By Sylvie Dale, Online Editor
April 10, 2002 — The U.S. Senate has rejected a proposal to require federal oversight of energy-related financial derivatives.
The amendment to the Senate energy bill currently in process was withdrawn when proponent Sen. Diane Feinstein became sure she didn’t have the votes to add it in, the Associated Press reported.
Feinstein had pushed for the amendment because she said power companies like Enron can too easily exploit the metals and energy derivatives markets without government oversight.
But the measure was widely opposed by energy companies, banks, securities companies and insurance companies because it threatened the viability of the market in derivatives, Rep. Phil Gramm said. Gramm led the fight against the measure for more than a month until its defeat Wednesday.
Enron’s energy trading business relied heavily upon trading in energy derivatives, which can now be done largely in secret. The amendment would have put such trading under the Commodity Futures Trading Commission, mandated new reporting, and required trading partners to show that they had enough capital to support the transactions.