Financial Netting Improvements Act of 2006
FINANCIAL NETTING IMPROVEMENTS ACT OF 2006 -- (House of Representatives - September 27, 2006)
Ms. WASSERMAN SCHULTZ. Madam Speaker, I yield myself as much time as I may consume, and first, let me thank Chairman Oxley and Ranking Member Frank for their stalwart leadership on this and many other issues that have come before the Financial Services Committee in the 109th Congress. Chairman Oxley has heard us say many times, but we will truly miss him after he retires. I believe that the combined leadership that he and my good friend, Ranking Member Frank, have displayed have set the tone for the rest of us on the Financial Services Committee, as well as the staff.
I, too, am pleased to stand here with my good friend and fellow freshman colleague, the gentleman from North Carolina (Mr. McHenry). I made the mistake of telling him that I was going to try to have a little bit of fun in the back and forth here, and I think I could best characterize our professional relationship as being the odd couple. So it is a great day that we have the opportunity to come together on this netting legislation.
I can tell you that we want to make sure on our side that Ranking Member Frank has suggested that we make sure the people understand that even though we have the next generation of Members managing the time on this bill, people should understand we are not high school kids. We are actually real live Members of Congress, you and I, and came here like everybody else.
I am pleased to join Mr. McHenry as an original cosponsor of H.R. 5585, and I am very pleased that we were able to come together on legislation because we have talked about that for a long time.
We could not have brought this bill to the floor without the support of the House Judiciary Committee on which I also sit, and I want to especially thank Subcommittee Ranking Member MEL WATT for working with us, also a gentleman from North Carolina, and for agreeing to help us move this bill forward.
As you know, as the gentleman from North Carolina has said, netting is simply the manner in which debts and credits are calculated between parties, and it is a critically important tool to unravel complex financial transactions which have, until now, been denied to our Nation's financial institutions.
This is in spite of broad-based, bipartisan support. In fact, the origin of this legislation is grounded in the collapse of the infamous hedge fund, Long Term Capital Management, after which former Federal Reserve Board Chairman Alan Greenspan implored Congress to pass the netting provision. Netting was also supported by the former Clinton and the current Bush administrations.
The primary goal of our legislation is to minimize systemic risks in situations when the procedure for resolving a single insolvency could trigger other failures elsewhere in the market.
H.R. 5585 protects the rights of market participants to terminate complex financial agreements. It also ensures that the Federal Government, like private entity creditors, will be able to enforce and net out qualified contracts with financial institutions during insolvency proceedings.
Additionally, this bill includes a fee increase provision in order to pay bankruptcy trustees.
I want to thank my good friend and colleague Congressman Watt for working us with. At his request, this bill was modified in two respects, and as a result of those modifications, Madam Speaker, more debtors will be eligible for the fee waiver.
However, the fundamental issue before to us today is support for netting provisions in the bankruptcy settlement of major market participants.
I encourage my colleagues to support this bill, and I ask our colleagues in the Senate to act on this before the end of the 109th Congress. This bill would codify commonsense business practices. These provisions have a long bipartisan legislative history in Congress, which continues today.
It is a privilege to work with Mr. McHenry, and there is no reason for us to stall any further. I know you join me in urging the Senate to take action on this bill after we do.
Madam Speaker, I reserve the balance of my time.
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