“SNAP is essential in protecting the most vulnerable citizens during tough times, but we need to have a complete understanding of its mission and purpose.” That was the message from House Agriculture Committee Chairman K. Michael Conaway this week as the committee began its top-to-bottom review of the Supplemental Nutrition Assistance Program (SNAP), previously known as food stamps.
Committee Continues Examination of Role of Credit Derivatives in the U.S. Economy
WASHINGTON – Today, the House Agriculture Committee held a hearing to review the role of credit derivatives in the U.S. economy. Chairman Collin C. Peterson of Minnesota called today’s hearing, the second by the Committee in as many months, to examine credit derivatives and their part in the worldwide credit and financial crisis.
“One thing we learned at October’s hearing is that very few people know much about the credit default swaps market and even fewer people know the significant role they have played in the financial and credit crisis that has threatened the stability of our economy,” Chairman Peterson said.
“I think one of the things we can do right away to start opening up and cleaning up the swaps markets is to use the CFTC model of transparent and above-board central clearing process. At some point, our regulators and the next Congress will have to get to the root of the problem before it is too late and allow for some real oversight of these markets, to provide transparency and accountability for both buyers and sellers, and to reduce systemic risk.”
"I am encouraged that we are collectively moving forward with establishing a clearing mechanism for credit default swaps. It will improve transparency and risk management, and will create a method for price discovery. However, as we move forward with this initiative, it’s important to make clear that merging the Commodity Futures Exchange Commission with the Securities and Exchange Commission is not an approach that we should pursue as a part of the solution," said Ranking Member Bob Goodlatte.
The hearing examined recent events in the credit default swaps market, the establishment of over-the-counter clearing of such contracts, and the announcement by some regulatory agencies to cooperate in overseeing the central clearing of swaps trades.
The credit derivatives market has grown dramatically over the last 15 years. The most frequent users of credit derivatives are large financial institutions, some of whom have notably failed or been taken over by the government in recent months, including American International Group (AIG), Lehman Brothers, Bear Stearns, and Washington Mutual, among others.
Witness testimony is available on the Committee website, and a full transcript of the hearing will be posted on the Committee website at a later date.
• Mr. Ananda Radhakrishnan, Director, Division of Clearing and Intermediary Oversight, Commodity Futures Trading Commission, Washington, D.C.
• Mr. Patrick M. Parkinson, Deputy Director, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C.
• Mr. Erik R. Sirri, Director of Division of Trading and Markets, Securities Exchange Commission, Washington, D.C.
• Mr. Eric R. Dinallo, Superintendent, State of New York, Insurance Department, New York, NY