Washington (Platts)--24Oct2008

US Senator Dianne Feinstein late Thursday accused former Federal
Reserve Chairman Alan Greenspan of helping to derail her efforts to establish
strict oversight of energy swaps and derivatives markets in 2002 and 2003.

The California Democrat has been a longtime proponent of increasing
transparency and tigthening regulation over energy futures trading following
the California energy crisis and the Enron scandal, which she claimed cost her
state's consumsers some $30 billion.

In March 2003, she and six other senators introduced a bill that would
have regulated both online and bilateral energy trades and given the Commodity
Futures Trading Commission the authority to investigate and punish fraud and
manipulation in those markets.

Feinstein, however, said Greenspan and former US Treasury Department
Secretary John Snow "strongly opposed" her efforts to broaden oversight of
over-the-counter markets.

In a November 2003, letter, Greenspan told Senator Michael Crapo,
Republican-Idaho, that "[b]y imposing large-trader reporting requirements on
bilateral transactions in energy commodities, the proposal would take the
first steps toward introduction of an ex ante prophylactic regulatory regime
for the OTC energy derivatives markets."

And in a September 2002 letter, Greenspan and Snow said OTC derivatives
markets are a major contributor to the US economy, and increasing regulation
of these instruments might drive players and liquidity from the markets.

"Public disclosure of pricing data for customized OTC transactions would
not improve the overall price discovery process and may lead to confusion as
to the appropriate pricing for other transactions, as terms and conditions can
vary by contract," Greenspan and Snow wrote.

Greenspan instead touted "enhanced market discipline" in the gathering
and formation of various energy price indexes. He also recommended the CFTC
exercise more vigorously its authority to halt market manipulation.

Feinstein's criticism came on the heels Greenspan's testimony Thursday
before the House Oversight and Government Reform Committee on the intensifying
US economic crisis. The senator said he hoped "to demonstrate Mr. Greenspan's
longstanding opposition to increased regulation in the swaps market."

--Jessica Marron, jessica_marron@platts.com