Tonight, Ed asked Sen. Bernie Sanders (I-VT) about President Obama's stand on position limits. If you saw our series on Wall Street and gas prices last week, you know all about position limits. If you didn't, here's all you need to know--position limits restrict how much speculating hedge funds and Wall Street firms can do on basic commodities like oil and wheat. Want a little more depth? Well, people who need to buy and sell these commodities trade in futures contracts--which are basically deals to lock in prices down the road. That's called "hedging" against price fluctuations. Airlines are legitimate hedgers of fuel. Bakeries are legitimate hedgers of wheat. Now, you need SOME Wall Street money buying and selling these contracts--because legitimate hedgers have to make these contracts with other parties, after all. Now, if you have a crapload of money and start making lots of contracts indicating you think the prices will go one way or another, pretty soon the market takes notice--and, voila, prices go where you've pushed them. Beginning with FDR, the government began to limit the percentage of futures contracts that could be held by such speculators. THOSE are position limits. And for obvious reasons, without position limits, there's nothing to stop non-legitimate hedgers (e.g., Wall Street) from manipulating prices.
The Dodd-Frank Wall Street reform law ordered the Commodity Futures Trading Commission to restore those old position limits, which for decades ensured that gas and food prices were driven by supply and demand. Two of the CFTC commissioners support position limits. Two do not. And the swing vote, CFTC Commissioner Michael Dunn, remains a question mark. Some analysts say Wall Street speculators are adding at least $15 to the price of a barrel of gas. Tonight, Sen. Sanders called on the president to use his bully pulpit to press for position limits. But when Ed asked the senator where the president stands on position limits, well...see for yourself: