Major Dodd-Frank Act Vote Delayed Yet Again In Face Of Industry Pressure

In what is becoming a troubling pattern, financial regulators have yet again delayed a vote on a crucial provision of the Dodd-Frank Act.

The Commodity Futures Trading Commission again put off voting on a rule that would more strictly regulate the massive swaps market, which is used by firms to fix or lock in their energy costs, more clearly defining which banks and energy companies would be subject to costly regulations. Major commodity companies, such as BP, Shell and Cargill have vigorously argued that they should be exempt from the new regulations because their use of swaps is necessary to insulate themselves from major changes in prices and currency values.

The CFTC, which is working on the regulation with the Securities and Exchange Commission, was scheduled to vote on Thursday to finalize the rule. "The SEC pulled it for a variety of reasons. I think there is still some questions among the commissioners," a CFTC official told Reuters.

As the Watchdog has reported, progress on Dodd-Frank has slowed due to industry pressure; less than one-quarter of the 400 total rulemaking requirements had been implemented as of the end of January.

Not that the financial overhaul is necessarily adequate, according to some observers. In an interview with Bloomberg Law, former SEC commissioner Roberta Karmel said that Dodd-Frank is far too weak because it fails to resolve the problem of too-big-to-fail banks, saying that the current system is "antithetical to any notion of the capitalist ideal." Karmel added that the financial industry has "moved away from holding people responsible for business failure," citing the infamous implosion of investing banking firm Drexel-Burnham-Lambert in the late 1980s. She said that TARP recipients haven't had to "pay the price of that bailout by the government, by the taxpayers, in terms of a change in the structure of the financial services industry. In fact, the too-big-to-fail banks are bigger than ever."

SEC Pursues Chinese Execs Over Sale Of Empty 'Mine'

In other SEC news, the agency continues to pursue securities law violations by Chinese firms. It has revoked the securities registration of more than a dozen U.S. issuers based in China, and on Wednesday morning, it charged two China-based executives with defrauding investors into believing they were investing in a coal business, which turned out to be a shell company.

Puda Coal chairman Ming Zhao is accused of scheming with former CEO Liping Zhu to "steal and sell" the company's coal mining company by transferring controlling interest to Zhao and selling a "substantial portion" to a fund controlled by China's largest state-owned financial firm, according to the SEC.

"The massive fraud perpetrated by Zhao and Zhu wiped out hundreds of millions of dollars in shareholder value and was compounded by their brazen obstruction of the SEC's investigation," said SEC regional director George S. Canellos in a statement.

Energy Dept Moves To Dismiss Whistleblower Suit

The Department of Energy moved to dismiss a lawsuit filed by a whistleblower who claims he was removed from a radioactive waste removal project after raising safety concerns.

Walter Tamosaitis, the former manager of research and technology at the Hanford vitrification plant, sued the department in federal court in November. But the DOE claims that it should be tossed because he is not an employee since Tamosaitis works for subcontractor URS and on other legal grounds, reports the Seattle Times.

Quick Hits
  • A candy plant in Pennsylvania was cited for nine workplace violations by the Occupational and Safety Health Administration. Foreign student workers at a packing plant operated by Excel Inc. complained that the firm failed to report injuries and illnesses, and failed to protect their hearing. OSHA also proposed a $5,000 fine against SHS Staffing Solutions, which placed the workers at the plant.

  • The world's most under-reported financial scandal is heating up -- Citigroup and UBS are cooperating with investigators in the U.S. and abroad who are probing whether the biggest banks manipulated the benchmark LIBOR interest rate, which applies to over370 trillion in deals around the globe, reports Thomson Reuters.
  • Quote of the day: “It’s as if we told the banks to stop speeding and required them to have speedometers. But we didn’t set the speed limit,” a Congressional official told the New York Times in a criticism of the Volcker Rule.
  • A state bill requiring tire salesmen to disclose a tire's age to consumers is being challenged by the Tire Industry Association, which packed a hearing in the Maryland State Legislature to "stop its passage."