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 prescr ...

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, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investin ...

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. For ...

. 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 United States federal legislation that ensured financial products known as over-the-counter (OTC) derivatives remained unregulated. It was signed into law on December 21, 2000 by President ...

, signed by U.S. president

Bill Clinton William Jefferson Clinton ( né Blythe III; born August 19, 1946) is an American politician who served as the 42nd president of the United States from 1993 to 2001. He previously served as governor of Arkansas from 1979 to 1981 and agai ...

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 U.S. 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. The primary purpose of the SEC is to enforce the law against market ...

, and Phil Johnson, then chairman of the Commodity Futures Trading Commission. In September 2007, Senator Carl Levin (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 continuation ...

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

George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...

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, 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 served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the ...

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