Rep. Frank Lucas, Chairman of the House Agriculture Committee, today issued a statement in response to the Commodity Futures Trading Commission's (CFTC) surprise "advisory notice" to further regulate cross-border swaps.
Ag Committee Questions Impact of CFTC's Rules on Economy
Tamara Hinton, 202.225.0184
WASHINGTON – Today, the House Agriculture Committee held a public hearing to review the definitions of key terms included in Title VII of the Wall Street Reform and Consumer Protection Act, such as "swap," "Swap Dealer," and "Major Swap Participant." Additionally, Members examined how end-users will be impacted by these definitions and regulatory designations.
The Act does not define an end-user explicitly. In order to qualify for the end-user exemption, a company must not be designated a Swap Dealer, Major Swap Participant, or a financial entity. Consequently, the Commodity Futures Trading Commission’s (CFTC) interpretation of these definitions through its proposed rules shape the end-user exemption and ultimately determine who will be exempt.
"Rarely does Congress consider an issue that has an impact on such diverse segments of the economy, which is why we cannot impose a wave of new regulations that are rushed and poorly vetted. CFTC has proposed very broad and far-reaching definitions, but very narrow interpretations of the exemptions Congress authorized. The end result will be a spectrum of market participants subject to a regulatory scheme, and the costs that come with it, that far exceed the risks they pose to the financial system," said Chairman Frank Lucas.
"I am sympathetic to concerns about how the CFTC’s proposed rules could potentially impact groups that were not responsible for the financial crisis. At the same time, we need to make sure that some of the big financial firms, whose irresponsible behavior Dodd-Frank seeks to address, don’t use these concerns to create loopholes for themselves. I have some optimism that at the end of the day the resulting rules are going to be acceptable. If they aren’t, it will definitely be an area for the Committee to address," said Ranking Member Collin Peterson.
Written testimony provided by the witnesses is available below and can be found on the Committee's website by clicking here.
The Honorable Gary Gensler, Chairman, Commodity Futures Trading Commission, Washington, D.C.
Mr. James C. Allison, Risk Manager, Gas and Power North America, ConocoPhillips, on behalf of the Working Group of Commercial Energy Firms, Houston, Texas
Mr. Mark J. Cvrkel, Chief Financial Officer, Susquehanna Bank, Lititz, Pennsylvania
Mr. James M. Field, Senior Vice President and Chief Financial Officer, Deere & Company, Moline, Illinois
Mr. Richard McMahon, Vice President, Finance and Energy Supply, Edison Electric Institute, Washington, D.C.
Ms. Ann Trakimas, Chief Operating Officer, CoBank, on behalf of the Farm Credit Council, Greenwood Village, Colorado