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Obama vows to beef up oversight of energy traders

THE ASSOCIATED PRESS

June 23, 2008

WASHINGTON - Sen. Barack Obama said yesterday that as president he would strengthen government oversight of energy traders he blames in large part for the skyrocketing price of oil.

The Democratic candidate's campaign singled out the so-called "Enron loophole" for allowing speculators to run up the cost of fuel by operating outside federal regulation.

"My plan fully closes the Enron loophole and restores common-sense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future," Obama said in a statement.

Obama's campaign blamed the loophole on former Sen. Phil Gramm, a Texas Republican who serves as Sen. John McCain's campaign co-chairman and economic adviser. The Obama campaign accused Gramm of inserting a provision into a bill in late 2000 "at the behest of Enron lobbyists" that exempted some energy traders from government oversight.

Houston-based Enron collapsed in scandal in 2001 when it was discovered the company had vastly overstated its income.

McCain spokesman Tucker Bonds said the Republican candidate has supported efforts to close the loophole and noted that the bill in question was signed into law by former President Clinton.

"The fact that Barack Obama is attacking John McCain, despite McCain's leadership on the issue, shows that Barack Obama is driven by the partisan attacks that Americans are tired of," Bounds said.

McCain's campaign supplied a copy of a letter Gramm wrote to Sen. Byron Dorgan (D-N.D.) on June 13 in which the former senator denied charges that the adoption of the bill was a "secret maneuver." Gramm said he had "nothing to do with the writing of the provision" on regulation of energy trading.

New Jersey Gov. Jon Corzine, former chairman and chief executive of the Wall Street investment firm Goldman Sachs, outlined Obama's plan yesterday during a conference call with reporters. Corzine said the volatility in the price of oil "is absolutely indicative of speculation in the markets."

Congress already has acted to close the loophole, including a provision in the huge farm bill that passed earlier this year. But Obama's campaign said the candidate would go further by requiring that U.S. energy futures be traded on regulated exchanges.

Obama also would ask the Commodity Futures Trading Commission to consider whether traders should be subject to higher margin requirements. He also would work with other countries to regulate energy markets and press the Federal Trade Commission and the Department of Justice to investigate possible market manipulation.