Dianne Feinstein: “I rise on behalf of Senators Fitzgerald, Cantwell, Corzine, Wyden, Leahy, Boxer, and Durbin in modifying our amendment…”

“I rise on behalf of Senators Fitzgerald, Cantwell, Corzine, Wyden, Leahy, Boxer, and Durbin in modifying our amendment on energy derivatives. As you know, we discussed this issue on the floor before, and the senior Senator from Texas had some concerns. So we spent a good deal of time talking with him and his staff. We have also kept in touch with our cosponsors. We have agreed on some modifications. There are some modifications that the Senator from Texas sought that the cosponsors and I could not agree to. So this modification represents where we agree and not where we disagree. I begin by explaining two terms in the amendment. The first term is 'a derivative.' A derivative is a financial instrument traded on or off an exchange, the price of which is directly dependent upon an underlying commodity, such as natural gas or electricity. An 'over-the-counter' or 'swap' contract is an agreement whereby a floating price is exchanged for a fixed price over a specified period. It involves no transfer of physical energy, and both parties settle their contractual obligations in cash. Although energy derivatives make up only 4 percent of all derivative transactions, energy swaps make up 80 percent of all energy derivatives.”