Tamara Hinton, 202.225.0184
Today, we’re moving forward with legislation that is a product of four hearings in this Committee. We’ve heard from agricultural cooperatives, electric utilities, large global banks, small community banks and farm credit banks. We’ve heard from manufacturers, pension plans, mutual funds and a global oil and gas producer. And we’ve listened to testimony from regulated exchanges, clearinghouses, and electronic trading platforms that will be leaders in the emergence of swap execution facilities.
Across the spectrum of our witnesses’ expertise, perspective and customer base, there was one consistent message: the rushed regulatory process to implement Title VII of the Dodd-Frank Act is jeopardizing the viability of the rules themselves, and the health and liquidity of the derivatives markets.
We’re not here today to reopen the debate about Dodd-Frank or make substantive policy changes to Title VII. We’re here to make sure the regulators take the time necessary to implement a regulatory regime that achieves the objectives of Title VII, without unnecessary or unintended consequences that will harm the economy.
There is a substantial Committee record demonstrating the negative impact that impractical deadlines have had on the regulatory product:
- The sheer volume and pace of rulemaking, in addition to the sequence of rule proposals, has made it difficult for stakeholders to participate in the process and offer their expertise and market insight.
- Cost benefit analysis has been a mere legal formality, instead of a thoughtful review of the potential economic impact.
- Despite nearly identical statutory mandates, the CFTC and SEC have proposed inconsistent rules that create confusion and will make it more difficult for market participants to comply.
- The U.S. is moving well ahead of the G20, increasing the likelihood for regulatory arbitrage, and negatively impacting the competitiveness of U.S. firms.
- The CFTC has taken a broad-stroke approach that exceeds congressional intent, and may significantly increase the costs of hedging and threaten the affordability of the OTC market for end-users.
It is the responsibility of this Committee to exercise oversight over this process. And it is time for us to slow it down.
The bill we’re marking up today is a common sense approach. It doesn’t water the bill down and it’s not a kill tactic. It provides an additional 18 months for rulemaking, and directs the regulators to re-sequence the rule proposals.
HR 1573 directs the CFTC and SEC to finish the definitions first – the building blocks of the entire title. This will provide market participants certainty about their regulatory status, and allow them to focus their participation on the rules that will impact them.
In addition, this legislation directs the CFTC and SEC to move forward with transparency. A principal element of Title VII is that it allows the regulators a view of the OTC market it currently doesn’t have. Many other rules depend on what the regulators learn from this transparency and therefore HR 1573 keeps that process moving on the current timeframe.
Unlike the rest of Dodd-Frank, Title VII regulations will touch thousands of businesses in every sector. A rushed regulatory process that jeopardizes their ability to manage the uncertainty in their businesses is irresponsible, particularly for a recovering economy.
Before this Committee, Chairman Gensler has stated that the Commission cannot, in many cases, meet the deadline in the law. This bill will allow him to continue his implementation efforts in a more sensible way and allow him to do so without violating the requirements of Dodd-Frank. It is my hope Members of this Committee will support reasonable efforts to make sure we get this right.