The big finance bill Congress passed earlier this year left lots of key details unresolved. So, not surprisingly, lobbyists have been swarming the government agencies charged with hammering out all the new rules.
The latest: In an effort to influence the new rules, somebody sent several forged letters to the Commodities Futures Trading Commission, a key government agency. The letters were sent as part of the public comment process for an arcane rule that could have big financial implications.
In a statement yesterday, the head of the CFTC said:
... the Commission recently became aware of some comment letters that were fraudulently submitted in response to a proposed rulemaking. We ... have referred the matter to the Justice Department.
The letters were purportedly from an exec at Heinz (the food company), a Burger King franchise owner, a local judge, and a county sheriff, among others, according to Bloomberg News, which broke the story earlier this week.
They were apparently sent by a PR firm, which in turn blamed the forgeries on an Arkansas subcontractor, Bloomberg said. The Arkansas subcontractor blamed it on another subcontractor. Rabbit holes within rabbit holes.
The PR firm wouldn't name its client.
The finance bill will require many derivatives to be traded through clearinghouses. That's supposed to increase both the transparency and stability of the derivatives market, which played a key role in the financial crisis.
The letters were arguing over details in the proposed rules that would limit ownership of the clearinghouses by banks and other financial firms. Several of the letters contained identical passages criticizing banks for their "cartel-like" control of the derivatives market, Bloomberg says.
Given the central role the clearinghouses will play, ownership rules could have big financial implications for the banks, exchanges, and other players who participate in the derivatives market.
Countless details like this are being worked out in offices all over Washington right now. And, inevitably, the people most involved in trying to exert influence are inside players who stand to profit (or lose) the most from the new rules.