Opening Statement of Chairman Lucas at Derivatives Reform: The View from Main Street Hearing

Jul 21, 2011 Issues: Dodd-Frank Implementation

Tamara Hinton, 202.225.0184

Thank you all for being here today. I’d especially like to thank Chairman Gensler for joining us on our first panel, and I’m grateful to all the witnesses on our second panel for taking time away from your businesses to be here.

This is our sixth hearing on the Dodd-Frank implementation process. We’ve heard from over 30 witnesses, including Chairman Gensler on three different occasions.

We’ve explored just about every issue under our jurisdiction. And Members of the Committee, from both sides of the aisle, have raised concerns regarding the direction of many of the rules.

We have listened carefully to concerns from small banks and small businesses. We’ve learned how businesses on Main Street—the end-users of derivatives—could be affected by proposed regulations.

We’ve heard how organizations that played no role in the financial crisis could be subject to significant new regulations designed for the largest financial institutions.

And Chairman Gensler, we’ve used these hearings to put issues in front of you that are very important to our constituencies. So, as you prepare the rules in final form, I hope you’ve been listening. And I hope you will listen today to the issues that will be raised.

I urge you to respond honestly and directly.

Congress has given you an extraordinary amount of authority and responsibility to write rules to govern these markets.

But with that authority comes the responsibility and expectation that you will keep at the forefront the prevailing issue facing the country – economic growth and job creation.

We can achieve a robust regulatory regime without imposing undue or ill-fitting regulations on businesses across the country.

The Commodity Futures Trading Commission, or CFTC, has acted on some issues that this Committee has raised. In light of the unrealistic timeline established by Dodd-Frank, the Commission has finalized an Order to extend the effective dates, providing much-needed certainty to market participants and additional time for rulemaking.

Unfortunately, we have not seen similar responses on most of the concerns that have been raised in this hearing room. The Commission has given us little reason to believe that the clarity and scope of these regulations will improve.

Nor is there any indication that proposed regulations which are overly burdensome or counterproductive in their current form will change substantially or that they will not bring economic harm.

And frankly, I don’t believe anyone in this Administration can provide an honest assessment of what the cumulative impact of these regulations will be – for end-users, for liquidity in our financial system, for our competitive position globally.

With unemployment stagnating at more than 9 percent, we need greater accountability from you, Chairman Gensler, and from the Administration, that you at least have a handle on the impact these regulations will have on our economy and the functioning of our financial markets.

If you don’t think the statute gives you the flexibility to address the concerns that are raised today, I urge you to indicate that clearly.

And, I urge you to balance the need for modern regulations with common sense policy that differentiates between farmer cooperatives and Wall Street firms.

As many of you know, the CFTC has turned the corner in its implementation of Title VII. They have moved from proposing rules to implement the Dodd-Frank Act to finalizing regulations.

So it stands to reason that the moving parts of these regulations are starting to settle into place. Parties that will likely be regulated should know where they stand.

But our Committee continues to hear from stakeholders that say they have received little to no guidance on what the final rules will look like, or how they will be affected by them.

We’re hearing this despite the fact that these stakeholders are regularly meeting with you or your staff. And instead of the confusion clearing as rules become final, stakeholders seem even less sure of where they stand now than they were three months ago.

The title of today’s hearing is “The View from Main Street.” Our witnesses bring a valuable perspective on how financial regulations will stretch well beyond Wall Street to the Main Streets of towns across America—from water departments in California to rural electric cooperatives in our congressional districts.

I’d like to thank our witnesses once again for being here and sharing your testimony.

I look forward to learning more about how your organizations will be affected by Dodd-Frank, and I hope that this hearing guides Mr. Gensler and his colleagues towards a balanced approach to regulation.