Hoffa Urges Senate to Continue on Path of Real Financial Reform

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International Brotherhood of Teamsters

Apr 23, 2010, 10:50 ET

Teamsters Want Strong Regulation of Derivatives

WASHINGTON, April 23 /PRNewswire-USNewswire/ -- Teamsters General President Jim Hoffa today called on the Senate to push forward with tough financial regulation of Wall Street.

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He urged the Senate not to weaken the Agricultural Committee's bill to regulate derivatives, complex financial instruments responsible in part for the financial crisis of 2008. He called on Republicans to stop trying to block financial reform.

"Derivatives are too often sophisticated rip-offs that Wall Street bankers design in secret," Hoffa said. "We need to take derivatives out of the back rooms and put them on an open market where regulators can keep an eye on them. Investors need enough real-time information about derivatives so they can confirm that they're not simply extortion schemes. The bill that just passed out of the Agriculture Committee would bring derivatives out of the back rooms.

"The financial sector needs to serve a useful economic purpose other than to make a handful of people wealthy. Paying billions of dollars to Wall Street executives simply drains our economy of capital that could be used productively."

The Teamsters were very nearly victims of a derivatives scheme late last year. A small group of investors almost cost 30,000 Teamsters jobs at Overland, Kans.-based YRCW, the country's biggest trucking company. The investors were involved in a derivatives deal that amounted to a bet that YRCW would fail. The banks backed down when the Teamsters exposed those who were marketing both YRCW's bonds and bets that the company would default on those bonds.

YRCW is not an isolated example of the harm that derivatives cause to real people. Hundreds of municipal governments lost millions of dollars from their investments in derivatives, causing tax hikes and layoffs.

"We need to put a stake through the heart of the fraud on Wall Street," Hoffa said. "Our financial sector is not creating the capital that companies need it to grow and to create jobs.

"One out of five Americans who wants a full-time job can't find one, but Goldman Sachs, JPMorgan and Morgan Stanley all had record profit. There's something wrong with this picture."

Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.

SOURCE International Brotherhood of Teamsters