[Congressional Record Volume 159, Number 83 (Wednesday, June 12, 2013)]
[House]
[Pages H3301-H3304]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BUSINESS RISK MITIGATION AND PRICE STABILIZATION ACT OF 2013
Mr. HENSARLING. Madam Speaker, I move to suspend the rules and pass
the bill (H.R. 634) to provide end user exemptions from certain
provisions of the Commodity Exchange Act and the Securities Exchange
Act of 1934, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 634
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Business Risk Mitigation and
Price Stabilization Act of 2013''.
SEC. 2. MARGIN REQUIREMENTS.
(a) Commodity Exchange Act Amendment.--Section 4s(e) of the
Commodity Exchange Act (7 U.S.C. 6s(e)), as added by section
731 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, is amended by adding at the end the following
new paragraph:
``(4) Applicability with respect to counterparties.--The
requirements of paragraphs (2)(A)(ii) and (2)(B)(ii),
including the initial and variation margin requirements
imposed by rules adopted pursuant to paragraphs (2)(A)(ii)
and (2)(B)(ii), shall not apply to a swap in which a
counterparty qualifies for an exception under section
2(h)(7)(A), or an exemption issued under section 4(c)(1) from
the requirements of section 2(h)(1)(A) for cooperative
entities as defined in such exemption, or satisfies the
criteria in section 2(h)(7)(D).''.
(b) Securities Exchange Act Amendment.--Section 15F(e) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)), as
added by section 764(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, is amended by adding at the end
the following new paragraph:
``(4) Applicability with respect to counterparties.--The
requirements of paragraphs (2)(A)(ii) and (2)(B)(ii) shall
not apply to a security-based swap in which a counterparty
qualifies for an exception under section 3C(g)(1) or
satisfies the criteria in section 3C(g)(4).''.
SEC. 3. IMPLEMENTATION.
The amendments made by this Act to the Commodity Exchange
Act shall be implemented--
(1) without regard to--
(A) chapter 35 of title 44, United States Code; and
(B) the notice and comment provisions of section 553 of
title 5, United States Code;
(2) through the promulgation of an interim final rule,
pursuant to which public comment will be sought before a
final rule is issued; and
(3) such that paragraph (1) shall apply solely to changes
to rules and regulations, or proposed rules and regulations,
that are limited to and directly a consequence of such
amendments.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas (Mr. Hensarling) and the gentleman from Michigan (Mr. Peters)
each will control 20 minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. HENSARLING. Madam Speaker, I ask unanimous consent that all
Members have 5 legislative days within which to revise and extend their
remarks and submit extraneous materials for the Record on H.R. 634, as
amended, currently under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. HENSARLING. Madam Speaker, I yield myself as much time as I may
consume.
Madam Speaker, H.R. 634, the Business Risk Mitigation and Price
Stabilization Act of 2013, is bipartisan legislation. It will help
provide America's job creators with greater certainty so that they can
invest more in our still-struggling economy and help create desperately
needed jobs for the millions who remain either unemployed or
underemployed.
Again, when our so-called recovery has produced 4 million fewer jobs
than the average recovery of the last 70 years, clearly nothing is more
important than finding solutions that will help grow our economy and
create more and better jobs for those who need them.
Americans want and deserve a healthier economy and a more secure
[[Page H3302]]
future. But, regrettably, all too often Washington, either
inadvertently or on purpose, creates piles and piles, mountains upon
mountains of unnecessary red tape for our entrepreneurs or small
business people and our job creators.
Quite often, Madam Speaker, this institution makes the goal of
economic growth and job creation more difficult. But the bipartisan
bill before us today is helpful. It is needed to help protect
manufacturers, ranchers, thousands of Main Street businesses across the
Nation from unnecessary red tape that would divert their resources and
time away from the activities to make their businesses successful and
thus create more jobs.
One manufacturer told the Financial Services Committee earlier this
year, a Mr. Thomas Deas, who works for a chemical manufacturing company
in Pennsylvania, he testified before our committee that without H.R.
634, manufacturers and other end-users of derivatives, which this
legislation deals with, would be forced to comply with unnecessary
regulation that he said ``means less funding is available to grow their
businesses and expand employment.''
Now, improving the Dodd-Frank Act, regardless of its relative merit,
it did at least make clear that Congress intended that manufacturers,
ranchers, and, again, Main Street businesses that this bill is intended
to address, that they would not be subject to certain regulations
regarding margin requirements for end-users of derivatives.
Still, despite Congress' clear intent on the subject, such
requirements have been proposed by Washington regulators. And so this
resulting legislation would contain provisions that would modify and
provide greater clarity to the Dodd-Frank Act regarding the intentions
of Congress in dealing with the end-user exemption.
We have heard from Federal Reserve Chairman Bernanke, who stated
before the Senate Banking Committee earlier this year that because the
Dodd-Frank Act is ``a very big, complicated piece of legislation'' that
regulators like the Federal Reserve needed ``clarity'' from Congress on
what ``to do about end-users.''
So H.R. 634 provides that clarity by stating clearly that end-users
of derivatives shall be exempt from the onerous margin requirements
imposed by Title VII of the Dodd-Frank Act.
As I said earlier, Madam Speaker, this is a bill with very strong
bipartisan support. The Financial Services Committee reported this bill
out of committee on a recorded vote of 59-0. Let me repeat that, Madam
Speaker: the Financial Services Committee reported this bill out of
committee on a recorded vote of 59-0.
Likewise, the Agriculture Committee approved this bill on a voice
vote, meaning it has received no opposition in either committee.
And, Madam Speaker, I should note that this substantially similar
legislation was overwhelmingly passed by the House last year with 370
bipartisan votes.
In closing, I want to thank our colleague, Agriculture Committee
Chairman Frank Lucas, for advancing this bipartisan bill on which our
committees share jurisdiction. And I also want to thank the bipartisan
supporters of this bill, particularly the gentleman from New York (Mr.
Grimm) and the gentleman from Michigan (Mr. Peters), who are
outstanding leaders in our committee, as well as the gentleman from
Georgia (Mr. Austin Scott), the gentleman from North Carolina (Mr.
McIntyre), leaders on the Agriculture Committee.
H.R. 634 is sound policy, and it is necessary to ensure that
regulators do not further hurt our economy by forcing manufacturers,
ranchers, and Main Street businesses to needlessly divert resources
away from creating more and better jobs for an American public that is
more than ready for them.
Madam Speaker, I urge the House to approve this needed bipartisan
legislation today.
I reserve the balance of my time.
{time} 1250
Mr. PETERS of Michigan. Madam Speaker, I ask unanimous consent to
yield 10 minutes of my time to the gentleman from North Carolina and a
member of the Agriculture Committee, Mr. McIntyre, and that he be
allowed to control that time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
Mr. PETERS of Michigan. Madam Speaker, I now yield myself as much
time as I may consume.
I rise today in support of H.R. 634, the Business Risk Mitigation and
Price Stabilization Act of 2013. I'm proud to have coauthored this
bipartisan legislation with my colleague, Michael Grimm. I appreciate
his hard work on this important legislation and his willingness to work
across the aisle. I would also like the thank our partners on the
Agriculture Committee, Representatives Austin Scott and Mike McIntyre.
We all worked together on this bill to keep costs down for families and
small businesses for a wide range of goods and services like groceries,
air travel, and autos. I would like to thank Chairman Hensarling and
Ranking Member Waters for their support on this crucial legislation.
While this bill improves financial regulation, this is truly a Main
Street bill. Derivatives end users represent a broad cross section of
businesses across our Nation, from farmers worried about the price of
fertilizer to manufacturers concerned about fluctuating interest rates.
Businesses in all of our districts use derivatives to ensure that they
pay a reasonable price for the products they need and keep consumer
prices stable no matter what happens in the financial markets. This
bill is about protecting businesses across Michigan and the United
States that rely on derivatives to responsibly manage risk.
During consideration of the Wall Street Reform, there was bipartisan
recognition that regulations to curb excessive risk taking in the
financial sector should not stifle job creation in the agriculture or
manufacturing industries. Michigan is a State that builds and grows
things, and I will continue to fight to make sure that we always will
be.
Let me be clear: as a member of the conference committee that
approved the final version of the Dodd-Frank Act, I can say with
certainty that Wall Street Reform was not written or signed into law to
hinder the hardworking folks building autos or growing apples.
End users, companies that use derivative contracts to offset
legitimate business risks, were specifically exempted from the clearing
requirements, and Congress did not specifically direct regulators to
require end users to post margin. Our bipartisan bill simply clarifies
congressional intent that nonfinancial end users are exempt from the
Dodd-Frank margin requirements.
Forcing nonfinancial end users to post margin could have several
negative consequences: unnecessarily increasing prices for consumers
across a range of goods, slowing job growth here in the United States,
and driving businesses to foreign, less transparent derivatives
markets.
Our bill passed the House last year with overwhelming bipartisan
support because it is about protecting jobs and clarifying
congressional intent, and it passed the House Financial Services
Committee earlier this year, as we heard, with unanimous, bipartisan
support by a vote of 59-0.
This bill will ensure congressional intent to protect our
manufacturing and agricultural industries is carried out. I look
forward to this crucial legislation passing the House later today, and
I urge my colleagues to support it. I will continue to work to get the
Business Risk Mitigation and Price Stabilization Act signed into law.
I reserve the balance of my time.
Mr. HENSARLING. Madam Speaker, I now yield 4 minutes to the gentleman
from New York (Mr. Grimm), an outstanding member of the Financial
Services Committee and the coauthor and lead Republican on this
legislation.
Mr. GRIMM. Madam Speaker, I proudly rise in support of this
legislation, H.R. 634, the Business Risk Mitigation and Price
Stabilization Act of 2013. H.R. 634, as has already been noted by the
chairman and my colleague, is truly a bipartisan piece of legislation
that has passed this House previously in the 112th Congress with
overwhelming support.
I would like to thank my colleague, Mr. Peters, for working on this
with me--this is an extremely important
[[Page H3303]]
issue, and it is a pleasure to work across the aisle--as well as my
colleagues on the Agriculture Committee, Mr. Austin Scott and Mr.
McIntyre. Of course, I want to thank Chairman Hensarling for his
leadership on this issue, as well as for his leadership as chairman of
the full committee, and also thank Ranking Member Waters.
H.R. 634, as has been noted, will clarify the intent of Congress
under the Dodd-Frank Act by providing an explicit exemption for the
true commercial, nonfinancial end users of over-the-counter derivatives
from having to post margin on uncleared derivatives transactions. This
exemption is extremely important for job creation and economic growth,
as well as price stabilization for average consumers.
Despite clear legislative history to the contrary, regulators
continue to misinterpret the Dodd-Frank Act as giving them authority to
impose margin requirements on true end users. H.R. 634 will ensure that
nonfinancial end users remain exempt from margin requirements and that
the regulators do not--I emphasize, they do not--exercise authorities
that were not specifically given to them by the Congress.
If margin requirements were imposed on these nonfinancial end users,
it would harm our economy by very simply diverting working capital from
productive uses such as reinvestment into the business or job creation.
And this legislation prevents this, and that's also extremely important
to protecting American jobs and our economy.
True end users are firms and companies that use derivatives to manage
their various financial risks. For example, firms use these products to
protect against changes in interest rates if they've sold floating rate
debt as well as to protect their profits earned in other currencies
from variations in foreign exchange markets.
The benefits of this legislation are not limited to American
businesses but extend into the heart of our communities. This bill will
help keep consumption prices stable for hardworking families and for
individuals. If true nonfinancial end users were required to post
margin, their hedging costs could become so high that they could
abandon the practice. This would lead to larger variations in consumer
prices for a whole host of products, which has been said, things like
groceries and airline tickets, and would create economic instability.
There's a study that has shown that imposing a 3 percent margin
requirement on over-the-counter derivatives held by the S&P 500
companies could cut capital spending by $5.1 to $6.7 billion and cost
100,000 to 130,000 U.S. jobs. With the unemployment rate at 7.6
percent, this is a consequence that simply cannot be overlooked.
So, in closing, I ask that my colleagues once again support this
commonsense, bipartisan pro-jobs legislation.
Mr. PETERS of Michigan. I yield 2 minutes to the gentlewoman from New
York (Mrs. Maloney).
Mrs. CAROLYN B. MALONEY of New York. I thank the gentleman for
yielding and for his leadership on this important issue along with
Congressmen McIntyre, Grimm, Hensarling, and many, many others.
Madam Speaker, I rise today in support of H.R. 634, the Business Risk
Mitigation and Price Stabilization Act. This bill will make it easier
for companies to manage their risks and plan for their future by
clarifying that Dodd-Frank does not require end users of derivatives to
post collateral on these trades. Congress never intended for these
companies to be required to post collateral on their derivatives,
because that would needlessly raise their costs and could even
discourage companies from prudently managing their risks.
But because of a drafting error in Dodd-Frank, end users of
derivatives currently face uncertainty about whether the regulators
will require them to post collateral. Both Federal Reserve Chairman Ben
Bernanke and CFTC Chairman Gary Gensler have stated that they support
this bill because it would provide them with much-needed clarity on
whether their rules on posting collateral should apply to end users.
This bipartisan effort to correct a problem with Dodd-Frank is not an
attempt by opponents to weaken the safeguards of the bill but, rather,
an attempt to make good legislation even better. Congress needs to step
in and ensure that companies that use derivatives to manage their day-
to-day commercial risk are not subject to unnecessary collateral
requirements.
It was reported out in a very strong bipartisan vote from Financial
Services Committee, and for these reasons, I urge my colleagues on both
sides of the aisle to support H.R. 634.
Mr. HENSARLING. Madam Speaker, at this time, I'm pleased to yield 1
minute to the gentleman from Illinois (Mr. Hultgren), another leader on
H.R. 634.
Mr. HULTGREN. Thank you, Chairman Hensarling.
Like many of my colleagues here, I am confident the House will pass
H.R. 634 today and present this deserving bill to the Senate--again.
After years of inaction bordering on dereliction, it's time for the
Senate Banking Committee to act on Title VII before potentially
irreparable and self-inflicting harm is done to our economy.
{time} 1300
Unaddressed, end user margin requirements could lock up billions of
dollars that would otherwise be put to productive use, dollars that
could go to hiring new employees.
This bill, the Business Risk Mitigation and Price Stabilization Act
of 2013, is a jobs bill. Without this bill, company treasurers
complying with new margin requirements will have to pull money from
somewhere, choking off funding for other business operations.
And these businesses, by definition, are those that only use these
tools to avoid risk, not for speculation. These businesses do not pose
systemic risk; they didn't contribute to the crisis of 2008. Yet going
against what Congress intended, regulators are roping them in.
I hope this bill passes with a large majority so it cannot be ignored
by the Senate and President.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
Mr. HULTGREN. I thank the chairman.
My constituents in Illinois need this legislation. Our farmers and
manufacturers, big and small, have voiced their clear support. Thank
you to the sponsors of this legislation, Mr. Grimm and Mr. Peters.
Mr. PETERS of Michigan. Madam Speaker, I have no further requests for
time from the Financial Services Committee.
I ask unanimous consent to allow the gentleman from North Carolina
(Mr. McIntyre) from the Agriculture Committee to control the rest of
the time.
The SPEAKER pro tempore. Without objection, the gentleman from North
Carolina will control the time.
There was no objection.
Mr. McINTYRE. Madam Speaker, I rise today in support of this bill of
which I'm a strong supporter and lead cosponsor, H.R. 634, and would
like to thank my colleagues--Representatives Hensarling, Grimm, Peters,
and Scott--for their commitment to working together on this, as you've
heard, in the discussion that has occurred thus far.
This bipartisan bill is a prime example--something our Nation is
yearning for to see here in Congress--that Members can and will work
together when we need to to find solutions that we can come across the
aisle and reach, and reach them quickly.
The Business Risk Mitigation and Price Stabilization Act will clarify
that true derivatives end users are exempt from the margin requirement
supplied by the Dodd-Frank Wall Street Reform and the Consumer
Protection Act to many derivatives contracts.
These true end users use derivatives to manage actual business risk
and protect against fluctuating prices, currency rates, or interest
rates--not to speculate. Margin requirements would place undue burden
on responsible end users not only back home in eastern North Carolina
where I'm from, but also, indeed, across the country.
Our farmers, agriculture co-ops, and community banks all use
financial products to mitigate risk, provide security for their
businesses, and maintain prices for consumers. By removing margin
requirements, this bill will free
[[Page H3304]]
up capital--something we all hear about that our small businesses are
screaming for--free up capital and allow businesses to plan for the
future, shield these plans from risk, and provide certainty needed to
create American jobs. And those battle cries of freeing up capital and
providing certainty is something I know all of our colleagues on both
sides of the aisle can agree on. We do want to help with jobs and small
business.
In the previous Congress, the House overwhelmingly passed an
identical bill, as has been mentioned earlier. It is my hope that this
House will again pass this important bipartisan legislation today and
send a strong message that Congress can and will work together to pass
commonsense solutions that protect our businesses, our farmers, our
cooperatives and others from burdensome and misguided regulations.
With that, I reserve the balance of my time.
Mr. HENSARLING. Madam Speaker, I now yield 3 minutes to the gentleman
from Georgia (Mr. Scott), who is the lead cosponsor of this bill from
the Agriculture Committee.
Mr. AUSTIN SCOTT of Georgia. I thank the chairman.
Madam Speaker, I rise today in support of H.R. 634, the Business Risk
Mitigation and Price Stabilization Act of 2013. And I, too, would like
to thank many of the Members on the other side of the aisle, as well as
mine, specifically, Mr. McIntyre from North Carolina for his work on
the Ag Committee on this piece of legislation.
This bill clarifies congressional intent by providing a clear
exemption for non-financial end users that qualify for the clearing
exception under Title VII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.
Across the country, consumers and businesses alike are confronted
with risks that are associated with their day-to-day operations. To
manage these risks, businesses use over-the-counter derivatives to
provide price certainty. Consumers, in turn, benefit from these risk-
management practices through lower volatility in the day-to-day prices
of the goods and services that they purchase.
By passing this legislation, Congress is providing a specific
exemption from clearing and margin requirements for businesses and
individuals who are not financial institutions. This accounts for less
than 10 percent of the capital of the derivatives markets. It relieves
the burdensome regulations and keeps the U.S. economy moving. This
balance protects the consumer while providing a pro-growth environment
for business.
To further the initial goal, H.R. 634 clarifies Congress' intent of
keeping much-needed capital in the U.S. markets, which plays an
important role in our country's continued economic growth.
I would also like to reiterate the fact that last year Congress
passed this same piece of legislation 370-24. For this reason, I ask my
colleagues to support H.R. 634, so that businesses and individuals may
benefit from the day-to-day risk-management prices that this will
provide.
Mr. McINTYRE. I reserve the balance of my time.
Mr. HENSARLING. Madam Speaker, I now yield 2 minutes to the
gentlelady from Missouri (Mrs. Hartzler), also a member of the
Agriculture Committee.
Mrs. HARTZLER. I rise today in strong support of H.R. 634, the
Business Risk Mitigation and Price Stabilization Act of 2013.
This bipartisan, commonsense piece of legislation is critical for
commercial end users like farm credit companies and rural electric
cooperatives to be able to use swaps to manage their long-term risks.
Earlier this year, I introduced H.R. 2136, the School Business Credit
Availability Act, to address this very issue. I'm pleased that my
colleagues have put together this important legislation which addresses
the concerns that I have with clearing and margin requirements for
rural electric cooperatives.
It's important to every family in my district to be able to count on
reasonable and stable electric bills without unplanned price
fluctuations. This bill ensures that the rural electric cooperatives in
my district will be able to manage their long-term risk without the
burden of costly clearing and margin requirements that would ultimately
be passed on to my constituents.
I want to especially thank the chairman and ranking member of both
committees for including language ensuring that cooperatives that have
clearing exemption are also excluded from costly margin requirements.
Dodd-Frank never intended for end users like rural electric
cooperatives and farm credit companies to be subject to clearing and
margin requirements.
Rural cooperatives in my district provide a great service at the
lowest rates possible. Requiring these rural cooperatives to post
margin on their swaps merely ties up working capital and will
unnecessarily lead to higher electricity costs across the U.S.
I was pleased to see that earlier this year the CFTC included many of
these end users, like rural cooperatives, in their proposed rulemaking
on the clearing exemption. I support this legislation's directive to
close the loophole by granting margin exemptions to those same entities
as well.
Again, I support H.R. 634, and I urge my colleagues to vote for this
legislation.
Mr. McINTYRE. I reserve the balance of my time.
Mr. HENSARLING. Madam Speaker, I'm prepared to close, and I reserve
the balance of my time.
Mr. McINTYRE. Madam Speaker, I do want to emphasize the fact that we
have great bipartisan support and would like to see this bill passed
right away.
I yield back the balance of my time.
Mr. HENSARLING. Madam Speaker, I just want to urge all my colleagues
to support this bipartisan legislation to bring some relief to end
users, promote economic growth and jobs, and make congressional intent
clear.
Again, I urge all of my colleagues to adopt it, and I yield back the
balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Texas (Mr. Hensarling) that the House suspend the rules
and pass the bill, H.R. 634, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. McINTYRE. Madam Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________