Greenberger's Testimony: I-Banks Control the Energy Market

Michael Greenberger, the former head of the CFTC's Division of Trading and Markets, testified yesterday before the Senate Commerce Committee on the topic of Energy Market Manipulation.  He stated that the investment banks, namely Goldman Sachs (GS) and Morgan Stanley (MS), control the price of oil and natural gas through the ICE futures market.  He cited that Morgan Stanley currently owns 27% of the natural gas futures.

He stated that former Senator Phil Gramm of Texas sneaked the Enron loophole through a large piece of insignificant legislation years ago: the result was that regulations upon the futures industry were abandoned.  This loophole eventually allowed the current CDO-subprime crisis, and the current energy market crisis because regulations, which once protected the market from manipulation, are no longer enforcable.

Greenberger suggested that the current attempt of closing the Enron loophole by Senator Levin through the Farm Bill, would not work - as it would leave the government with the constant burden of proof to prove manipulation was occurring.  Also it would only be enforcable on domestic market manipulators and not international ones.

Greenberger said that legislation immediately closing the Enron Loophole with a broader, international scope would stop market manipultion and would cause oil prices to plunge over 25% overnight.

Here is a video link to the testimony on market manipulation on CSPAN. Additional reading here.

 

Comments

[fxtrader07:]

interesting. unfortunately, the link for further read leads only to an email-address?

2008 Jun 04 05:17 AM

[violinist:]

well , as Paul Harvey used to say, now you know the rest of the story!! And didn't bush advisor on energy say the problem with oil was supply??? And a certain nameless md senator said"" not enough oil to go around, and as for speculation, if its happening, well punish those who are doing it""" well, close enough to what he said. Great article on how congress screwes the american people on a monthly bsis and we can't do a thing about it. They get rich while you and I get poorer every day. Feinstein's immigration bill another good example of self serving senators attempts to get things done without full senate knowledge. And the beat goes on, as sonny and cher used to sing. They dont miss a beat.

2008 Jun 04 08:54 AM

[ussmls7:]

The quote,there nothing you can do about it,Americans can change that,It takes Grass roots groups,provideing a true record of what each member has done,good or bad! If they support a appointed data miner,to supply updated info to groups,that could be explained in easy to understand lingo,whos up for re-election,if they need to go,Vote them out,onece Congress is purged of scumbags, those that will follow the Constitution, as it is ment to be,Americans can take back our Nation from the Banking Cartels,Special interest,lobby groups, that have line the pockets of Congress with our taxes & Blood.
Those that bich,but do nothing,will not change,unless they are starving, & the Liberial wellfare has gone,because of there lack of Action.
The CFTC has lost creitability, Manipulation has been going on for years,but they turn away, as it moves on!
silverseek.com has a great article about this subject,read it, it will sober the mind!

2008 Jun 04 09:47 AM

[buyitcheap:]

Classic... and supportive of previous testimony given with respect to speculators controlling the pricing. Time to go short and watch outrageous kneejerk retaliatory legislation ensue. Hopefully GS is balanced on their trades like in housing.

2008 Jun 04 09:50 AM

[Eric Fox:]

Do you have a link to a transcript of his comments?

2008 Jun 04 01:39 PM

[Eric Fox:]

Never mind

commerce.senate.gov/pu...

2008 Jun 04 01:43 PM

[asdf314:]

Oh man the cat is out of the bag now. Please, WAKE UP

2008 Jun 04 05:53 PM

[asdf314:]

You can get a copy of his comments at

republicbroadcasting.o... Click on show archives, National Intel Report , First Hour for June 04 2008 or Second Hour for June 03 2008

These same guys are manipulating the gold and silver markets through the concentrated short position.

2008 Jun 04 05:55 PM

[Jason Rines...:]

Between housing and energy, the scams run deep and the American people as a whole are screwed for the next several years. Very sad and very short-sighted of I-Banks. Since they love developing markets so much, feel free to permanently move there. Meanwhile, 300 million of us will work on the petroleum competing alt energy products for the transportation sector (94% of our petro usage), suffer the pain but enjoy the biggest bull run in world history in 2013. Those of use whom care about other people will have the long-term benefits AND the satisfaction to retain our honor.

To all of you who participated in these schemes (the sum of you are about 200 of you), you may escape serious justice but YOU WILL be humiliated and exiled to be with your friends. Hope you like London and the desert. I know jihadists just love Americans in the ME.

2008 Jun 04 10:18 PM

[jjason:]

The last two lines of this article give the links to more information about futures markets manipulating oil prices and commodity prices. AND THE LINKS WILL TELL YOU WHAT SENATORS WERE INVOLVED, how they did it, how Bill Clinton signed it into law, and why Congress has not fixed it yet.

Also, look up the article that Phil Davis wrote last week on the manipulation of oil prices ( on SeekingAlppha ).

Copy some of these articles and send them to your Senators and members of the House. Complain folks because the SOB's responsible for this fraud are killing our airline industry, trucking industry, farmers and fisherman.

And don't any of you dare to tell me that price manipulation is not going on...because if you do you are a liar.

Enron was a huge fraud. This manipulation of commodities prices is even bigger.

2008 Jun 05 12:49 PM

[jjason:]

Eric Fox, The link works to Greenburger's written testimony. Thanks. I downloaded it.

Could you please tell me how you put these links into your blogs? Thanks again.

2008 Jun 05 12:57 PM

[jjason:]

Thanks for the article and the links Anthony. Together we CAN do something about it. And, finally, although SeekingAlpha's executive committee does not like political discussions on this board, bad politics and bad politicians are partly responsible for the mess our economy is in and Senator John McCain is part of the problem.

OBAMA 08

2008 Jun 05 01:08 PM