Warren Buffett Denied by the Senate, GOP Stopped Current Bill

Update: The GOP managed to stop the current bill by a vote of 57. Back to "negotiations" it goes. "Democratic" Ben Nelson voted with the GOP.

Did you know Warren Derivatives are Weapons of Mass Destruction Buffett was lobbying Congress to exempt existing derivatives contracts from collateral requirements? Did you know that Brookshire Hathaway, Buffett's company, has a $63 billion derivatives portfolio?

Well, this is a first. Warren Buffett's lobbyists were denied a derivatives provision in the Senate bill, according to The Wall Street Journal.

The Democrats just denied Brookshire Hathaway an exemption on capital requirements for existing derivatives contracts, so now Buffett's Hathaway will have to pony up collateral to back their existing derivatives portfolio.

Sen. Ben Nelson (D., Neb.) initially helped push the provision into a bill passed by the Senate Agriculture Committee last week. It would have prohibited the government from requiring companies to hold collateral against their existing derivatives trades.

Note how Senator Ben Nelson always seems to be around when it comes to adding provisions demanded by lobbyists?

Meanwhile Republicans are now in agreement to attempt to block the Senate Financial Reform bill. Senator Shelby:

Republicans will block Democrats’ efforts to begin debate on the measure in a test vote today, saying the move would give them more leverage.

“I believe that 41 Republicans are right now going to stand together,” Shelby, the top Republican on the Senate Banking Committee, said in a speech at an Independent Community Bankers of America conference in Washington.

If Democrats fail to get enough votes, Republicans plan to offer their own alternative financial regulation plan, a Shelby aide told reporters today.

Democrats, who control the Senate with a 59-41 majority, need 60 votes to open debate in the procedural ballot set for 5 p.m. in Washington.

I'll update this post for more Senate shenanigans. Gee wiz, we only had Financial Armageddon and the worst recession since the Great Depression because of all of this.

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Let the Republicans Block The Bill - It's Their Guillotine

Buffet claims that the energy patch in Berkshire-Hathaway needs 'derivatives' to function. They are conflating futures used in all commodity trading since the Babylonians with interest rate plays. Typical futures do not have underling real securities or commodities. Derivatives are synthetic, calculated or strips. Example: Treasury Interest rate longs and shorts are derivative. Oil and other commodities, have associated commodities

Why would anyone fight disclosure? If you have big exposure from the unwind of your positions and you screw around with other peoples' money, you need to convince yourself you are a Trustee. Full Disclosure has been around since SEC Acts of 1933 and 1934. We should not be arguing about this. It has been settled law for most of a century.

This is worth fighting to preserve disclosure and accountability. The Meltdown has allowed the inmates to escape from the asylum and blend into the population. The Phil Grahams want to claim that no disclosure is just fine and that we did not need Glass-Stegull. This argument should
be over but it is not.

Burton Leed

WEll, I don't think the block was to improve it

That said, as it is, we got some improvement on derivatives but as far as I know a host of other things are still broken, i.e. the CFPA under the Federal Reserve and the entire TBTF, see Michael Collins recent post on nobody likes it but how exactly do you guarantee you have fixed TBTF and not dumped it on the taxpayer?

What about JP Morgan Chase, Citigroup in all of this?

It's not just Goldman Sachs here, seems we're playing roulette wheel. I mean JP Morgan Chase, BoA, Citigroup are all guilty of similar doings. WaMu (now part of Chase) was beyond belief bad in originating subprime mortgages. All eyes are on Goldman instead of looking at this systemically.

Tamany Hall Federal Division - Fly on Oval Office Wall

Regulation at a federal level works like the police and fire under Boss Tweed. 2 Police Departments, many fire companies for such a small corrupt town like Washington. Here is what the fly on the Oval Office Wall told me.

When 'clients' have a problem, you can go to Boss Tweed in Washington. As JP Morgan told TR, 'Send your man to talk to my man and they will work it out'.Buffet went to Obama first. Then he used his homeboy lapdog Sen. Nelson. Nelson may be doing Obama' bidding.

$63 Bn in forward commodity contracts is speculation, not hedging. Exxon does not own inventories that large. Buffet wants to make the case that legitimate hedging should be allowed. Instead, he make the case for how the whole lot of them need to be treated,

Burton Leed

GOP allows Financial Reform bill to move to floor

What kind of crappy, watered down crud is a result, I've yet to find out. Will write an overview update soon.