Tamara Hinton (202) 225-0184
WASHINGTON – Today, Ranking Member Frank Lucas along with House Republican Conferees urged Senate Republicans to oppose the derivatives provision the Democrats added to H.R. 4173 in the middle of the night during the final conference meeting. As some press reports indicate, end users will face substantial costs related to this provision.
In the letter
to their Senate colleagues House Republican Conferees write:
"One of the most serious errors is the provision directs the regulators to set margin requirements for the thousands of businesses across the country that use derivatives to manage their legitimate commercial risk. We write to urge you to oppose H.R. 4173 when the Senate considers the conference report.
"It is important that financial regulatory reform does not unfairly hurt our U.S. businesses. If the derivatives language in H.R. 4173 is not changed our small businesses will not be able to use derivatives to manage risk. Additionally, these companies will have less capital to devote to hiring workers and expanding their operations."
The letter continues to highlight the inaction of the Democrats to change the derivatives provision:
"Recently, Senators Chris Dodd and Blanche Lincoln have claimed that regulators have no authority to impose margin on end users. They are mistaken. The legislation specifically directs regulators to set margin requirements for end users.
"Additionally, Democrats had two opportunities this week to fix this language. On Tuesday, June 29, the conference committee had to meet in order to consider an amendment by Senator Dodd to change the funding mechanism for the bill. At this meeting, Senator Saxby Chambliss attempted to clarify this derivatives provision but was blocked by the Democratic conferees. And yesterday, during House consideration of the final conference report, Republicans offered a motion that would have sent the bill back to conference with instructions to remove the new margin requirements for U.S. companies. The Majority again blocked our efforts.
"Democrat protestations to the contrary not-with-standing, their refusal to correct this language was the strongest message they could send to regulators. The Majority apparently intended for regulators to impose these provisions on end-users. Otherwise, they would have made these changes when they had the chance."