Providing for Consideration of H.R. 2289, Commodity End-User Relief Act

Floor Speech

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Mr. Speaker, on Tuesday, the Rules Committee met and reported a rule, H. Res. 288, providing for the consideration of a very important piece of legislation, H.R. 2289, the Commodity End-User Relief Act.

The rule provides for the consideration of H.R. 2289 under a structured rule and makes five amendments in order--two Democrat and two Republican, as well as one bipartisan amendment--allowing for a balanced debate on these important issues.

H.R. 2289 is essential to the smooth functioning of the American economy and is long overdue for an enactment into law. This important legislation will reauthorize the Commodity Futures Trading Commission, also known as the CFTC, which had its statutory authority lapse in September of 2013.

The House passed, with strong bipartisan support, a very similar version of this legislation on June 24 of last year. Unfortunately, the Senate failed to take up the House-passed bill despite its strong bipartisan support in the House, leading us to reconsider this legislation again today.

After the financial crisis of 2008, almost everyone agreed that changes needed to be made to our financial services sector in order to protect our economy and prevent another crisis in the future. Like many of my colleagues, I have concerns with some of the reforms that were instituted in response to this financial calamity because they have put overly burdensome restrictions on our business communities.

However, it is important to note that this legislation keeps intact the overarching reforms made in title VII of the Dodd-Frank Act. Every witness who appeared in front of the Agriculture Committee was supportive of the clearing, margining, and execution requirements that are the heart of title VII; yet, like every major comprehensive law--and this was very comprehensive--there are always unintended consequences that need to be addressed, and H.R. 2289 does just that.

For example, the authors of Dodd-Frank would likely argue the law's main purpose is to reduce systemic risk to the economy. However, I don't think anyone would argue that farmers, who are simply trying to lock in a good price for their corn or for their wheat, are a systemic risk to our economy.

It is just as restaurant chains that are looking to make sure they have enough beef or pork or potatoes to sell to their patrons also do not pose a systemic risk. Utility companies that are seeking to ensure that they have enough power to meet the needs and demands of their customers did not cause the financial crisis.

Unfortunately, though, the current law imposes rules that treat all of these entities as major risks to our economy, and it imposes overly burdensome capital and paperwork requirements on them.

Mr. Speaker, critics may claim this bill undermines consumer protections. However, this could not be further from the truth. Title I of H.R. 2289 puts in place greater consumer protections, like requiring brokerage firms to notify investors before moving funds from one account to another in order to prevent abuses like those that occurred at MF Global prior to its bankruptcy.

It would also require firms that become undercapitalized to immediately report to regulators and work with them to restore adequate capital and financial security. These title I provisions are commonsense reforms that will protect consumers.

Title II would make reforms to the CFTC itself, such as strengthening the cost-benefit analysis the CFTC must perform when considering the impacts of its rules and appointing a chief economist to assist with compiling and analyzing financial data.

Critics may claim that requiring cost-benefit analyses will open up the CFTC to lawsuits, which could be costly. However, such critics also ignore the endless cycle of the proposal and reproposals of rules that are rushed, poorly conceived, and unworkable.

This work requires the CFTC to waste staff time and Commission funds to redraft rules or to provide workarounds for impacted parties. This requirement merely gives the CFTC a standard for writing good rules the first time that will benefit our economy and the users.

Title II would also require the CFTC to take steps to invest in IT to protect sensitive market data against cyber attacks, a very real issue given the recent breaches we have seen at the IRS and at various national retailers. Most importantly, this section reauthorizes the CFTC until 2019, which has been operating without our authorization, to spend money for a year and a half.

Title III now gets to the heart of what I mentioned earlier, providing relief to the end users or the farmers, the restaurants, the manufacturers, the utilities, and other entities that rely on a steady supply of commodities that have been caught up in the unintended consequences of Dodd-Frank's reforms.

These users have a genuine need to use markets to hedge against bad weather, natural disasters, inflation, price shocks, and other unforeseen circumstances that could jeopardize their ability to serve their customers. These entities inherently want to avoid risk and, thus, shouldn't be subjected to the same requirements as financial and investment entities.

Mr. Speaker, title III of H.R. 2289 makes significant reforms to aid these end users, such as preventing utility companies from being inappropriately classified as ``financial entities'' and being treated like banks under the law.

It exempts end users who are not otherwise regulated by the CFTC from having to keep records of every email, phone call, fax, or letter with regard to every trade, a huge recordkeeping burden. It would prevent nonbank swap dealers from having to hold more capital than banks do, which would put them at an unfair disadvantage in the market.

Additionally, this section would allow end users operating in rarely traded markets not to have to disclose trade data, which can be a serious disadvantage if they must publicly show all of their trading partners what they are buying and selling.

Title III would also require the CFTC to determine if the rules for foreign swaps are equivalent to U.S. rules and create a workable system of substituted compliance for market participants whose activity crosses multiple jurisdictions. This would ensure that businesses which trade internationally do not have to comply with two sets of divergent rules.

Mr. Speaker, the most important thing to remember about H.R. 2289 is that the farmer who grows the food that you eat for dinner did not cause the financial crisis, neither did the people you buy your electricity from or the people who provided the wood for your desk or the metal used in your car. I do not know of any reason we should continue to treat them as if they did, which is what the current law does, and it is what H.R. 2289 is seeking to correct.

Mr. Speaker, this is a good, straightforward rule, allowing for the consideration of important legislation that will help grow our economy. I support its adoption, and I urge my colleagues to support the rule and the underlying bill.

I reserve the balance of my time.

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I would just like to make one comment in response to those of my colleague from Massachusetts in considering the underfunding of CFTC.

In the last 5 years, through the reductions of Federal spending and the efforts that have been going on, I think anyone would be hard-pressed to find another agency that has received an almost 50 percent increase in its budget over that period of time.

I will just point out that, certainly, they have received a lot of new responsibilities under Dodd-Frank, but also a large increase in their available resources.

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Mr. Speaker, I yield myself the balance of my time.

Let me just say I appreciate the good discussion here today over the past hour. People on both side of the aisles have made very good comments, very good points.

As it relates to the last comment from Mr. McGovern that talked about chipping away at Dodd-Frank, everything we're doing around here is fine-tuning and improving what has been passed in Congresses--legislation, laws on the books that need improvement--and I see that as what we are doing here today.

So I appreciate very much the comments. And although we may have some differences, I believe that this rule and the underlying bill are very strong measures that are important to the future of our country.

This rule provides for ample debate on the floor, the opportunity to debate and vote on the bill and numerous amendments, which I would note are divided evenly between Democratic and Republican Members of this Chamber. It reflects the balanced deliberation that this rule will provide. This rule will provide for a smooth and deliberative process for sending this bill over to the Senate for their consideration.

H.R. 2289 is a solid and substantial measure that will address several critical issues that the CFTC and end users are facing.

Mr. Speaker, no one wants to see the complete deregulation of our financial services industry and our commodities and derivative markets. And I appreciate the comments from the gentleman from Massachusetts. However, it is critical that the regulations put in place are appropriate for our economy and as well for the users.

These rules have to provide safeguards and prevent systemic risk but cannot catch our entire economy in a one-size-fits-all regulation.

As we have discussed here today, the current rules place enormous paperwork and financial burdens on small businesses. And that cannot go unstated. Our small businesses, ranchers, utilities, and manufacturers all face these financial burdens. They take these small, risk-averse entities and place them under the same regulatory scheme as large financial institutions and hedge funds. H.R. 2289 will differentiate and exempt the end users who are not a cause of systemic risk and should not have been lumped into these rules in the first place.

The u make muchnderlying bill would also make much-needed reforms in the CFTC to strengthen their rulemaking process and add commonsense consumer protections.

Overall, this is a strong rule that provides for consideration of this important legislation. I urge my colleagues to support House Resolution 288 and the underlying bill.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

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