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Oldtimer
Rancher
Joined: 10 Feb 2005
Posts: 24330
Location: Northeast Montana
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 Posted: Thu Jul 15, 2010 4:59 pm Post subject: Financial/Commodity Reforms |
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R-CALF United Stockgrowers of America
“Fighting for the U.S. Cattle Producer”
For Immediate Release Contact: R-CALF USA Communications Coordinator Shae Dodson-Chambers
July 15, 2010 Phone: 406-672-8969;
Group Heralds Senate Passage of Sweeping Financial Reforms
Billings, Mont. – R-CALF USA is pleased with today’s 60-39 Senate vote in favor of significant financial reforms. President Obama is expected to sign the measure into law sometime next week.
“This legislation will increase transparency, close down loopholes in the regulation of commodities futures markets and reduce volatility in commodity prices, which continues to wreak havoc on commercial businesses and consumers,” said R-CALF USA CEO Bill Bullard. “Real reform to the American economy regarding the improvement of the commodities futures markets is now within reach, and we believe this landmark legislation will benefit all American consumers and our nation’s economy at large because the glaring shortcomings in our nation’s commodity derivatives regulation framework will finally be addressed.
“Cattle producers – some of whom use futures markets to offset price risk – are vulnerable to any market distortions caused by beef packers that may not only participate in the futures market as physical hedgers, but as significant speculators as well,” he continued. “The cattle futures market is susceptible to downward price movements – in contradiction of supply/demand fundamentals, when beef packers, who may hold a physical hedging position in the market, also engage in substantial speculative short selling of the market. The effect of the beef packers’ speculative short selling is to lower not only the futures market price, but also the cash spot market price, which is intrinsically tied to the futures market.
“Independent U.S. cattle producers are among the most significant commodity end users in the country, and as such, we have suffered disproportionately due to the recent staggering volatility in commodity futures markets and the impacts that rampant speculation and inadequate regulation have had on those markets,” Bullard added. “For years, we have been supporting efforts to provide regulators with significantly expanded authorities and mandates for overseeing commodity markets.”
R-CALF USA member policy calls for fundamental reforms of the commodities futures markets to restore its purpose of providing U.S. cattle producers with accurate price discovery and a meaningful opportunity to offset price risk.
“This legislation represents significant progress in achieving our members’ goal to reform the futures market so it can become a more useful management tool for U.S. cattle producers,” Bullard concluded.
# # #
R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, non-profit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA represents thousands of U.S. cattle producers on trade and marketing issues. Members are located across 47 states and are primarily cow/calf operators, cattle backgrounders, and/or feedlot owners. R-CALF USA directors and committee chairs are extremely active unpaid volunteers. R-CALF USA has dozens of affiliate organizations and various main-street businesses are associate members. For more information, visit www.r-calfusa.com or, call 406-252-2516. |
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Mike
Rancher
Joined: 10 Feb 2005
Posts: 16442
Location: Montgomery, Al
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Texan
Rancher
Joined: 10 Feb 2005
Posts: 2911
Location: East Texas
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| Posted: Sat Jul 17, 2010 7:21 pm Post subject: Re: Financial/Commodity Reforms |
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| Oldtimer wrote: |
| R-CALF USA is pleased with today’s 60-39 Senate vote in favor of significant financial reforms. |
More power for a tax cheat like Tim Geithner? A crooked, sleazy bastard like Chris Dodd applauding the "accountability" of this legislation? Is that what R-CALF is pleased about?
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Timothy Geithner's realm grows with passage of financial regulatory reform
By David Cho
Saturday, July 17, 2010; A01
Half a year after some predicted he would be booted from the Obama administration, Treasury Secretary Timothy F. Geithner stands to inherit vast power to shape bank regulations, oversee financial markets and create a consumer protection agency.
Few Treasury secretaries have had such sweeping influence over such a wide realm as Geithner will wield once President Obama signs the new financial overhaul legislation passed this week by Congress.
The effort to dramatically expand financial regulation bears the stamp of no one more than Geithner. The bill not only hews closely to the initial draft he released last summer but also anoints him -- as long as he remains Treasury secretary -- as the chief of a new council of senior regulators. The legislation also puts him at the head of the new consumer bureau until a director is confirmed by the Senate, allowing Geithner to mold the watchdog in coming months. And it will be up to him to settle a raft of issues left unresolved by the bill -- for instance, which financial derivatives will be subject to the tough new trading rules and which risky activities big banks will be required to spin off.
The legislation "will help restore the great strength of the American financial system, which -- at its best -- develops innovative ways to provide credit and capital, not just for our great global companies, but for the individual with an idea and a plan," Geithner said to reporters shortly after the bill was approved. Obama will sign the bill in the middle of next week, according to White House officials.
It has been a remarkable turnaround for the 48-year-old Treasury secretary, who endured repeated calls for his head from lawmakers a few months ago. Anger over the Treasury's bailout of troubled banks was high. The unemployment rate was soaring. In a January interview, Geithner called the hubbub over his job security "a price of this office."
In the wake of the bill's passage, there is recognition within the administration as well as on Capitol Hill that Geithner is not going anywhere anytime soon. White House officials said the speculation earlier this year about his tenure misunderstood his standing within the administration.
These officials said Geithner endeared himself to Obama and senior White House advisers by advocating a response to the financial crisis that later proved correct. Geithner vigorously resisted calls by some lawmakers and financial experts to nationalize the nation's largest and most troubled banks during the most perilous days. Instead, he helped get the financial system back on its feet, in particular by pressing for stress tests of big banks. The results of these tests showed that nearly all the banks would be able to weather the financial storm and quickly restored investor confidence.
The campaign to win passage of the financial regulatory bill has been driven primarily by the Treasury, showing that Geithner has gained significant latitude within the administration, a far cry from the early days when senior White House officials kept close watch over his public statements and sought to burnish his image.
"This is a very substantial victory for the president, and it is a credit to Tim's leadership that we have achieved so comprehensive a reform so quickly," said Lawrence H. Summers, director of the National Economic Council and a senior adviser to Obama.
Geithner has not won every battle over the legislation. Notable losses include measures added by lawmakers that would exempt auto dealers and banks with less than $10 billion in assets from new consumer protection rules. These firms represent a significant proportion of the financial industry.
But the bill broadly reflects his faith in regulators and his overriding belief that large financial companies can be protected from upheaval if they set aside large enough capital reserves. His has been a middle course, rejecting the era of deregulation that preceded the financial meltdown but also dismissing proposals to fundamentally restructure the financial industry, for instance by cutting the nation's biggest banks down to size.
In an interview last summer, as his team was drafting its version of the bill, Geithner said the heart of any financial reform effort must consist of "three things: capital, capital, capital."
That statement reflected Geithner's evolution from the time he was president of the Federal Reserve Bank of New York, starting in 2003. The New York Fed allowed Citigroup to create massive pools of mortgage loans and other assets worth more than $2 trillion, but it also allowed the company to hold a relatively thin cushion in its capital reserves to cover losses in case those investments went bad.
The New York Fed pressed Citigroup to raise its capital levels in the fall of 2007, just as the financial crisis was gathering steam, but by then it was too late for the company. When its portfolio blew up, Citigroup ended up needing $45 billion in direct aid and federal guarantees on $335 billion of its worst assets -- a bailout exceeding that of any other bank.
The legislation passed this week does not specifically set new capital levels for banks but directs U.S. regulators to work with their counterparts in other countries to set international standards. Geithner is leading this effort -- just one of the ways he will be able to put his imprint on the banking industry.
Some Treasury officials sought to play down the influence Geithner will have.
One aide said the bill merely details the authority that Treasury secretaries could exercise during a crisis -- powers that Geithner's predecessor, Henry M. Paulson Jr., largely made up on the fly as the financial world teetered in 2008.
"It essentially enshrines their ability to handle this stuff," the official said. "In the middle of a crisis, now you have real, defined responsibilities."
The official added that "in the near term, Tim has a lot of new powers, but I don't think he'll use them."
But government analysts say the bill greatly enhances the Treasury secretary's role within government.
"The Treasury Department and the Treasury secretary in particular pick up significant influence compared to what they formally had in the past," said Douglas Elliott, a financial analyst at the Brookings Institution.
Geithner's influence might go beyond what is delineated in the law, Elliott noted. As head of the Financial Services Oversight Council, the Treasury secretary will be able to use the bully pulpit to shape the thinking of other agencies on matters such as capital reserve levels at banks. In theory, these agencies are supposed to work independently of any political actor, such as Cabinet secretaries.
Sen. Christopher J. Dodd (D-Conn.), who shepherded the financial overhaul package through the Senate, said it wasn't his preference to put the Treasury secretary in charge of the new council. He said he would rather have a member of the Fed board fill that role. Still, he said, having a member of the president's Cabinet in charge could make the council "more politically responsive."
"It gives you some accountability," Dodd said.
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/16/AR2010071603732.html?hpid=topnews
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Grunex
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Joined: 28 Nov 2009
Posts: 11
Location: SE MN
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~SH~
Rancher
Joined: 14 Feb 2005
Posts: 5426
Location: South Western SD
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| Posted: Sun Jul 25, 2010 9:42 am Post subject: |
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| “Cattle producers – some of whom use futures markets to offset price risk – are vulnerable to any market distortions caused by beef packers that may not only participate in the futures market as physical hedgers, but as significant speculators as well,” he continued. “The cattle futures market is susceptible to downward price movements – in contradiction of supply/demand fundamentals, when beef packers, who may hold a physical hedging position in the market, also engage in substantial speculative short selling of the market. The effect of the beef packers’ speculative short selling is to lower not only the futures market price, but also the cash spot market price, which is intrinsically tied to the futures market. |
A few years back the packer blamers demanded an investigation into commodity trading practices by the major packers at the CME. The results of that investigation proved that the feeders held far more short speculative positions than the packers. If packers are not able to minimize their financial risk by protecting their investments on the board, they will have to buy cattle with a safety margin built in to account for the risks of market volatility.
Most who oppose CME trading have never used it yet they buy insurance and it's no different.
Just one more baseless market manipulation conspiracy theory in the light of $1.00 fat cattle.
~SH~
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Sandhusker
Rancher
Joined: 10 Feb 2005
Posts: 18076
Location: Nebraska
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| Posted: Sun Jul 25, 2010 11:47 am Post subject: |
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| A large group of many participants such as the feeders having more contracts than a smaller group of a handful of participants such as the packers doesn't mean that a member of the smaller group can't move the markets. One doesn't have to take out all of the offsetting contracts, all you have to do is dump enough contracts to take out some stops, those shorts turn to longs, and the ball takes off from there.
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~SH~
Rancher
Joined: 14 Feb 2005
Posts: 5426
Location: South Western SD
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| Posted: Mon Jul 26, 2010 11:50 am Post subject: |
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I repeat, the packers had very few short positions during te investigation. The feeders had the bulk of the short positions. Long positions are not speculative as short positions are. Either way, both are legal and neither constituted market manipulation.
~SH~
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mrj
Rancher
Joined: 21 Feb 2005
Posts: 3333
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| Posted: Mon Jul 26, 2010 11:52 am Post subject: |
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Texan, thanks for your post. You have it exactly right. This will do nothing to stop the real perpetrators, Fannie Mae and Freddie Mac, nad the CONGRESSMEN who cheated and profitted from/through them!
It will harm only legitimate, honest banks, both large and small.
Obama and his handlers have found in R-CALF yet another group of "Useful Idiots" to manipulate by throwing them a few bones and using them to divide agriculture into easily controllable 'small' communes.
mrj
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Sandhusker
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Joined: 10 Feb 2005
Posts: 18076
Location: Nebraska
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Mike
Rancher
Joined: 10 Feb 2005
Posts: 16442
Location: Montgomery, Al
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~SH~
Rancher
Joined: 14 Feb 2005
Posts: 5426
Location: South Western SD
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| Posted: Sat Jul 31, 2010 9:54 am Post subject: |
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Let me explain that better, long positions generally are not used by speculators nearly as much as short positions hence the concern with packers using short positions.
Those who take long positions on the market are usually doing it to lock in their profit on the other end. A short position is generally used by those trying to outguess the direction of the market which is far more speculative and can have an influence on market direction on a short term basis.
As an example, if I buy feeder calves in Oct. according to the August feeder cattle board and I lock them on the feeder board for August as yearlings, I am probably trying to manage my financial risk.
In contrast, if I buy a short position at any time during that time period, I would more likely be speculating on the short-term movement of the market rather than managing my financial risk.
~SH~
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Sandhusker
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Joined: 10 Feb 2005
Posts: 18076
Location: Nebraska
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| Posted: Sat Jul 31, 2010 6:15 pm Post subject: |
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SH, "Let me explain that better, long positions generally are not used by speculators nearly as much as short positions hence the concern with packers using short positions. "
WRONG.
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