Excessive Speculation and Compliance with the Dodd-Frank Act, Hearing Before the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs, United States Senate, One Hundred Twelfth Congress, First Session, November 3, 2011   [open pdf - 16MB]

From the opening statement of Carl Levin: "For years now, commodity markets have taken the American people on an expensive and damaging roller coaster ride with rapidly changing prices for crude oil, gasoline, natural gas, heating oil, airline fuel, wheat, copper, and many other commodities. Commodity prices have whipsawed American families, farms, and businesses, run roughshod over supply and demand factors, and made our economic recovery that much harder and more chaotic. Unstable commodity prices are a key reason why Congress enacted, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, new statutory requirements to put a lid on excessive speculation and price manipulation. Congress enacted the new law not only to protect consumers and businesses from unreasonable prices--prices disconnected from the usual supply and demand discipline of the marketplace--but also to protect the commodity markets themselves from losing investor confidence and looking more like a casino or rigged game than a marketplace where supply and demand determine prices. Commodities markets are not stock markets. Stock markets are intended to attract investors to provide new capital for U.S. businesses to invest and to grow. Commodity markets are supposed to serve a different function. Their purpose is not to attract investors, but to enable producers and users of physical commodities to arrive at market-driven prices for those goods and to hedge their price risks over time. […] Speculators, who by definition do not plan to use the commodities that they trade but profit from the changing prices, are needed only insofar as they supply the liquidity needed for producers and users to hedge their risks." Statements, letters, and materials submitted for the record include those of the following: Carl Levin, Tom Coburn, Paul N. Cicio, Gary Gensler, Tyson T. Slocum, and Wallace C. Turbeville.

Report Number:
S. Hrg. 112-313; Senate Hearing 112-313
Public Domain
Retrieved From:
Government Printing Office, Federal Digital System: http://www.gpo.gov/fdsys/
Media Type:
Help with citations