WASHINGTON, D.C. — At an emergency hearing of the House Committee on Agriculture this morning, Congressman Zack Space took Wall Street and government officials to task for the role they played in the current economic crisis. These officials allowed and facilitated a system of buying and selling investments in other companies’ debt -- a situation that Warren Buffett called “weapons of mass destruction” -- to function virtually unregulated for years.

Space demanded greater transparency in the arcane process known as “credit derivatives” and called for a clearinghouse where such investments would be more open and not conducted in a way fundamentally detrimental to the marketplace and the American economy. Such a mechanism would regulate credit derivatives to protect the credit market from risky practices that threaten the entire economic system.

“We can no longer believe Wall Street when it tells the government, ‘Trust us, we know what we are doing,’” Space said. “The decisions by a small number of people with an obscene amount of money can dramatically impact every sector of our economy and ultimately every American’s way of life.”

“The credit derivatives market is an unregulated, extremely complex Wall Street tool invented by mathematicians with trillions of dollars changing hands and no government oversight whatsoever,” Space said. “Just last year, the amount of money involved in derivative transactions was equal to the combined Gross Domestic Product of every country on earth. That’s outrageous.”

“These markets must face stringent regulation and transparency, or we may suffer from the same problems in the future.”

The House Agriculture Subcommittee on General Farm Commodities and Risk Management grilled representatives from the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and various Wall Street banks about how a lack of oversight and regulation on the part of the Administration facilitated the near-collapse of the American banking system.

The Committee questioned officials for hours about how the exploitation and misuse of credit derivatives could have been allowed to lead to the collapse of the country’s credit market. The insurgence of credit derivatives, also known as financial swaps, began in the late 1990s and ballooned in the last few years. What began as a tool for hedging bets on risky investments, became, virtually overnight, a volatile, multi-trillion dollar market with no regulation virtually overnight. In 2002, the entire market included contracts and instruments valued at $106 trillion – today the market is $531 trillion.

For too long, Wall Street told the government that the credit market did not need to be regulated because the financial institutions participating in the market were properly capitalized and “sophisticated” enough to regulate themselves and manage risk. The collapse of Lehman Brothers, AIG, Washington Mutual, and many others, in recent days, due to their investments in this market show that such practices can have a devastating impact on the global economy and underscore the importance of the government in ensuring transparency, fairness, and accountability.

Congressman Space has represented Ohio's 18th Congressional District since 2007. He is working to restore integrity to the office, expand Ohio's economy, and support renewable energy.