Senator wants to use gambling laws on Wall Street

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.

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Cantwell is in the pocket of Bill Gates

So, if she has a very good idea, I automatically discount pretty much everything she has to say due to past attempts to get the "Bill Gates bill" into legislation.

It is a very good idea...quick, someone who represents the people grab it from her before it becomes a Trojan horse! ;)

Cantwell -- finally changing her spots....

You know, I've been arguing with Cantwell and her staff during the entire time she's been in the senate with regard to her pro-offshoring position (she's always claimed it is the only way American-based multinationals can "compete").

If she finally, after all the years she's been voting in support of spreading depleted uranium all over the planet, is changing her attitude, it's really neat.

Unfortunately, it is too damn little and too damn late in the game. We, I repeat, no longer have an economy in the USA.

We only have the financial engineering bubble.

Besides, if she had any brains on board she would really go after Wall Street based upon the Trust Indenture Act of 1939 (still in effect, the last time I checked) as well as taking advantage of the RICO Act.

(Please forgive my pissy attitude -- but I strongly suspect Cantwell is simply grandstanding due to all the negative mail and calls she's been receiving.)

ah, someone else knows her voting and legislative history

I hear ya on the pissy attitude. Every step of the way to try to reform H-1B, she's right there, making all of the moves to do Bill Gate's bidding behind the scenes, all the while trying to spin somehow and hide her agenda, which is zero reform, enabling more labor arbitrage with these Visas, even more offshore outsourcing. I watched that minute by minute action in 2006/2007 and I was so disgusted! While this is a great idea and all of a sudden she's making brew ha ha on the financial institutions...

She's up for re-election 2012.

She came out of the same industry

By the way, did she ever pay off her mega-campaign debt? She had put up her stock and mortgaged her house to finance it.

Cantwell is onto something

Senator Cantwell has a good idea. However, the question of why no one thought of this before isn't quite right. I wrote about credit default swaps as being gambling contracts in December, 2008 and pointed out that Federal preemption of state rights to regulate and enforce these contracts isn't as tight as it appears. States have the right to enforce their general anti-fraud laws and through the enforcement of those laws most of the abuses connected with CDS can be contained.

The link to my article is

And the link to my other aticles (including one written for the Financial Times) is

Gambling Laws?

This writeup might be a little more interesting/informative if it defined what "gambling laws" are

good point

Folks we should pull out the legislative meat on what these politicians mean for posting.

A lot of our readers are looking for the "readers digest" of critical intel.

I would say it's rhetoric in support of a Tobin Tax. In the Tobin Tax Instapopulist you will see all sorts of links trying to go into the actual proposals.

It's a tax on financial transactions in the markets. i.e. a small tax everytime a threshold of trades are made.

Kind of like what banks do to small business every time someone buys something with a debit/credit card at their shop...but much more Progressive and much smaller.

It's always entertaining to

It's always entertaining to watch rock-throwers and ideologues obscure an argument or concept's merit by attacking the messenger. The right wing of American thought has long since mastered this technique, so much so that the mentally-lazy American lumpenproletariat actually believes it to be 'thought' when they mimic it.

This refers to the folks who responded to Cantwell's proposal by attacking past behavior.

has nothing to do with idealogues

Sorry, that's her legislative track record, very anti Professional labor (college level professionals).

In terms of this policy, I have been writing on a Tobin tax for some time. See the latest post.

So, we love the rhetoric calling Wall Street a gambling casino, glad she's spewing it out there, but in terms of moving forward with legislation or having her write it...
uh, let's let Byron Dorgan, Dick Durbin or Bernie Sanders or someone else do that....

She's notorious for trying to limit amendments behind the scenes at the last minute with no public disclosure.

So, we love the rhetoric and we do not trust her....

From an email that was copied to Senator Cantwell office

----- Original Message -----
Sent: Tuesday, March 03, 2009 12:18 PM
Subject: ...of 684 TRILLION, 550 Trillion in CDSs are side bets on the outcome of an event...people need to understand what we are propping up with taxdollars

Rep. Collin Peterson has said,

"As much as 80 percent of the credit-default swap market is traded by investors who don’t own the underlying bond."

Which means of $684 trillion in CDSs, almost $550 trillion of that sum is unnecessary coverage for mortgage backed securities. That indicates that 550 Trillion in CDSs are side bets on the outcome of an event. Folks, that is gambling. Interstate gambling is illegal. Why should those CDS instruments be honored? C'mon, they are placed bets.

If a well connected bookie shorted you, would you call the cops to get your money back? I don't think so. Would the cops be on your side? I don't think so. Would the cops loan the gangster the money to cover your bets.? I don't think so. Why are "suits" treated so deferentially in this case?

The "suits" who were holders of these CDS placed illegal bets...

At this point the US Government's duty is to step in and confiscate the illegally placed bets under the Wire* & Travel Act statutes...

By taking these bets AIG was a bookie...and now the US Government duty is to make a case under RICO statutes and arrest the players involved in this bookie's operation. The law is clear, follow it, so that others may learn.

* - "The Wire Act of 1961 complements other federal bookmaking statutes, such as the Travel Act (interstate travel in aid of racketeering enterprises, including gambling), the Interstate Transportation of Wagering Paraphernalia Act, and the Illegal Gambling Business Act (requires a predicate state law violation).

The Wire Act was intended to assist the states, territories and possessions of the United States, as well as the District of Columbia, in enforcing their respective laws on gambling and bookmaking and to suppress organized gambling activities.[58] Subsection (a) of the Wire Act, a criminal provision, provides:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.[59]

In order to prove a prima facie case, the government must establish that:

The person was "engaged in the business of betting or wagering" (compared with a casual bettor);
The person transmitted in interstate or foreign commerce: bets or wagers,
information assisting in the placement of bets or wagers, or
a communication that entitled the recipient to receive money or credit as a result of a bet or wager;
The person used a " wire communication facility;" and
The person knowingly used a wire communication facility to engage in one of the three prohibited forms of transmissions.