking too much risk” because it feared the exact type of “debt bomb” that caused the financial crisis. But after the repeal of Glass-Steagall, banks that did have government backing were able to take much riskier positions, putting taxpayers at risk when the crisis occurred.
Vasey isn’t the only former Wall Streeter to support the Volcker Rule. Former Goldman Sachs employee Greg Smith unwittingly made the case for the rule when he resigned from the firm via an editorial in the New York Times, and former Citigroup CEO John Reed has gone even farther, calling the rule a “critical response” to the prop trading problem but criticizing it for not imposing stiff enough penalties on institutions that violate it.
I have mentioned that we will see a wave of shareholder activism this spring, with direct action challenges to the biggest corporations in America. Today Citigroup shareholders voted against the $15 million pay deal for CEO Vikram Pandit and also reject[...]
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The Energy Report: Oil and gas controversies are all over the news these days. Evan, what is your take on the space?
Evan Calio: Energy is a challenging space currently. The biggest story right now is the widening West Texas Intermediate (WTI) discount to water-borne, global crudes like Brent, largely as a result of unconventional oil production growth in the U.S. Our five-year forecast for U.S. oil liquids production growth is 2 million barrels per day (MMb/d). You could add some of the Canadian barrels that ultimately should travel into the U.S. refining system of almost 700 thousand barrels per day (Mb/d). That is a pretty material amount of production growth on a relative basis and could result in . . . → Read More: Domestic Oil Production Is Bullish for Americans: Evan Calio
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There Is No Super Secret Obama Waiting for 2013By: Jon Walker, Firedog LakeTuesday April 17, 2012 12:26 pmI want to give the same piece of advice to some apparently delusional people who both oppose and support President Obama: there is no super secret[...]
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The editors at Bloomberg have a good op-ed calling for the federal government to raise the pathetically low minimum wage. It is truly pathetic that a very business friendly, business news company is doing more to actively promote raising the minimum[...]
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Mitt Romney had no trouble garnering more endorsements than his opponents during the Republican primaries, though a number of prominent figures held off from granting Romney their nod until his nomination was all but certain. John Boehner was one such politician?no huge surprise given his position in the party (then-Speaker Nancy Pelosi refrained from directly endorsing Obama in the 2008 primary though it was clear she supported him against Hillary Clinton).
Now that Romney is the presumptive candidate Boehner is free to offer his support, but boy does he sound unexcited about the idea:
?It?s clear now that Mitt Romney is going to be our nominee,? the Speaker told reporters after a House GOP conference meeting. ?I think Mitt Romney has a set of economic policies that can put Americans back to work and contrast sharply with the failed economic policies of President Obama. And I will be proud to support Mitt Romney and do everything I can to help him win.?
This is just the latest in a string of tepid endorsements from Republicans since Romney secured the nomination. As a Washington Post/ABC News poll showed yesterday, the Republican electorate has resigned itself to a Romney candidacy, but they're not excited about it.