Hoffa Supports Cantwell Call for Crackdown on Derivatives

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International Brotherhood of Teamsters

Feb 03, 2010, 04:37 ET

Urges Transparency in Credit Default Swaps

WASHINGTON, Feb. 3 /PRNewswire-USNewswire/ -- Teamsters General President Jim Hoffa said the union supports Sen. Maria Cantwell's call today for a crackdown on derivatives.

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Sen. Cantwell, D-Wash., today says she is advocating more transparency and accountability for futures markets and derivative products promoted by banks and other financial institutions. The Senate is expected to take action on financial reform this month. Cantwell held a news conference today to announce her proposal.

"It's time to close the casino and put our financial system to work for, not against, working Americans," Hoffa said. "Wall Street must stop using these abusive financial products to loot the middle class."

The Teamsters recently exposed certain banks and equities firms for making markets in a high-risk derivative trade -- credit default swaps -- when YRC Worldwide Inc. (Nasdaq: YRCW) was attempting to get its bondholders to exchange the bond debt for equity. By creating additional markets, they were essentially encouraging investors to force YRCW's bankruptcy -- and the loss of 30,000 Teamster jobs.

To avoid a public relations fiasco, the bankers suspended their activity in derivatives related to YRCW.

"We have to shine a light on these shadow market activities that destabilize American businesses," Hoffa said. "When we exposed bankers selling insurance betting on the company's failure, they stopped. They knew how bad it would look for financial companies that received billions of dollars in bailout money to profit from the destruction of America's largest trucking company."

By revealing the shameful behavior of the banks and other financial firms, Hoffa was able to help persuade YRCW bondholders to participate in the company's debt-for-equity exchange offer that averted bankruptcy. YRCW still has hurdles to clear, but without this bond exchange it would not have gotten the chance to continue to provide employment for 30,000 Teamsters in 2010.

YRC Worldwide Inc. is the parent company of YRC, Holland, Reddaway and New Penn trucking companies.

Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.

SOURCE International Brotherhood of Teamsters