Many of us don't know what electronic credits called Renewable Identification Numbers (RINs) are, but Carl Icahn, the uber-investor Donald Trump at one time said he would like to have as treasury secretary, argues in today's Wall Street Journal that RINS may be as big a threat to the U.S. economy as the mortgage-backed securities, which crashed the economy at the end of the George W. Bush administration.

So what are RINS?

This system of credits was created as part of the Renewable Fuels Standard, a biofuels mandate passed by Congress in 2005. RINs are generated when renewables, like ethanol, are blended into gasoline and diesel fuel. Oil firms that are not able to blend are required to purchase RINs to comply with the biofuels mandate. It’s sort of like a “cap and trade” scheme, but meant to encourage renewables.

The problem is that the EPA, in implementing the Renewable Fuel Standard, made the enormous mistake of regulating the wrong party. The obligation to blend biofuels was put on petroleum refiners and importers. This has been catastrophic for small and medium-size refiners, often called “merchant refiners,” most of whom cannot blend. The majority of fuel they produce goes into a common-carrier pipeline and is sold to blenders downstream.

Those blenders, often gas-station chains, earn windfall profits by generating RINs that the merchant refiners are forced to buy to comply with the law. Big integrated oil firms are practically exempt: Most of them blend more fuel than they refine, meaning they end up with excess RINs to sell.

This “blender loophole” is the downfall of the program. Any blender can generate RINs, and anyone, including Wall Street investors, can buy and sell them. So instead of being a small system for trading credits among oil firms, RINs have turned into a $15 billion market full of manipulation, speculation and fraud.

The law requires refineries and importers to buy RINS. Wall Street and Big Oil have gotten into the act, vastly inflating the cost of RINS. Billions of dollars are being made trading in RINS. This price tag means that many merchant refineries are on the brink of bankruptcy. Icahn explains a possible result:

If merchant refiners go under, the Big Oil oligopolies will be strengthened and gasoline prices will go up, with ripple effects throughout the economy—lower consumer spending, decreased travel, higher shipping costs, increased unemployment, labor market monopsony, decreased consumer confidence, higher food prices, and less public funding for priorities like education. The failure of multiple refineries would absolutely wreck America’s economy.

Just let me interject that we already likely spend too much on education for the results we are getting, but the rest of this is sobering. The EPA is not alarmed by the high price of RINS, arguing that this forces more bio-fuel spending. Icahn says that instead of spending on bio-fuel, many of those who would be able to do so merely retain their RINS profits. Fraud, as you might expect, is widespread.

Icahn says that we have a chance to deal with this now:

If the small and merchant refineries start shutting down, it will jeopardize the economy and national security alike. The Trump administration, with new leadership at the EPA, should move quickly next year to reform the biofuels mandate and forestall the crisis.

Under President Obama, who seized upon the bureaucracies as a way to govern, primarily through regulations, the already powerful EPA became more out of control.

RINS are just one of the reasons the EPA needs to be reined in by a new administration.