The "Enron loophole" exempts most

over-the-counter Over-the-counter (OTC) drugs are medicines sold directly to a consumer without a requirement for a prescription from a healthcare professional, as opposed to prescription drugs, which may be supplied only to consumers possessing a valid pres ...

energy trades and trading on electronic energy

commodity market A commodity market is a market that trades in the primary economic sector rather than manufactured products. The primary sector includes agricultural products, energy products, and metals. Soft commodities may be perishable and harvested, w ...

s from

government regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. F ...

. The "loophole" was enacted in sections § 2(h) and (g) of the

Commodity Futures Modernization Act of 2000 The Commodity Futures Modernization Act of 2000 (CFMA) is a United States federal law that ensures that Over-the-counter (finance), over-the-counter (OTC) Derivative (finance), derivatives remained Financial regulation, unregulated. Commodity Ex ...

, signed by U.S. president

Bill Clinton William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician and lawyer who was the 42nd president of the United States from 1993 to 2001. A member of the Democratic Party (United States), Democratic Party, ...

on December 21, 2000. It allowed for the creation, for U.S. exchanges, of a new kind of derivative security, the single-stock future, which had been prohibited since 1982 under the Shad-Johnson Accord, a jurisdictional pact between John S. R. Shad, then chairman of the

U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

, and Phil Johnson, then chairman of the

Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an Independent agencies of the United States government, independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures contract, fut ...

. In September 2007, Senator

Carl Levin Carl Milton Levin (June 28, 1934 – July 29, 2021) was an American attorney and politician who served as a List of United States senators from Michigan, United States senator from Michigan from 1979 to 2015. A member of the Democratic Party (U ...

(D-MI) introduced Senate Bill S. 2058 specifically to close the "Enron Loophole". This bill was later attached to H.R. 6124, the

Food, Conservation, and Energy Act of 2008 The Food, Conservation, and Energy Act of 2008 (, also known as the 2008 U.S. Farm Bill) was a $288 billion, five-year agricultural policy bill that was passed into law by the United States Congress on June 18, 2008. The bill was a continuatio ...

, also known as "The 2008 Farm Bill". President

George W. Bush George Walker Bush (born July 6, 1946) is an American politician and businessman who was the 43rd president of the United States from 2001 to 2009. A member of the Bush family and the Republican Party (United States), Republican Party, he i ...

vetoed the bill, but was overridden by both the House and Senate, and on June 18, 2008 the bill was enacted into law.

Wendy Gramm Wendy Lee Gramm (born January 10, 1945) is an American economist who led the Commodity Futures Trading Commission during the Reagan administration. She is also the wife of former United States Senator Phil Gramm. Gramm has gained notoriety for he ...

, Senator Phil Gramm's wife, coincidentally was the former chairman of the Commodity Futures Trading Commission. After leaving the CFTC, she took a seat on Enron's board of directors. On June 22, 2008, then U.S. Senator

Barack Obama Barack Hussein Obama II (born August 4, 1961) is an American politician who was the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, he was the first African American president in American history. O ...

blamed the "Enron loophole" for allowing speculators to run up the cost of fuel by operating outside federal regulation.

References

{{DEFAULTSORT:Enron Loophole Enron Acts of the 106th United States Congress United States federal energy legislation

See also

References