Abstract: Enron's Leaking Bucket or the Unintended Consequence of a Regulatory Change

Robert Russ, Edward N. Coffmann, Gary John Previts, and Chester H. Brearey

Abstract

In the later part of the nineteenth century and the early part of the twentieth century, bucket shops relieved everyday people of large quantities of money. Bucket shops were gambling establishments where individuals could place bets on the future prices of stocks and commodities. In 1922, the United States Congress passed the Grain Futures Act to eliminate bucket shops in the United States. This paper discusses the rise and fall of the bucket shops in the United States. The final elimination of the bucket shops was accomplished by legislative actions, taken first by the states and then by the federal government. The paper also discusses the evolution of federal regulations regarding futures transactions and how the reversal of the 1922 Grain Futures Act amplified the financial crisis of 2008.