[Congressional Record Volume 146, Number 132 (Thursday, October 19, 2000)]
[House]
[Pages H10411-H10415]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDER ATION OF MOTIONS TO SUSPEND THE RULES
Mrs. MYRICK. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 640 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 640
Resolved, That it shall be in order at any time on the
legislative day of Thursday, October 19, 2000, for the
Speaker to entertain motions to suspend the rules and pass,
or adopt, the following measures:
(1) the bill (H.R. 2780) to authorize the Attorney General
to provide grants for organizations to find missing adults;
(2) the resolution (H. Res. 605) expressing the sense of
the House of Representatives that communities should
implement the Amber Plan to expedite the recovery of abducted
children;
(3) the bill (H.R. 4541) to reauthorize and amend the
Commodity Exchange Act to promote legal certainty, enhance
competition, and reduce systemic risk in markets for futures
and over-the-counter derivatives, and for other purposes;
(4) the concurrent resolution (H. Con. Res. 271) expressing
the support of Congress for activities to increase public
awareness of multiple sclerosis; and
(5) the bill (H.R. 2592) to amend the Consumer Products
Safety Act to provide that low-speed electric bicycles are
consumer products subject to such Act.
Sec. 2. House Resolutions 615 and 633 are laid on the
table.
The SPEAKER pro tempore (Mr. Isakson). The gentlewoman from North
Carolina (Mrs. Myrick) is recognized for 1 hour.
Mrs. MYRICK. Mr. Speaker, for purposes of debate only, I yield the
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
Mr. Speaker, yesterday, the Committee on Rules met and passed this
resolution, providing that it shall be in order at any time on the
legislative day of Thursday, October 19, for the Speaker to entertain
motions to suspend the rules and pass or adopt the following measures:
The bill H.R. 2780, to authorize the Attorney General to provide
grants for organizations to find missing adults; the resolution, House
Resolution 605, expressing the sense of the House that communities
should implement the Amber Plan to expedite the recovery of abducted
children; the bill H.R. 4541, to reauthorize and amend the Commodity
Exchange Act to promote legal certainty, enhance competition, and
reduce systemic risk in markets for futures and over-the-counter
derivatives, and for other purposes; the concurrent resolution, H. Con.
Res. 271, expressing the support of Congress for activities to increase
public awareness of multiple sclerosis; and, five, the bill H.R. 2592,
to amend the Consumer Products Safety Act to provide that low-speed
electric bicycles are consumer products subject to such an Act.
Finally, the rule provides that House Resolutions 615 and 623 are
laid upon the table.
Mr. Speaker, as we all know, we are coming to the end of the
congressional session and floor time is at a premium. This resolution
allows us to consider several bills today under the expedited
suspension procedure. I must stress that we have had all day to examine
these bills, four of which are totally noncontroversial. These
suspensions are not a surprise.
In addition, this resolution is within the spirit of the House rules.
Under clause 1 of rule XV of the rules of the House, the Speaker may
only entertain motions to suspend the rules on Mondays and Tuesdays and
during the last 6 days of the session.
The House has not yet passed an adjournment resolution, but I think
all of us hope and expect that we are in the last 6 days of this
session. This resolution simply abides by the spirit of the standing
rules of the House.
One of these bills is a bill I introduced in honor of Kristen
Modafferi, a college student from Charlotte, North Carolina, who
disappeared after her 18th birthday. When Kristen's parents called the
National Center for Missing and Exploited Children to ask for help,
they were told, ``No, we can't help you because Kristen is 18 years
old.'' If we pass Kristen's Act, that will never happen again.
The National Center for Missing Children has been an incredibly
effective resource for the recovery of minors. Kristen's Act would
create the same type of center for missing adults. It is just common
sense. We should build upon the success of the National Center for
Missing Children.
H. Res. 640 also allows the House to consider H.R. 4541, the
reauthorization of the Commodity Exchange Act under suspension of the
rules. H.R. 4541 will lift a portion of the regulatory burden from our
commodity and futures exchanges, allowing them to compete within the
world's modern financial markets.
I must state, though, that I am disappointed with one aspect of the
measure. While the intent of H.R. 4541 is to deregulate U.S. markets,
it actually places retroactive regulation on some of our newest and
most innovative electronic markets.
Foreign countries are taking advantage of electronic technology at a
more rapid pace and with less red tape than our domestic market. With
this in mind, the House Committee on Banking and Financial Services
placed language in its version of the bill that would have ensured
freedom from regulation for U.S. companies that are developing and
implementing new electronic technology within the swaps market.
I was extremely disappointed to see the Committee on Banking and
Financial Services language stripped from the bill we are considering
today. We should encourage business innovation and not stifle new
companies with regulatory uncertainty. If we fail to restore the
Committee on Banking and Financial Services's language, we will place
our domestic electronic exchanges at a relative disadvantage to their
foreign competitors.
I am confident our colleagues in the Senate will take care of the
problem. If not, our homegrown companies will have to move overseas.
Now, Mr. Speaker, despite my disappointment with part of H.R. 4541, I
strongly support this rule and urge my colleagues to do the same. With
this resolution, we will consider five bills before we adjourn for the
year.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I thank the gentlewoman from North
Carolina for yielding me the customary 30 minutes, and I yield myself
such time as I may consume.
Mr. Speaker, I will not actively oppose the rule. The underlying
suspension bills that the rule make in order are important for many of
our constituents. But it is astonishing that the Committee on Rules
must generate resolutions such as these to create the illusion that
Congress is diligently performing its obligation.
This body is floating in a Never-Never Land 2 weeks into the fiscal
year, considering suspension bills at a time when only 7 of the 13
spending
[[Page H10412]]
bills are on their way to the President. I wish I could justify
unqualified support for this measure with the excuse that Congress was
hard at work and needed this flexibility to complete its commitments,
but my constituents know better.
Instead of working to ensure affordable prescription drugs for
seniors or working to secure funds for school construction, this body
routinely adjourns in the early afternoon to ponder what post office we
will name on the following legislative day. The long stretches of
idleness in this body surely can be replaced with meaningful
deliberation on important measures.
Instead, my colleagues and I are left at the mercy of the
leadership's scheduling whims. If the majority is going to abuse the
power of suspensions, I implore them to put them to good use and make a
real difference in the lives of the American people.
Mr. Speaker, I reserve the balance of my time.
Mrs. MYRICK. Mr. Speaker, I yield such time as he may consume to the
gentleman from California (Mr. Dreier).
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
Mr. DREIER. Mr. Speaker, I rise in strong support of this rule and
want to congratulate my colleague the gentlewoman from North Carolina
(Mrs. Myrick) for her very, very able management of it.
This rule addresses the legitimate concern of Members who very much
want an opportunity to review in advance any legislation that will be
considered under the suspension of the rules procedure. The rule
provides suspension authority only to those measures that are listed in
the rule, so there will be no surprises whatsoever.
One of the measures listed in the rule, Mr. Speaker, is a bill
authored by the manager of this rule, the gentlewoman from North
Carolina (Mrs. Myrick), which would establish a national center to
collect and disseminate information on missing adult cases. I want to
commend my friend from Charlotte for her work on behalf of the millions
of Americans who are searching for their loved ones, and I strongly
support her legislation.
Mr. Speaker, the rule also allows under suspension of the rules the
consideration of H.R. 4541, critically important legislation to
modernize the financial futures market. It is a collaborative effort
between the Committee on Agriculture, the Committee on Banking and
Financial Services and the Committee on Commerce, and I want to commend
the chairmen of those committees, the gentleman from Texas (Mr.
Combest), the gentleman from Iowa (Mr. Leach), and the gentleman from
Virginia (Mr. Bliley); as well as the gentleman from Illinois (Mr.
Ewing), the gentleman from Louisiana (Mr. Baker), and the gentleman
from Ohio (Mr. Oxley) for their hard work and dedication in bringing
this legislation to the floor.
{time} 1730
Similar to the Graham-Leach-Bliley Financial Services Modernization
Act, H.R. 4541 will remove actually the impediments to financial
innovation and will be competitive by bringing the antiquated
regulatory framework for financial futures and derivatives into the
21st century. While I strongly support the bill, it is not perfect.
As my friend from Charlotte, North Carolina (Mrs. Myrick), so clearly
noted, the bill does not remove all of the necessary regulatory
impediments to electronic systems that are used in trading financial
futures and derivatives. It is important that this legislation not only
promote competition and innovation within traditional markets but that
it promote competition and innovation for emerging technologies.
Otherwise, these innovative companies, which are the key to the
continued growth of our economy, will simply take their operations
overseas where the regulatory climate today is much more favorable
toward competition from electronic trading systems.
Mr. Speaker, passing H.R. 4541 will allow the process to move
forward. It is my hope that this bill can be further improved when it
is considered by the other body. But before we can consider it, we need
to pass this rule, and we need to debate and pass that legislation.
So I want to urge my colleagues to move just as expeditiously as
possible to pass this measure again so that all can have an opportunity
to look at the different pieces of legislation that we will be
considering.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to my colleague, the
gentlewoman from New York (Mrs. Maloney).
Mrs. MALONEY of New York. Mr. Speaker, I thank the gentlewoman for
yielding me the time and for her leadership.
Mr. Speaker, I rise in support of the rule and in support of the
underlying legislation, which is among one of the most important bills
that this Congress will consider this session.
The notional value of the derivatives market is fast approaching $100
trillion. By comparison, the entire Federal budget is closer to $1.7
trillion. This legislation increases the legal certainty of these
instruments and makes sure that market participants are held
responsible for their losses or gains.
In the Committee on Banking, I offered an amendment that was
supported by the CFTC to limit the trading of energy derivatives when
conducted off exchange and out of public view. Energy derivatives are
based on underlying commodities, such as oil and gas, that are
critically important to consumers. While my amendment was narrowly
defeated, I continued to work on this issue after the markup.
I am pleased to report that my concern has now been addressed at
least in part. This legislation now gives additional authority to the
CFTC to monitor day-to-day prices and to issue regulations to police
fraud and manipulation in off-exchange energy derivatives trades. These
powers will increase public confidence in the markets and reduce the
potential of manipulation by big players operating off-exchanges.
This provision could be further improved by deleting language that
favors electronic trading facilities over traditional exchanges.
Monitoring derivatives markets will be a major focus of the Committee
on Banking for years to come. When properly used, large companies and
financial institutions decrease economic risks and benefit consumers
through the use of derivatives.
Large financial institutions use derivatives to hedge interest rate
risk and decrease potential market disruptions.
I just want to close very briefly by thanking the chairman of the
Committee on Banking, the gentleman from Iowa (Mr. Leach), for his 6
years of leadership and the ranking member, the gentleman from New York
(Mr. LaFalce). This will probably be the last bill from the Committee
on Banking while he is chair of the committee.
Mrs. MYRICK. Mr. Speaker, I yield 5 minutes to the gentleman from
Texas (Mr. Combest).
Mr. COMBEST. Mr. Speaker, I thank the gentlewoman for yielding me the
time.
Mr. Speaker, I did not intend to comment on the rule, but I want to
let my colleagues know that I rise in strong support and appreciate the
work that the Committee on Rules did giving us an opportunity to bring
the Commodities Exchange Act in front of the Congress today under a
suspension. And since we are establishing a record here, I wanted to
take the opportunity to make a couple of comments in response to the
gentlewoman from North Carolina (Mrs. Myrick) in regards to one area
that she specifically singled out as having had some concern.
This has been a long going process, and the process has been with the
intention and the goal of trying to relieve to the extent possible the
regulatory burden on the exchange activity and commodities in the
United States, giving them much more of a level playing field in
regards to some of their foreign competitors. And at the same time
while the interest and endeavor has been to relieve some of the
regulatory burdens, we wanted to make sure that there was still a great
amount of public confidence by the fact that there would be an
oversight regulatory body that would be in fact monitoring these
trades.
The specific new businesses that the gentlewoman from North Carolina
(Mrs. Myrick) referred to we generally call electronic billboards. I
just wanted to make mention that I had met with a number of them over a
long period of time; and certainly as an endeavor not
[[Page H10413]]
to increase regulations on various types of trading associations and
groups, we wanted to make for certain, as they requested, that we did
not in fact increase regulatory burdens on them.
We have not done that, Mr. Speaker. In fact, there are a number of
sections of the bill that specifically indicate that the type of
trading that is done by electronic billboards would be totally excluded
as a part of CEA, would not come under the regulatory burden; and the
President's working group that also had a great deal of input agreed to
the fact that there should be exclusion from the CEA.
A question remains. I have visited with the gentlewoman about it. We
will continue to look at it into the future. Actually, the problem
seems to arise from a request of certain of these new electronic
billboards to have a specific carve-out that in fact would give them
additional authority that other type exchanges would not have, and it
is strongly opposed by other exchanges giving them a specific
advantage. That is the reason that there were not the changes. But in
terms of the regulatory authority, not only did we not include them, we
excluded them in some areas in some parts of the bill.
In regards to liability, we in fact created a number of things that
electronic billboards, I think, would find very pleasing.
Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentleman from
New York (Mr. LaFalce), the ranking member of the Committee on Banking
and Financial Services.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. Mr. Speaker, I thank the gentlewoman for yielding me the
time.
Mr. Speaker, I rise in support of one of the bills that would be
permitted to be taken up today under the suspension calendar, H.R.
4541, the Commodities Futures Modernization Act of 2000.
I do this for one overriding reason. If we do not pass this bill, our
huge and vibrant exchanges and swap markets will decline while those in
the rest of the world will flourish.
Given the alterations taking place in global finance, the need to
modernize our futures and swaps markets is clear. At every turn, we are
seeing active innovation in our global environment. Indeed, there is a
major international merger movement in progress off shore.
OM is bidding to buy the London Stock Exchange. We now have Euronext,
the creation of the merger of the Paris, Brussels, and Amsterdam
bourses. There is Eurex, which now has an interest in merging with some
United States exchanges. All of these are capable of more flexibility
than what is permitted in our current market structures.
Moreover, the financial markets are creating increasingly specialized
instruments and transactions. The most prominent of these are swaps,
contractual arrangements which are so diverse in detail that they
cannot be readily categorized. Their notional value has swollen to
nearly $100 trillion. Moreover, there are other novelties, such as flex
options, which are beginning to emerge.
American law and American regulations have been unable to keep up
with these innovations except through makeshift and questionable legal
inventions and contortions, the foundations of which are unclear and
uncertain.
H.R. 4541 is merely a first step in this modernization. It opens up a
new category of future which has heretofore been forbidden, the future
on single stocks or small groups of stocks. It provides legal certainty
to swaps innovations, a certainty which has been sorely missing until
this bill. Moreover, it recognizes that, in most cases, the normal
consumer is not the proper participant in these markets or that their
participation is guarded by regulations such as the ``know your
customer rule.''
These alterations will assist in streamlining the United States so
that it can mirror the practices which are emerging in the competitive
markets of Europe and Asia and prevent those markets from obtaining
legal advantages. Further, it will keep these burgeoning businesses in
the United States and not force them to migrate overseas.
I do not say this is a perfect bill. Indeed, I do not approve of
using the suspension calendar to consider this sort of legislation.
There should be opportunity for more than the managers amendment. There
also should be opportunity for more extensive education and fuller
debates.
I am not pleased with some of the bill's provisions, which fail to
establish an optimal regulatory scheme and might be open to loopholes
that would undermine the vital transparency and trustworthiness of
American markets. Consequently, while I do not join others who oppose
this legislation, I do have considerable sympathy for some of their
arguments.
However, I believe the legislative process must be moved along at
this time. It is doubtful we can come to agreement with the other
Chamber and the administration in the short period remaining in the
106th Congress. Indeed, I caution that attempts in the other Chamber to
push through vast deregulatory schemes, which will prevent the SEC,
CFTC, and banking authorities from assuring the investing public that
the markets are not subject to manipulation and fraud, will certainly
meet with my opposition.
It is dubious whether Congress can produce a public law this session.
And if we cannot, passage of today's bill will at least set down a
marker for us to take up next year. In any case, this is not a subject
area which is going to go away with one new law. The rapidity and
breadth of change to which I have alluded assure that. Yet, for today,
I support the administration's Statement of Policy on this bill and,
therefore, urge an aye vote.
Mrs. MYRICK. Mr. Speaker, I yield 1 minute to the gentleman from
Illinois (Mr. Shimkus).
(Mr. SHIMKUS asked and was given permission to revise and extend his
remarks.)
Mr. SHIMKUS. Mr. Speaker, I am going to be brief because I know there
is a lot of activity going on.
Some of the great exchanges of our Nation are in Chicago, Illinois.
We have been fighting to preserve and protect those.
As many of my colleagues know, this bill modernizes the regulation of
the exchange trade and futures. It establishes legal certainly for
over-the-counter derivative products, and it reforms Shad-Johnson.
To the gentleman from Illinois (Mr. Ewing), who is my friend, my
counselor, and part author of this legislation, I just want to say, job
well done.
Mr. Speaker, I rise today in support of H.R. 4541, the Commodity
Futures Modernization Act of 2000. Being from Illinois, with all the
Chicago interests involved, you should know that it has been my intent
to develop a level and fair playing field for all involved.
When this bill was in the Commerce Committee, I offered an amendment
in the nature of a substitute that eventually resulted in the version
the Commerce Committee reported. We knew when we reported the bill that
there was still a lot of work to be done. For that reason, I am pleased
to see a final product on the House floor today. I want to thank my
good friend from Illinois, Mr. Ewing, for the leadership he and his
staff have taken on this issue. In your retirement, you will be missed
by the Illinois delegation, as well as this entire body. I also want to
thank Chairman Bliley, Subcommittee Chairman Oxley, the ranking
Members, Mr. Rush of Illinois, and their staffs; as well as the Members
and staff of the Banking Committee. They need to be recognized for
their tireless efforts, persistence and cooperation to bring this
compromise to the House floor.
Finally, I want to thank the Chicago Board Options Exchange, the
Chicago Mercantile Exchange and the Chicago Board of Trade for their
efforts to compromise and for their patience with us as we worked
through the legislative process. As you know, this legislation will do
three things: It modernizes the regulation of exchange-traded futures;
establishes legal certainty for over-the-counter derivatives products;
and reforms the Shad-Johnson Accord.
The Shad-Johnson portion of this legislation has been the most
controversial, but yet the most exciting section of this bill. If this
bill becomes law, we will lift an 18-year ``temporary'' ban on single
stock futures and allow U.S. investors access to these products. In our
global economy, we need to stay competitive, and I believe that lifting
this ban will help us achieve that goal.
This is historic legislation and a vote for U.S. investors and
markets. Please join me in voting in favor of H.R. 4541.
Ms. SLAUGHTER. Mr. Speaker, I yield 4 minutes to the gentleman from
Texas (Mr. Bentsen).
[[Page H10414]]
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Speaker, I rise in strong support of the rule and in
strong support of one of the bills that will be considered under the
rule, the Commodities Futures Modernization Act of 2000, H.R. 4541.
I want to associate myself with the remarks of the previous speaker,
the gentleman from New York (Mr. LaFalce), the ranking Democrat on the
House Committee on Banking.
As a member of that committee, I worked with both the chairman, the
gentleman from Iowa (Mr. Leach), and the gentleman from New York (Mr.
LaFalce) in helping to craft this legislation. I think that it is a
very good forward approach to moving the United States' regulatory
scheme over-the-counter derivatives markets in the right direction. And
I think all three committees which had jurisdiction over this, the
Committee on Banking, the Committee on Agriculture, and the Committee
on Commerce did very good work.
This otherwise complicated measure will repeal the Shad-Johnson
Accord and bring legal certainty to the over-the-counter derivatives
and swaps market. That is something that, as that market has grown and
developed in the United States, needs to be done. We need to codify a
regulatory regime, as opposed to having an understanding between two
Federal agencies. And it is done in a way which brings the regulatory
expertise of both the Commodities Future Trading Commission and the
Securities and Exchange Commission together. I think that is why we
have found this legislation is also being supported by the Treasury
Department.
{time} 1745
I also want to say that I think this bill is correct in its exemption
or exclusion of the energy derivatives market. This is a new market. A
lot of it is being conducted out of my area of the country, and I think
it is fair to say that the energy market in the United States is among
the most transparent in the world. I think it would be premature for
the Congress or the regulatory authorities to engage in some new form
of regulation in those markets, particularly in the derivatives market,
absent some form of national or global energy deregulation which
obviously this Congress is not going to take up and it will not be
taken up until the next Congress at the earliest date. So I think this
is a very good bill that moves us forward.
Finally, let me say one other item. In the Committee on Banking and
Financial Services, we considered the issue of whether or not to expand
the ability to market swaps and derivatives over the counter to the
retail public, and I think the committee very wisely chose not to
follow that path. I do not think we have the regulatory regime in place
to safely allow such products to be sold to the retail public, and if
that were in this bill I would have a very hard time supporting it. So
I think that Members need to understand that this is not a retail
instrument.
I think the Members need to understand that we have ensured that
there is no retail component in this bill. I think that is something
that is subject to a great deal more study before we move in that
direction, and so I would encourage the Members to support this bill. I
would also hope that the other body across the rotunda will adopt this
bill as well. It would be a shame if this Congress were to adjourn
without enacting this compromise legislation and providing legal
certainty to the markets.
I want to again reiterate what the gentleman from New York (Mr.
LaFalce) said. Without this legislation, it is very likely we could be
pushing certain sectors of the U.S. financial markets abroad, and I
think that would be to our detriment.
I rise in strong support of the rule and the bill.
Mr. Speaker, I rise today in strong support of the Commodity Futures
Modernization Act of 2000 (H.R. 4541). This legislation will provide
the legal certainty for Over The Counter (OTC) derivatives. Derivatives
are sophisticated financial instruments which help companies to manage
risk.
As a member of the House Banking Committee, I believe that providing
this legal certainty is necessary. First, legal certainty will ensure
that these instruments continue to be available and sold in the United
States. We have an economic interest in keeping these instruments here
in the United States. There is growing concern that some trading
operations will move overseas without this clarification. Second, the
President's Working Group on Financial Markets has also recommended
that approving legislation is the only practical way to provide this
legal certainty.
This legislation would also exclude certain hybrid instruments for
the Commodity Exchange Act. As a result, these hybrid instruments can
be sold on non-CEA regulated markets. As the representatives for one of
the largest energy-related trading markets, I am particularly pleased
that this legislation includes a provision that would ensure that
energy-based OTC derivatives will be exempt from the CEA.
This legislation would also ensure that single stock futures and
narrow-based stock index futures can be sold. As a result, the Shad-
Johnson Accord would be repealed. This language was developed in
cooperation with the Securities and Exchange Commission (SEC) and the
Commodity Futures Trading Commission (CFTC) who helped to negotiate
this language. Under this bill, these products could be sold on
existing or yet to be established commodities and securities exchanges.
Trading of securities futures would be delayed for one year from
enactment. Options on futures would be permitted three years after
enactment after the SEC and CFTC have jointly determined whether to
permit such trading and jointly studied the framework needed for such
options. By requiring joint rulemaking for the CFTC and SEC, we are
ensuring that both the securities and commodities regulators will be
working together to set up a framework for the sale of these products.
I am also pleased that these provisions would ensure that the retail
public cannot purchase these products. I am not yet convinced that
selling stock futures to the retail public is appropriate and requires
more study.
This bill also reauthorizes the Commodity and Exchange Act. On
October 1, 2000, the CEA expired and the CFTC is currently working
without its authorization. Reauthorization is necessary to ensure that
our commodity markets are being reviewed and overseen by a federal
regulator.
Mrs. MYRICK. Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield 5\1/2\ minutes to the gentleman
from North Carolina (Mr. Watt).
Mr. WATT of North Carolina. Mr. Speaker, I thank the gentlewoman from
New York (Ms. Slaughter) for yielding me this time.
Mr. Speaker, I am going to rise in reluctant opposition to the rule
under which these bills are being considered, because the rule provides
that these bills will come here under suspension, which means that the
bills cannot be amended in any way. It deprives us of the opportunity
to offer an amendment to one of these bills, H.R. 4541, which a number
of us have worked on throughout this process.
Now I want to say at the outset that I am not going to vote against
H.R. 4541, because I think it is a marginal improvement in the law. It
is important to pass this bill, but we passed a bill out of the
Committee on Banking and Financial Services, a version of this bill
which was substantially better than the bill that is coming to the
floor, in one important respect.
We have heard a lot of discussion here about driving U.S. commercial
ventures offshore. There is one provision that has been dropped from
the bill from the Committee on Banking and Financial Services that I
believe will have the effect quite possibly of driving a commercial
venture that is currently located in my congressional district
offshore. I represent a small company called D&I Holdings, which has a
system, a proprietary communications and information system, over which
the world's largest financial institutions negotiate and agree on
certain types of swap transactions on an electronic basis. This company
was founded in 1996 and is headquartered in my congressional district
in Charlotte, North Carolina, and it has offices in London, New York
and Tokyo.
At the present time, there are 40 commercial and investment banks
that use their system to effectuate swaps agreements which total over
hundreds of millions of dollars per day. Their system, this small
business' system, is the first and at the present time the only
operational inter-dealer electronic system for this segment of the swap
market. It has a number of patents, but it is essentially an electronic
information system.
[[Page H10415]]
The problem is that this bill, in the haste to deal with trading
facilities, has defined trading facilities in such a way that it brings
this electronic system and information system that does no negotiating
at all, the parties on each end of the system are doing the negotiating
but now we have bought into the definition of trading facility an
electronic system that should not be included in the Federal
regulations. Now, my colleagues quite often are talking about how
terrible it is to have Federal regulations regulating things that
should not be regulated. I am here this time talking about one of those
instances where we are regulating something that really should not be
regulated.
The parties on both ends of the transaction, I concede, should be
regulated; and that is what this legislation should be about, but the
electronic system in between the two negotiating parties should not be
regulated. In the process of going through the conference and basically
carving out language that the Committee on Banking and Financial
Services had carefully considered that would have protected this small
venture in my congressional district, they have overzealously, probably
unintentionally, included an operation here that really should not be.
And I think ultimately what is going to happen is we are running the
risk that this small operation could be driven offshore because it can
be done, this electronic operation can be done, in England or Tokyo or
anywhere else in the world; but we want this business located here in
the United States as we want every business located here.
It is a clean, good, upstanding business, and there is no reason that
we ought to be regulating it. If this bill were not on suspension, we
would have the opportunity to offer an amendment to get back to the
language of the Committee on Banking and Financial Services, and
therefore I am going to vote against the rule, even though I will
probably end up voting for the bill.
Mrs. MYRICK. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Ewing).
Mr. EWING. Mr. Speaker, I thank the gentlewoman from North Carolina
(Mrs. Myrick) for yielding me this time.
To the gentlewoman's colleague, the gentleman from North Carolina
(Mr. Watt), who just spoke, I would like to respond to him. I think the
issue the gentleman brings up is a very important issue and as the
sponsor of the bill I want to let the gentleman know where we are with
this legislation. Number one, the Blackbird Institution is not
regulated by this bill. It is not regulated now. We believe that this
bill exempts them from any regulation so long as they are trading in
the manner in which they have indicated they are. The issue here is so
long as they do not act as an organized exchange and do not do retail
trades, they will be exempt under this bill and exempt from regulation.
The idea, of course, is that if they decide to do otherwise then, of
course, they will come under regulation like every other exchange,
every other trader with retail interests.
Mr. WATT of North Carolina. Mr. Speaker, will the gentleman yield?
Mr. EWING. I yield to the gentleman from North Carolina.
Mr. WATT of North Carolina. Mr. Speaker, what I would like to do with
the gentleman's permission is perhaps come back during the debate on
the main bill and actually have a colloquy so that at least we can
create a legislative record that specifically indicates that the
gentleman's interpretation is that this bill does not cover this
Blackbird system, because their interpretation is entirely different
than the gentleman's, and I think it would be helpful at least to have
that legislative record developed. I am not sure we can do it as a part
of the rule. So if the gentleman would be so kind.
Mr. EWING. Reclaiming my time, I would be more than happy to engage
in that colloquy.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
New York (Mr. Engel).
Mr. ENGEL. Mr. Speaker, I thank the gentlewoman from New York (Ms.
Slaughter) for yielding me this time.
Mr. Speaker, I want to comment on one of the bills that everyone else
seems to be commenting on, that is H.R. 4541, the Commodities Futures
Modernization Act. I support the bill. The legislation reauthorizes the
Commodities Futures Trading Commission, streamlines regulation of the
futures markets and provides legal certainty to over-the-counter
derivatives.
As we know, the President's Working Group on Financial Markets has
testified that securing legal certainty for financial derivatives is
imperative to reducing risk within America's financial system. This
legislation, while a compromise on many points, is not only an
important step toward achieving the legal certainty our financial
markets need but it will foster continued American innovation in the
increasingly important realm of derivative financial products.
Moreover, it will help prevent the flight of our domestic financial
derivatives business abroad. This makes H.R. 4541 particularly
important to my State, Mr. Speaker, New York, where much of our
Nation's financial trading takes place. The legislation has broad-based
backing. It is supported by the Department of the Treasury, the SEC,
the CFTC, as well as the major financial institutions. I would,
however, like to raise one note of concern, Mr. Speaker.
The process through which H.R. 4541 was developed was not completely
fair or open. At times Democrats were not sufficiently included in the
negotiations, and the ranking member on the Committee on Commerce, on
which I serve, the gentleman from Michigan (Mr. Dingell), has expressed
concerns which I share about the process, the fact that the Committee
on Commerce was not sufficiently involved in the process, and that is
wrong and things were put into this bill at the last minute just the
other day, and there really has been no time to discuss it or
deliberate on it; and I think that is wrong as well.
I would hope that some of these issues can be resolved when the bill
finally comes back.
While the process was not satisfactory, overall the final bill moves
forward and is worthy of passage by the House. Once again, I express my
support for the Commodity Futures Modernization Act and I urge my
colleagues to support the bill.
Ms. SLAUGHTER. Mr. Speaker, I have no further requests for time, and
I yield back the balance of my time.
Mrs. MYRICK. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
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