Committee Statement

 

The Honorable Frank D. Lucas

Ranking Member, House Committee on Agriculture

 

RE: Agriculture Committee hearing to review derivatives legislation

 

February 3, 2009

Thank you Chairman Peterson for calling today’s hearing.

We appreciate the opportunity to examine your draft legislation that addresses concerns with the derivatives industry and its impact on the U.S. economy

During the past few months, the committee has spent a great deal of time monitoring the issue of trading activity in the futures markets, as well as exploring the role credit default swaps have played in our current financial crisis.

The draft legislation we are considering would impact a wide array of financial instruments, but what the ultimate effect will be in the marketplace is unknown. My main concern is how this legislation will impact risk management for agricultural producers? How far-reaching will this legislation go beyond credit default swaps and derivatives, in general?

I support greater transparency and accountability with respect to over-the-counter transactions. However, I also believe any legislation to regulate financial markets has to strike a delicate balance between protecting the economic workings of the country and creating opportunities for economic growth, business expansion, and risk management for our agricultural producers.

To that end, I believe this committee must work to ensure that the Commodity Futures Trading Commission plays a leading role in appropriately regulating the derivative and commodity markets once the committee decides what level of additional regulations are needed. We should also work to ensure that CFTC has the tools it needs—human resources, technical resources, economic resources—to effectively carryout its statutory mandate. It must be noted that the CFTC has a proven track record in clearing futures contracts and to date has not lost a single dollar of a single customer’s money due to failure of a clearinghouse.

Finally, I would like to thank the participants of our two panels today. We appreciate your time and commitment to the public policy process, and we look forward to your testimony.

 

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