Closing the 'Enron loophole'
Congress wants to prevent inflated natural gas prices from investment manipulation, along the lines of what happened with hedge-fund Amaranth. But some say the government shouldn't have to look so closely over investors' shoulders. Amy Scott reports.
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Doug Krizner: Does the name Brian Hunter ring a bell? He was a trader at a hedge fund called Amaranth, and his huge investments in natural gas last year helped bring down the hedge fund and raise heating costs. Now, Congress is looking at ways to prevent that from happening again. Amy Scott reports.
Amy Scott: Democratic Senator Carl Levin has written a bill that would close the so-called Enron Loophole. It exempts some energy exchanges from regulation by the Commodity Futures Trading Commission, or CFTC.
Former CFTC official Michael Greenberger says Amaranth inflated natural-gas prices by trading on unregulated exchanges.
Michael Greenberger: They've only been able to do it because they know that no one's been looking over their shoulder.
Levin hopes to attach his measure to the larger Farm Bill. A House committee holds a hearing on similar issues today.
University of Houston finance professor Craig Pirrong says regulators already have the tools they need.
Craig Pirrong: If a manipulation happens, it's gonna manifest itself in prices. The government currently has the authority to find out who's doing it and proceed accordingly. And I think it's much better to do that than try to watch everybody all the time.
Pirrong points to reports yesterday that BP agreed to pay more than $300 million to settle charges it manipulated propane prices.
In New York, I'm Amy Scott for Marketplace.
