Hoffa Applauds Senate Passage of Financial Regulatory Reform

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International Brotherhood of Teamsters

May 21, 2010, 03:22 ET

Teamsters Want Strong Regulation of Derivatives

WASHINGTON, May 21 /PRNewswire-USNewswire/ -- Teamsters General President Jim Hoffa today commended the Senate for standing up to the banks and passing a bill that strengthens regulation of Wall Street.

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He urged Congress not to weaken the Senate's language on derivatives, complex financial instruments responsible in part for the financial crisis of 2008.

"Derivatives are too often sophisticated scams designed by Wall Street bankers in secret," Hoffa said. "We need to put derivatives on an open market where investors can understand what they're buying and regulators can watch how they're doing."

Teamster members were very nearly victims of a derivatives scheme late last year. A small group of investors almost cost 30,000 Teamsters jobs at Overland, Kan.-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.

The bill also establishes a consumer watchdog to help prevent predatory behavior by financial firms. Hoffa urged Congress to establish it as an independent agency, rather than housing it in the Federal Reserve.

"The Federal Reserve has failed miserably in its mission of protecting consumers," Hoffa said. "Any agency charged with safeguarding consumers should be independent of the influence of big banks."

"We can't forget that banks served a useful social purpose in the years following World War II because of strong financial regulation," Hoffa said. "They lent money and helped create jobs. It was only after the banks were deregulated that Wall Street became a casino that made a handful of people wealthy without doing much to stimulate the economy. Even worse, lack of government oversight allowed the financial sector to rob 8 million people of their jobs through recklessness and greed."

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