David Corn

As Barack Obama turns from overseas issues to economic matters--with a scheduled meeting on Monday in Washington with economic leaders--I noted elsewhere that there was a potent economic issue waiting for Obama: economic transparency. Referring to the subprime meltdown, I noted:

So here's a populist issue for Obama: the U.S. economy is too important to be placed in the hands of wheeler-dealers who in the shadows engage in transactions that have the potential to send waves of harm throughout the highly-interconnected financial world. Americans are entitled to feel insecure when they see that the economy can be so severely affected by a few big firms that go off the reservation, thanks to the imaginative machinations of a small number of traders. More transparency, more regulation--whatever the policy prescriptions are (and they will be technical and hard for most of us to understand), Obama could by addressing this issue gain a political advantage over John McCain, who tends to celebrate the workings of the markets.

Then I came across a story in Monday's Washington Post that was headlined, "Transparency Sought as Speculators' Activity in Oil Market Grows" and that reported:

Big Wall Street firms representing the interests of pension funds, endowments and wealthy individuals around the country have grown in just a few years from minor participants in the oil markets to their most dominant force.

These financial firms -- whose holdings of oil contracts are now larger than the collective demand of airlines, trucking firms and other companies that need oil to run their businesses -- have become the focus of an intense debate in Washington over whether their exponential growth is contributing to the surge in oil prices.

The agency that regulates commodity trading has been tracking some of the activities of these investors. But a year and a half ago, the Commodity Futures Trading Commission decided to keep that information secret, rebuffing thousands of requests from industry groups and individuals to make the data public. The CFTC noted in a report that only one group supported this decision: the International Swaps and Derivatives Association, which lobbies on behalf of the Wall Street firms.

The biggest financial speculators, called swap dealers, trade "futures contracts" that allow them to make money by betting on the price commodities will fetch in the future. They rarely take delivery of the goods themselves. In 2000, swap dealers held about 140,000 oil contracts, according to CFTC data obtained by a House Energy and Commerce Committee investigation. That has surged to about 1.8 million today, including a three-fold jump since 2006.

Here's an instance when a small number of those wheeler-dealers may be having a serious impact on the economy and the financial health of households across the United States, and the regulators take the side of the speculators and allow them to continue their trading far from the prying eyes of the public.

This is a good--and populist--issue for Obama and the Democrats. Regulators ought to be working for the public, not industry. And transparency ought to be the rule. During the W. years, unregulated segments of the economy that are cloaked in secrecy--such as the swaps market--have grown in size and significance. It's time for pushback.