This is such a simple and obvious idea, I don't know why no one thought of it before.
Sen. Maria Cantwell wants to use state gambling laws to regulate parts of Wall Street, saying someone needs to police financial markets where "casino capitalism" involving highly speculative trades she likens to sophisticated betting continue unabated and threaten to create yet another financial crisis.
"She's going for their jugular," Michael Greenberger, a University of Maryland law professor, said of the effort by Cantwell, a Washington state Democrat. Greenberger was a top official at the Commodity Futures Trading Commission during the Clinton administration who unsuccessfully fought to regulate such trading.
Cantwell wants to repeal parts of a 2000 law that barred states from using their gambling laws to help rein in the nearly $600 trillion derivatives market.
The senator's effort comes as Congress is starting to consider tightening federal regulation of financial markets in the wake of the current economic downturn. Cantwell said she's not convinced Congress will take strong enough action and, as a backup, wants to give state attorneys general the power to act.
Cantwell's proposal, besides making good sense, is based on an idea that predates the New Deal.
In the early 1900s, gaming establishments known as "bucket shops" allowed people to place wagers on whether a stock would go up or down without actually buying the stock. States banned such betting after the economic crash and the panic of 1907.
In 2000, Congress attached the Commodity Futures Modernization Act to a must-pass, 11,000-page omnibus spending package that provided funding for a handful of Cabinet departments and other federal agencies. The bill essentially deregulated the commodities markets and pre-empted the states from applying their "bucket shop" or other gambling laws.
Cantwell is one of the few in the Senate who have actually stood up for the public in the past. In the aftermath of the West Coast electrical price spike of 2000-2001, she helped release audio tapes of Enron traders bragging about their schemes to drive up prices in an effort to force the Federal Energy Regulatory Commission to do their job.