McCain advisors created and defend 'Enron loophole'
Keith Olbermann delivered a special report Wednesday on the "Enron loophole" -- a regulatory gap that is the single greatest cause of out-of-control gasoline prices -- and how McCain's leading advisors created that loophole and continue to defend it.
People who deal in oil routinely use "futures" -- agreements in advance on prices and delivery dates -- to deal with fluctuations in the market. However, deregulation has allowed commodity speculators to take over this system of futures and use it for their own profit, running up the price of oil in a speculative bubble.
According to Olbermann, the story of $4 a gallon gas begins during the presidency of George H.W. Bush, when former Enron CEO Ken Lay started speculating on energy futures. The Commodity Futures Trading Commission (CFTC) gave Enron free rein, and when Bill Clinton was elected in 1992, CFTC Chairwoman Wendy Gramm moved to lock in the commission's informal position on Enron as official policy. Gramm then joined Enron's board of directors, earning more than $900,000 over the next decade.
In December 2000, during the chaos following the presidential election, Enron got a law passed containing an amendment known as the "Enron loophole," deregulating not just single trades but entire markets. This made it possible for Enron to artificially create the California energy crisis -- and left Enron employees chortling over how they had fucked over "Grandma Millie."
The Enron loophole applied not just to electricity, but to all energy sources, which is why speculators have now been able to take over the oil market. Two weeks ago, the Senate Commerce Committee heard testimony from a former CFTC director that "the speculators are not just placing bets in these futures markets, they're saying, 'Gosh, I can control the price of heating oil.' ... Morgan Stanley is the biggest heating oil owner in New England."
If the Enron loophole is removed, said this director, "you get at least a 25% drop in the cost of oil ... some people estimate 50%."
John McCain voted to close the Enron loophole in 2002 and 2003, saying at the time that "we're all tainted" by Enron's money. But, notes Olbermann, "for most of this campaign, McCain has offered explanations other than the influence of speculators, and remedies other than regulation." If the Enron loophole is not closed, even alternative energy sources will do little to reduce prices, because speculators will be able to immediately take those over as well.
"John McCain doesn't talk about the Enron loophole any more," reports Olbermann. "What changed? Since 2006, John McCain's top economic advisor has been former Texas Senator Phil Gramm, husband of the former CFTC head who then joined Enron."
"It was Graham who passed the Enron loophole ... with no hearings, no debate," Olberman emphasizes. "It was Graham who stopped Democrats from closing the Enron loophole. ... Graham lobbied Congress about commodity trading rules in 2006."
In addition, McCain's senior advisor, Charlie Black, was a lobbyist for the act containing the Enron loophole in 2000, and McCain's finance co-chair, Wayne Berman, has lobbied more recently against legislation to prevent price gouging.
Olbermann acknowledges that McCain is now saying, "We must reforms the laws and regulations governing the oil futures market." However, McCain has not yet specifically mentioned the Enron loophole, and he still has Gramm and Berman and Black running his campaign and writing his economic policies
This video is from MSNBC's Countdown, broadcast June 18, 2008.