For organizations working to fight hunger and improve living conditions for poor people around the world, the financial reform bill currently being debated in the Senate right now represents perhaps the best chance in a decade to pass strong reforms that will have a direct and positive effect on the lives of the poorest communities in the world.
The bill is on the floor of the Senate right now, and the voice of your organizations and its supporters and members is needed in the debate in the next few weeks to ensure reforms are enacted that stop investors from literally gambling on hunger.
Background: Deregulation and the Food Crisis
An important cause of the high food and energy prices in 2008 was the deregulation of the commodity markets in the 1990s and 2000. This deregulation allowed a wall of speculative Wall Street money to flood into the commodity markets, driving up global energy and food commodity prices.
The result was $145 barrels of oil, $4 gallons of gasoline and food riots in dozens of countries. The UN estimated that an additional 130 million people were driven to hunger by these high prices. That persistent chronic hunger in so many countries exploded into spontaneous food riots should bring all of us to pause and reflect. We must do everything possible to avoid future price hikes like in 2008.
To avoid hikes in food prices that increase world hunger, we need to make sure two key provisions are included in the final financial reform bill that comes out of Congress:
1) Speculation limits across all commodity markets to guarantee that no individual speculator can unduly influence commodity prices, and
2) An end to opaque over-the-counter markets where there is no oversight or regulation over trades. The solution is to make all trades to pass through an exchange or clearinghouse; this would provide transparency as well as requiring that participants put up collateral to guarantee their bets. Without this, we are still open to another financial meltdown and/or food and energy price bubbles that hit the poorest and most vulnerable the hardest.
The Current Financial Reform Bill: Good, but Under Attack
The financial reform bill currently being debated in the Senate—as it is currently written—will go a long way in addressing the problem. Agriculture Committee Chair Blanche Lincoln’s strong reforms would basically do away with the secretive, over-the-counter markets where hundreds of trillions of dollars are traded with no oversight or regulation.
While Sen. Lincoln’s original language is included in the current version of the bill being debated by the Senate, the Republicans have identified her good reform proposals as a key part of the bill that they want to weaken. This is why it is so important for organizations worried about world hunger to voice their concerns now.
The basic debate is over who should be required to make their trades over exchanges while putting up collateral to guarantee their bets, and who will be exempt from those demands. Senator Lincoln only allows exemptions for legitimate users of commodity markets (those who produce or consume the physical commodities themselves) with no other exceptions. Her language would mean that 90% of all derivatives would be required to go through exchanges, a huge improvement. This could dramatically reduce Wall Street speculation in commodities, which would limit the roller-coaster food price volatility and reduce the likelihood and intensity of future food price spikes.
Republicans, and some Democrats, have complained that Sen. Lincoln’s reform provisions are too strong and that speculators unconnected to real-world supply and demand—i.e., hedge funds and other financial institutions—should be able to continue to use opaque markets for their investments.
Please motivate your grassroots members in the next week to sign onto the petition to Senate leaders urging them to ensure strong, transparent financial reform measures that place limits on destabilizing Wall Street speculation in food and other commodities.
The timeline is short. We ask that people send out alerts early next week to gather as many signatures as possible and send them to us (email@example.com or firstname.lastname@example.org) by Monday, May 17th. Then we will deliver the signatures to Senate leaders in order to influence the debate which is moving rapidly.
There are two ways people can act:
1) Send people to www.stopgamblingonhunger.com where they can learn more about this important issue and easily send a letter directly to their Senators and Representative.
2) Or, if you would prefer to use your own system, here is some suggested petition language to Senate leaders you could use is included below.
ActionAid, Food & Water Watch, Maryknoll, and other groups are working together to compile petition signatures to deliver to key Senators in the coming weeks. Please use the sample action letter below to engage your members and then we can deliver thousands of individual signatories to Senate leaders.
This petition, with your supporters’ signatures (names and city/state is all we need) would be delivered to the key Senate leaders on this issue: Senator Reid, Senate Majority Leader; Senator McConnell, Senate Minority Leader; Senator Blanche Lincoln, and Senaor Judd Gregg. Please contact email@example.com or Dave Kane firstname.lastname@example.org if you’d like to be part of the joint delivery effort.
Petition to the U.S. Senate:
The financial reform bill currently under consideration must include the bipartisan Wall Street Transparency and Accountability Act that passed out of the Senate Agriculture Committee in order to stop Wall Street speculators from literally gambling on world hunger.
Just like reckless speculation in the housing market drove the meltdown of the economy, supercharged speculation in farm commodities wreaked havoc on food markets, leading to the global food crisis of 2008. The UN estimated that an additional 130 million people were driven into hunger during this crisis. We need strong regulations to stop this from happening again.
While much of the debate over financial reform has focused on purely financial and banking issues, the oversight of unregulated derivatives markets has direct and important implications for consumer food prices, global hunger and the economic stability of family farmers. I urge you to include the Senate Agriculture derivatives legislation in the final financial reform package.
SAMPLE ACTION ALERT
The financial reform bill currently being debated in the Senate right could have a direct and positive effect on the lives of the poorest and hungriest people in the world – but we need your help to make sure strong reform measures are enacted.
The deregulation of the commodity markets in the 1990s and 2000 opened up these markets to speculators, who flooded them with Wall Street money. This drove up prices for food and energy across the globe, helping to cause the global food crisis of 2008. The U.N. estimated that an additional 130 million people were driven into hunger during this crisis. We need strong regulations to stop this from happening again.
Senator Blanche Lincoln has inserted language into the Senate bill that would set limits across all commodity markets and bring their trading out into the open. This language, which would stop speculators from gambling on hunger, must not be weakened. Her language is in the bill now, but it’s under attack.
We can not allow Wall Street use the commodity markets to gamble on hunger. Please tell your Senator to maintain the strong language proposed by Senator Lincoln.
Please sign onto the below petition to Senate leaders urging them to ensure strong financial reform measures that places limits on and bring out into the open speculation in food and other commodities and to stop gambling on hunger.
Keep A Congressional Pulse with Congress
Let your Congress person know how you feel about certain issues.
• Keep your eyes open for the Center’s current recommended Action Alerts.
Stay informed with the Network, one of the best U.S. legislative action groups that lobbies the U.S. Congress for social justice.