Chris Dodd's wife and derivatives trading - "all in the family"

It’s all in the family! Senator Chris Dodd writes a financial reform bill but forgets to regulate derivatives, “financial weapons of mass destruction.” Then we find out that his wife works for the owners of two exchanges that will very likely benefit from Dodd's “reform” legislation.


They make the rules. They take the money, all of it, and leave us with debt. And they tell us it’s all legal.

Here’s the story.

March 19, Los Angeles Times by Nathaniel Popper

In the middle of a blog item about credit default swaps, Felix Salmon of Reuters drops the following nugget about Sen. Chris Dodd and the CME Group, which owns the Chicago Mercantile Exchange and the New York Mercantile Exchange.

"Dodd’s wife, Jackie Clegg, is a director of the CME, which paid her $153,219 in 2009; she also owns shares in the company worth about $235,000. (The CME makes no mention of her husband on its website or in its SEC filings, despite the fact that he’s surely a big part of the reason why she has the position.)"

Why is this notable? (Full story)

Why? Because the Senator, who is supposed to represent the people, left out a big piece of necessary financial reform.  He forgot the tight regulation or out right banning of derivatives - a form of gambling illegal in the stock market for nearly 100 years before Congress brought it back to life.

Look what Warren Buffet says about derivatives in the press in 2003 and his 2002 annual report.

Buffeett Warns on Financial 'Time Bomb' BBC, March 4, 2003

The rapidly growing trade in derivatives poses a "mega-catastrophic risk" for the economy and most shares are still "too expensive", legendary investor Warren Buffett has warned.

But Mr Buffett argues that such highly complex financial instruments are time bombs and "financial weapons of mass destruction" that could harm not only their buyers and sellers, but the whole economic system.

Buffet goes into a little more detail in his 2002 annual report.

Warren Buffett Berkshire Hathaway Annual Report 2002

"Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counter-parties to them. But before a contract is settled, the counter-parties record profits and losses – often huge in amount – in their current earnings statements without so much as a penny changing hands. Reported earnings on derivatives are often wildly overstated. That’s because today’s earnings are in a significant way based on estimates whose inaccuracy may not be exposed for many years."

The fearless financial blogger who hounds Wall Street firms for their shoddy and illegal practices, Felix Salmon, first broke the story. He explains how Dodd, who is retiring this year, feathers the next for his wife's firm.

Is there an alternative to exchange-traded CDS? Felix Salmon Mar 19, 2010

The move to put derivatives on exchanges is something that has widespread support in the House of Representatives and the Obama administration, but what about the connection between Dodd and one of the major beneficiaries of this potential reform?It’s pretty obvious that the exchanges, especially the big ones like the CME Group, would love to see everything consolidated with them. And they’re in luck: that’s exactly what we see in the Dodd bill. I’m sure that makes for happy pillow talk in the Dodd household: Dodd’s wife, Jackie Clegg, is a director of the CME, which paid her $153,219 in 2009; she also owns shares in the company worth about $235,000. (The CME makes no mention of her husband on its website or in its SEC filings, despite the fact that he’s surely a big part of the reason why she has the position.)

So here we are. We've had the greatest economic collapse since the Great Depression. Unemployment is at about 17%. People are losing their houses, retirement, and health care. The prospects are bleak  for 300 million citizens.  But 10,000 investment bankers got $150 billion in bonuses for the great job they did in 2009.

In the midst of all that, the retiring Senator Dodd writes a bill that continues the Wall Street Casino's favorite game - derivatives like those for subprime mortgages and the much more frightening crisis posed by credit defaults swap.

Dodd is just carrying on the tradition.  Afterall, it was Congress that provided the very legislation in 1999 and 2000 which were the enabling acts for an era of greed.

"The bailout and other efforts to save Wall Street firms and the large banks are essentially an effort to deal with the problems of derivatives and other market failures. Wall Street got the court decisions and legislation it wanted and then promptly proceeded to create today's disaster." Michael Collins, March 14, 2009


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new "follow the money" website

It's everywhere. Just the other day someone who has tried to get labor arbitrage stopped for STEM (part of a union) was going off about how he is supposed to support, via work in the Democratic party, yet another tech executive who has decided to run for Congress. These are the very same people who offshore outsourced and insourced (guest worker Visas, manipulation of U.S. immigration system) to specifically displace U.S. STEM labor...

and their complete attitude, in fact their agenda is to do more of the same, and they spend tons of money trying to hide this agenda with various messaging/public relations spin. they even buy off a few researchers to write some very bogus "white papers".

So, that's the litter of candidates one gets to "choose" from.


and so it's like they believe, now that they have their millions, it's time to buy a seat in Congress.

If you look at the California races you have two of these, Carly "no American has a God given right to a job" Fiorina and just as bad, "let's offshore outsource the jobs to India" Meg Whitman.

Same in many other races. So, from the very ground on up, you get corruption and these sorts of relationships and connections.

Even when they get to Congress. Notice that Byron Dorgan is plain quitting. If there was anyone who should have been chair of the banking committee or assuredly have more power, it's that guy..
but no way, the committee chairs so often go to the most corrupt and personally vested interest in that particular topic area.

Connecticut knows this and they were not going to re-elect Dodd so the real question is why does he even have that chairmanship or why are bills even coming (or being stopped) in that committee when they could come from about 3 other ones to get financial reform passed.

Great post (and two complaints)

These two complaints I'm about to make fall into the category of constructive criticism, so please try not to be too offended.

First, that site: yes, all these new and newer sites are great, and like who can keep track of them anymore, but a number of them always seem to end up as simply diversionary (easily proven by tracking the updates, and their content, from sites such as firedoglake, et al., during this so-called "healthcare reform" surge) - not that I don't appreciate you mention of this site.

I strongly distrust this site as one of the board members is a Crown Fellow at that neocon startup "think tank" - the Aspen Institute (Holy Mother of God, I am sooooo tired of those clowns!!!).

Secondly, perhaps if you simply said "offshoring of jobs" as that is more widely and generally applicable -- when the multinationals are offshoring jobs to both their own foreign-based facilities, and to contracted-out factories, production and service facilities, that "outsourcing" term isn't always applicable, and probably confuses the issue for many (and it sounds stupid).

Colossally great post, Mr. Michael C.

offshore outsourcing

and I agree with you on that comment and why I run around as the content police, trying to make sure everyone uses data, stats that are accurate, objective and one even needs to watch bogus papers coming from Academia on this score....

Why EP is supposed to be fact based because you are correct, there are certain political agendas going on, some from the right and some from the left that are based in economic fiction. So, why we're supposed to be an economics blog, finance, all things $$ and do a lot of research, from 1st principles to screen out those biased things, which are really promoted some agenda and facts be damned.

On outsourcing, you are correct, so I'll say they promoted offshore outsourcing, howz that?

I checked out the website and looked up some liiberrals and the money from lawyers to me was very interesting, so it wasn't all bad...

Also, another problem we have is with TV talking often you will get one segment, which you know is accurate and then 10 minutes later another story that's just pure bullshit.

Case in point is this claim Bart Gordon had his health care vote bought for a job at NASA. Well, the guy is chair of the House Science Committee and NASA has been under their purview forever as is DARPA. So, to me, it would make perfect sense he went to NASA after quitting Congress, or DARPA or any of these government funded science research institutions....because he has strong expertise in the area, so it's not to me, so much of a stretch...

nothing like taking a job on the board of JP Morgan Chase or going to Goldman Sachs or say Daschle's job as a health insurance lobbyist and so on.

Anyway, you're right and I appreciate the comment police and content policing. It's easy to be snowed!

They do represent their constituents

But who are the constituents. It's

The Money Party

, that bipartisan coalition that caters to the less than 1% who control most everything and own the rest.  Christy Fiorina is a failed executive who now mouths off as though she knows something. They're all interchangeable. They don't care.  They don't have to.



and the survival of working class families depends on severing the ties between The Money Party and the oligarchy. - Financial Information for the Rest of Us.