Opening Statements

Good morning.  Thank you all for coming today and welcome. Today, the Committee is examining H.R. 2289, the Commodity End-User Relief Act.

The bill before us represents the bipartisan work of dozens of members of this Committee over the past three years to address the challenges and uncertainties that end-users are facing in derivatives markets. 

I’d like to start by thanking the leadership of the Commodity Exchange, Energy, and Credit Subcommittee, Chairman Scott and Ranking Member Scott.  Following the Full Committee’s hearing with CFTC Chairman Massad in February, they have led the Committee’s work on this issue.  Over the past two months they have held three separate hearings to gather testimony from the end-user community, market service providers, and the rank and file Commissioners.

What their subcommittee heard has been a consistent call to action by the market participants struggling to comply with rules that are needlessly burdensome and a law that is at times unclear.  Like last year, the Committee will consider a collection of narrowly targeted changes to the Commodity Exchange Act to provide the right relief to the right people. 

The reforms in this bill fall into three broad categories:

First, this legislation protects customer margin funds by codifying critical changes made in the wake of the collapse and bankruptcies of MF Global and Peregrine Financial.  In both these financial disasters, customer margin funds were stolen and thousands of Americans were left on the hook.  Today’s legislation cements the important reforms made over last two years into law.

Second, this legislation makes meaningful reforms to the operations of the Commission that improve the deliberative process at the Agency.  It will ensure that rank-and-file commissioners have the timely information they need to fulfill their duties to the public.  It also requires that the Commission put in place a robust system of cost-benefit analysis to get future rulemakings right the first time, and avoid the endless cycle of reproposing and delaying unworkable rules.

Third, the bill fixes real problems for the end-users who rely on derivatives markets to manage their risks.  New rules for recordkeeping, registration, definitions and others may have seemed good in theory at the Commission, but they present incredible challenges to established business practices and real costs to end-users required to comply.  When it is more costly for who need these markets to use them, it discourages exactly the kind of prudent risk-management activities Congress intended to protect with the end-user exemptions in Dodd-Frank.

As the Commission has worked through its complicated and difficult task of implementing the Dodd-Frank Act, it has made choices at every step of the process about how best to interpret the instructions Congress provided.  It is no surprise to me that the Commission has not always interpreted the law as Congress intended.  That is the nature of creating laws through regulation.

But, for the past three years, the Committee has debated the wisdom of the Commission’s approach to these issues and time and time again we have come to the conclusion that the burdens these rules place on our constituents are not appropriate to the regulatory gain.  Over the past two Congresses we have passed over a dozen bipartisan bills to address our concerns about these specific issues.  It is our job here in this Committee to balance these trade-offs and that’s what we will accomplish with today’s legislation.

Today, the Committee will reaffirm our commitment to protecting American farmers, ranchers, manufacturers, and other business from being saddled with costly new burdens stemming from policies meant to protect them in the wake of the 2008 financial crisis.  But, we will do so while being fully supportive of underlying goals of Title VII to bring clearing, reporting and electronic execution requirements to swaps transactions.

I am pleased that the Committee will again act in a bipartisan manner.  Over the last two Congresses I have enjoyed working with Ranking Member Scott on these issues and have always respected his keen insights into these markets.  I am happy the Committee is again able to introduce a bill that has earned his support.

I’d like to close by again thanking him, Chairman Scott, and all of the members of their subcommittee for the hard work they’ve done over the past few months.  I was able to sit in on several of their hearings and I am proud of the engagement and preparedness that all of my colleagues showed on these complicated issues.

I look forward to the upcoming amendment debate and I urge my colleagues to support the Commodity End-User Relief Act.

With that, I’ll turn to our Ranking Member, Mr. Peterson, for his comments.