Nebraska Farmers Union

1305 Plum Street • Lincoln, NE 68502 www.nebraskafarmersunion.org Contact John Hansen Office: 402-476-8815 Fax: 402-476-8859 Cell: 402-580-8815 john@nebraskafarmersunion.org

Guest Op-Ed

July 15, 2010

Financial Market Reforms Are Long Overdue

By John K. Hansen, President of Nebraska Farmers Union

I was deeply disappointed in the July 14^th Wall Street Journal press coverage of rural Nebraskans’ thoughts on financial market reform legislation. It seems their editorial opposition to financial market reforms colored their news reporting. Reading the article you would never know that rural America got hammered by gyrating input costs that nearly doubled within a two-year period thanks to unregulated speculative trading of derivatives. Fortunately, despite misleading news articles, editorials, and Wall Street banking efforts, the U.S. Senate passed the long awaited and long overdue Restoring American Financial Security Act on Thursday.

Nebraska Farmers Union, the general farm organization I lead, and National Farmers Union have been fighting for better oversight of complex commodities contracts trades. Once the President signs the recently passed legislation, the Commodity Futures Trading Commission (CFTC) will at long last be provided with tools to effectively regulate derivatives trading. This is good news for rural America. Most farmers get the short end of the stick when commodity markets fluctuate wildly, or when everyday commodity values are manipulated by out of control derivative speculation. In the last few years, most farmers were not able to capture the value of higher commodity prices in order to offset the higher costs for inputs like fuel and fertilizer, which forced many of them out of business or eroded their equity. It is clear that farmers and ranchers need stability in commodity markets for the products they buy and sell and the recently passed legislation will help bring order to our economy.

Let’s consider some of the pertinent ag facts about the financial market reform legislation:

• Legitimate end-users of commodities like farmers, ranchers, and business owners who actually use commodities are exempt. Farmers and ranchers will have the same risk management and marketing tools they had before but now with more transparency and fairness.
• It imposes common sense aggregate position limits on traders in order to limit their ability to distort and manipulate markets. Any activity that distorts and thwarts true price discovery must be curbed.

· The reforms eliminate the majority of the loopholes that have allowed Over the Counter (OTC) trades by financial firms and their corporate clients to induce and benefit from their speculative positions. It re-establishes the price discovery function of the commodity markets.

· As with most sweeping legislation of this magnitude, there will be the need to monitor implementation, and make changes as needed in the future.

We thank Sen. Nelson for his vote in the best interests of family famers, ranchers, and the rural community by supporting this long overdue bill. Congress has taken a stand with rural America to rein in the abuses of Wall Street banks and investment firms. It is about time.