Faced with some hot data on oil speculation, the media squawked when it should have jumped.
After firebrand Vermont Senator Bernie Sanders leaked confidential data from the Commodity Futures Trading Commission to the Wall Street Journal last month — data that dramatically illustrated how speculators were dominating the oil futures market during the 2008 spike in oil prices — other news outlets jumped on the story.
In the worst possible way.
The data, which exposed precisely how much Goldman Sachs, Morgan Stanley, and other Wall Street speculators dominated the crude oil futures market, was a big new lead reporters could have used to further explore the dynamics behind the staggering gas price increase that resulted in a huge transfer of wealth from ordinary Americans to the very rich.
Another valid response to the story would have been to examine why data this revelatory isn’t routinely made public.
But several news outlets instead focused on comments by one supposedly outraged futures trader. Sarah N. Lynch of Reuters reported that Sanders’s leak was “sparking broader concern about industry confidentiality.” The story quoted John Damgard, president of the Futures Industry Association, as saying: “This type of incident will have a chilling effect on derivatives trading in the U.S. because market participants will be reluctant to take the risk that their positions will be exposed to the public-and their competitors.”
The Gannett Washington bureau’s Nicole Guadiano (in a story no longer available online) wrote that the disclosure “could have a ‘chilling effect’ on the market and make it more difficult for regulators to gather information.”
But even leaving aside the issue of whether chilling the futures market would be a bad thing or a good thing, this complaint was a transparently insincere and self-serving one — and a feint. While the disclosure of futures trading activity in real time could potentially reveal proprietary information, the only danger presented by the release of three-year-old data was the exposure of enormous and inappropriate gambling by big Wall Street players in a market intended to let companies that actually use commodities hedge against future cost changes.
“That’s not an honest reaction,” said Tyson Slocum, the director of the energy program at Public Citizen, who helped Sanders get the data to reporters. “It’s pushback designed to discredit Sanders — and change the subject from what the data means to the action that leaked the data.”
The biggest endorsement of this bogus story line came on the op-ed page of the Washington Post in early September, in a piece titled: Sen. Bernie Sanders’s market data leak deserves investigation.
In the op-ed, James E. Newsome and Fred Hatfield, identified by the Post simply as former CFTC commissioners, lambasted Sanders for his “unconscionable” act and warned that traders could “lose confidence in these markets.”
“This reckless, unprecedented action deserves a full examination by the CFTC and congressional oversight committees,” they wrote.
The Post not only chose to run their piece, but neglected to note the authors’ blatant conflicts of interest.
As the Wall Street Journal noted three days later: “What the Washington Post opinion piece didn’t say is that Newsome now helps run Delta Strategy Group, a lobbying firm whose clients include energy traders — the very people who would be aggrieved by the public disclosure of energy-future positions. Delta Strategy Group has been among the most active lobbyists to the CFTC. Hatfield also is a lobbyist and chairman of ICE Future USA Inc.”
It took five days after that for the Post to finally run and append a “clarification” noting that Newsome’s company has clients that trade in futures and swaps and that Hatfield’s company “operates exchanges and trading platforms for credit, emissions, energy and other products.”
In the interim, Sanders had fired back in the Post with an op-ed entitled: What Wall Street doesn’t want us to know about oil prices.
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