Potential future carbon trading is getting swept up into “too big to fail,” we report here for the first time.
Last week the Wall Street Journal editorial page broke the following news:
… J.P. Morgan’s recent trading loss and the resulting Washington blather about tighter regulation have grabbed headlines. Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading—not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net…
Specifically, the law authorizes the Federal Reserve to provide “discount and borrowing privileges” to clearinghouses in emergencies. Traditionally the ability to borrow from the Fed’s discount window was reserved for banks, but the new law made clear that a clearinghouse receiving assistance was not required to “be or become a bank or bank holding company.” To get help, they only needed to be deemed “systemically important” by the new Financial Stability Oversight Council chaired by the Treasury Secretary…
We’re told that the clearinghouses of Chicago’s CME Group and Atlanta-based IntercontinentalExchange were voted systemic this week… [Emphasis added]
Climate cognoscenti will recall that the now-defunct Chicago Climate Exchange — launched as the first U.S.-based platform for trading cap-and-trade-issued carbon emission permits — was purchased by the IntercontinentalExchange in early 2010.
So if cap-and-trade (or whatever its next iteration is labeled) ever returns, taxpayers will be guaranteeing the scam doesn’t fail.