What is the so-called “Enron loophole”?
In 1936, Congress passed tough regulations to reduce the possibility of price manipulations by speculators. However, in 2000, Congress passed the “Enron Loophole” as a result of lobbying from Enron and a few other companies. Passage of this measure removed CFTC authority to monitor speculative energy trading of secret swaps and foreign exchange transactions over “virtual” or “electronic” exchanges. This has allowed speculators to trade commodities with little or no oversight. In order to ensure fair and open markets and to prevent manipulation, all energy trades need to be regulated in a manner similar to those on regulated markets like NYMEX.
