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.
Opening Statement of Chairman Frank D. Lucas Committee on Agriculture Public Hearing Examining Legislative Improvements to Title VII of the Dodd-Frank Act
Tamara Hinton, 202.225.0184
Thank you all for being here today.
In a way, we have already had this hearing during the last Congress. In fact, we held more than a dozen hearings on the Dodd-Frank Act during the last Congress with dozens of witnesses. And, we have discussed all of the bills or topics that are on our agenda today during past hearings.
Unfortunately, the reason we are still talking about the very same issues is because the same concerns still exist with parts of Dodd-Frank. We stand to harm significant portions of our economy if these issues are not addressed with legislative fixes.
Since the start of 2011, the feedback we have heard all across the country has been fairly consistent. Farmers, ranchers, financial firms, and Main Street businesses are worried about the unintended consequences of Dodd-Frank rules.
We’ve heard from public power companies that might not be able to hedge against volatile energy prices because their counterparties are walking away. As a result, energy prices could rise for millions of Americans—an unacceptable result that was certainly never contemplated when Dodd-Frank was written to reform our financial system.
And we’ve heard from manufacturers – who employ hundreds of thousands of Americans – that that they will have to alter their business models because they may be required to post margin on important risk management trades or on their very own internal transactions.
It boils down to this: some of these regulations could make using derivatives so expensive that businesses will be forced to stop using them to hedge against risk.
That increases costs for consumers and reduces stability in the market place. That is completely contrary to the intent of the original Dodd-Frank legislation.
Today, we will review legislation that are balanced proposals that ensure the legislation is implemented in the manner Congress intended or provides a technical fix to ensure Dodd-Frank does not disrupt markets or harm the economy.
It is good to note that this Committee heard from top regulators from Japan and the European Union just last December who warned that without better coordination between the CFTC and international regulators, there will be global fragmentation of the derivatives markets. That cannot be allowed to happen. One of today’s bills – a discussion draft – will directly address that issue in a common-sense manner that Dodd-Frank should have already included.
It is very important to note that every single bill we will discuss today is bipartisan with Republicans and Democrats both on the Agriculture Committee and the Financial Services Committee supporting them. They are bipartisan because they contain common-sense tweaks to ensure that Dodd-Frank does not unnecessarily burden our agricultural producers, job-creators, local utilities, financial institutions, and small businesses.
Again, all of these bills are intended to restore the balance that I believe can exist between sound regulation and a healthy economy.
I look forward to advancing all of them in a bipartisan fashion.
I now will turn to the Ranking Member to make his opening statement.