McCain Response to Obama’s “Enron” Plan

“The truth is Barack Obama is following John McCain’s lead to close a wall street loophole that was signed into law by President Bill Clinton. John McCain has supported bipartisan efforts to close this loophole and will work to address abuses in oil speculation. Barack Obama has voted the party line for Democrats who claim the loophole is fixed. The fact that Barack Obama is attacking John McCain, despite McCain’s leadership on the issue, shows that Barack Obama is driven by the partisan attacks that Americans are tired of.” —Tucker Bounds spokesman John McCain 2008

FACT: John McCain Has Led Bipartisan Efforts To Close The So-Called “Enron Loophole”

In November 2003, John McCain Was Only One Of Three Republicans To Support A Feinstein Amendment That Would Have Closed The So-Called “Enron Loophole.” Then-Senator Jon Corzine (D-NJ) Joined McCain To Vote For This Amendment. “Feinstein, D-Calif., amendment no. 2083 that would require the Federal Energy Regulatory Commission to promulgate regulations establishing an electronic information system to facilitate price transparency and participation in markets subject to the agency’s jurisdiction. It also would prohibit “round trip” trades, which generate profit without any commodity actually changing hands, and it would increase criminal and civil penalties for violations of the Federal Power Act and general penalties of the Natural Gas Act.” (H.R. 2673, CQ Vote #436: Rejected 41-56: R 3-48; D 37-8; I 1-0, 11/5/03. McCain Voted Yea)

· The Feinstein Amendment “Was Aimed At Closing What The Sponsors Called An ‘Enron Loophole.’” “The Senate rejected Wednesday, on a 56-41 vote, an amendment by Sens. Dianne Feinstein, D-Calif., Carl Levin, D-Mich., and Richard Lugar, R-Ind., to add energy derivatives reform language to the FY04 Agriculture appropriations bill. The amendment was aimed at closing what the sponsors called an ‘Enron loophole’ in the three-year-old Commodity Futures Modernization Act.” (”Senate Misses Another Target For Action On FY04 Approps,” National Journal’s CongressDaily, 11/6/03)

In June 2003, John McCain Was Only One Of Four Republicans To Vote Against Tabling The Feinstein Amendment To Close The “Enron Loophole.” Then-Senator Jon Corzine (D-NJ) Joined McCain To Vote Against Tabling The Amendment. “Domenici, R-N.M., motion to table (kill) the Feinstein, D-Calif., amendment that would give the Commodity Futures Trading Commission (CFTC) regulatory oversight of all derivative transactions of energy commodities, except for metals. It would subject electronic transactions to broad disclosure and transparency requirements, require electronic trading facilities and dealer markets to maintain sufficient capital to cover all operations, and require the CFTC and the Federal Energy Regulatory Commission to meet quarterly and discuss how derivative energy markets are functioning.” (S. 14, CQ Vote #218: Motion Agreed To 55-44: R 47-4; D 8-39; I 0-1, 6/11/03. McCain Voted Nay)

· The Feinstein Amendment Would Have Closed The “Enron Loophole.” “The Senate on Wednesday narrowly rejected a proposal to regulate online trading of energy derivatives and to impose stringent penalties for market manipulation despite some lawmakers’ effort to evoke incidence of fraudulent trading epitomized by the Enron scandal. The amendment by Sen. Dianne Feinstein (D-Calif.), described often as closing the ‘Enron loophole,’ attempts to fix the Commodity Futures Modernization Act of 2000 that exempted energy trading from regulation after intensive lobbying by Enron. The exemption allows firms to buy and sell billions of dollars worth of electricity, natural gas, oil, gasoline, and other petroleum products without disclosing information on those deals to the Commodity Futures Trading Commission (CFTC). But on a 55-44 vote the Senate passed a motion to table the amendment.” (”Senate Defeats Effort To Regulate Energy Trading,” Oil Daily, 6/11/03)

FACT: Just Last Week, John McCain Called for Comprehensive, Effective Regulation of Our Energy Markets

John McCain: “Where We Find Such Abuses, They Need To Be Swiftly Punished.” “There is the further problem of speculation on the oil futures market, which in many cases has nothing to do with the actual sale, purchase, or delivery of oil. When crude oil became a futures-traded commodity in the 1980’s, the idea was to afford a measure of protection against the historic volatility of oil pricing. It takes several weeks to ship oil from the Arabian Peninsula to the offshore port of Louisiana. And for the buyers, it helps to know that the price will not suddenly fall while the oil is in transit. A futures contract assures importers that they can sell the oil at a profit. That’s the theory, anyway. But we all know that some people on Wall Street are not above gaming the system. When you have enough speculators betting on the rising price of oil, that itself can cause oil prices to keep on rising. And while a few reckless speculators are counting their paper profits, most Americans are coming up on the short end — using more and more of their hard-earned paychecks to buy gas for the truck, tractor, or family car. Investigation is underway to root out this kind of reckless wagering, unrelated to any kind of productive commerce, because it can distort the market, drive prices beyond rational limits, and put the investments and pensions of millions of Americans at risk. Where we find such abuses, they need to be swiftly punished. And to make sure it never happens again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments. In all of these markets, reform must assure transparency, prevent abuse, and protect the public interest.” (John McCain, Remarks, Houston, TX, 6/17/0

FACT: President Clinton Signed The “Enron Loophole” Into Law

The “Enron Loophole” Was Part Of The Commodity Futures Modernization Act Of 2000. “The ‘Enron loophole’ was codified in the Commodity Futures Modernization Act of 2000, allowing oil futures to be traded electronically in unregulated markets outside of the jurisdiction of the Commodities Futures Trading Commission.” (David Goldman, “Democrats: Close Speculation Loophole,” CNNMoney.com, 5/8/00)

· President Clinton Signed The Commodity Futures Modernization Act Of 2000. “On December 21, 2000, President Clinton signed into law the Commodity Futures Modernization Act of 2000 (H.R. 5660) (the ‘Act’).” (Edward J. Rosen And Geoffrey B. Goldman, “The Commodity Futures Modernization Act Of 2000,” Futures & Derivatives Law Report, December 2000)

FACT: Democrats Control Congress and the Ability to Close the Enron Loophole Completely

Senator Dianne Feinstein (D-CA) Included A Provision Into The Farm Bill That “Closes ‘The Enron Loophole.’” “The bill’s 673-page conference report includes myriad provisions. California Democratic Sen. Dianne Feinstein, for instance, included language that she says closes ‘the Enron loophole.’ The language essentially tightens federal Commodity Futures Trading Commission oversight of electronically managed energy markets, which Enron allegedly manipulated during California’s 2000-20001 energy crisis.” (Michael Doyle, “Senate Passes Farm Bill, Setting Up Showdown With Bush,” McClatchy, 5/15/0

Senator Carl Levin (D-MI): “Our Five-Year Quest To Close The Enron Loophole Has Finally Been Successful.” “Following this investigation, I introduced a new bill, S. 2058, to close the Enron loophole and regulate the un-regulated electronic energy markets. Working again with Senators Feinstein and Snowe, and with the members of the Agriculture Committee in a bipartisan effort, we finally managed to include an amendment to close the Enron loophole in the farm bill that was then being considered by the Senate. The Senate unanimously passed this amendment to close the Enron loophole last December. The final Farm Bill that was passed by the House and Senate last month included language nearly identical to what the Senate had passed. Although President Bush vetoed the entire Farm Bill, both the House and Senate have overridden his veto. Our five-year quest to close the Enron Loophole has finally been successful.” (Office of U.S. Senator Carl Levin, “Senate Floor Statement On Oil And Gasoline Prices,” Press Release, 6/10/0

Senator Patrick Leahy (D-VT): “Last Week, Congress Passed A Farm Bill. It Would Close The Enron Loophole.” “Last week, Congress passed a farm bill. It would close the Enron loophole, and now the president has threatened to veto the legislation to close the Enron loophole. I’d like to know what the oil executives think about that.” (U.S. Senate Judiciary Committee, Hearing, 5/21/0

Senator Amy Klobuchar (D-MN): “As You Know, The Farm Bill Closed The Enron Loophole. I’m Hoping That That Will Be Helpful.” (U.S. Committee On Commerce, Science And Transportation, Hearing, 6/3/0

Representative Joe Donnelly (D-IN): “The New Farm Bill … Includes A Provision That Closes The Enron Loophole.” “The new Farm Bill, which became law just last week with Donnelly’s support, includes a provision that closes the Enron loophole.” (Office Of U.S. Rep. Joe Donnelly, “Rep. Donnelly Praises Federal Investigation Of Oil Speculation,” Press Release, 5/30/0

Representative Tom Allen (D-ME): “The Recently Enacted Farm Bill … Closed The So-Called ‘Enron Loophole.’” “Representative Allen noted that the recently enacted Farm Bill, which he supported, closed the so-called ‘Enron Loophole’ to hold oil speculators accountable to the same rules that already govern on-market traders.” (Office Of U.S. Rep. Tom Allen, “Rep. Tom Allen To Cosponsor Pump Act To Stop Oil Speculation That Drives Up Energy Prices For Middle Class Families And Small Businesses,” Press Release, 6/19/0