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BS Alert: Keybridge Report is Lobbying Ruse by Republicans

February 16, 2011

Who is Keybridge Research? They are an independent economics and public policy consulting firm. Or are they? After doing some honest to goodness journalism, Andrew Sorkin of the NY Times outed these folks as lobbyists for Republicans who are negotiating for hands off regulation on derivatives under the new Dodd-Frank financial rules. And why does that matter? It was the unregulated derivatives market that largely brought the economy down. This really reveals the Republicans for who they are – lapdogs for the wealthy and Wall Street too-big-to-fail firms.

How Did this Unravel? Simon Johnson, former IMF Chief Economist followed up today:

On Capitol Hill this week, a serious debate is under way about whether to carry out an important part of the new Dodd-Frank rules for derivatives – with hearings in the House on Tuesday and in the Senate on Thursday.

Much of the discussion has focused on the report produced by Keybridge Research for a group called the Coalition for Derivatives End Users that purports to show the dangers of extending the rules to nonfinancial companies (the so-called end users in this context).

In testimony on Tuesday before the House Financial Services Committee, Gary Gensler, the chairman of the Commodity Futures Trading Commission, pleased the Republican majority by saying the rules should not apply to nonfinancial companies that buy derivatives but “only on transactions between financial entities.”

Representative Spencer Bachus, Republican of Alabama and the committee’s chairman, responded: “I want to applaud Chairman Gensler. Members on the majority think it’s critically important that we don’t impose margin or clearing requirements on end users.”

Yet the Keybridge Research report – as exposed by Andrew Ross Sorkin in The New York Times on Tuesday – engaged in an extraordinary, shocking misrepresentation, asserting its credibility by claiming affiliations with respected academics who have now asked that their names be removed from the consulting firm’s Web site. Some of those listed as advisers said they had had no relationship with the firm.

The report is, in fact, pure lobbying disguised as research. For their own self-interest, the big banks want customers who can undertake derivatives transactions without reasonable constraints – and these banks want to disguise this self-interest in a veneer of social interest.

Read entire article, click here

Related: Vanishing Act, NY Times article by Andrew Sorkin

Derivatives Industry Report Collapses, article by Simon Johnson

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