[Congressional Record Volume 160, Number 103 (Thursday, July 3, 2014)]
[Extensions of Remarks]
[Pages E1100-E1101]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              CUSTOMER PROTECTION AND END USER RELIEF ACT

                                 ______
                                 

                               speech of

                          HON. RICHARD HUDSON

                           of north carolina

                    in the house of representatives

                         Monday, June 23, 2014

       The House in Committee of the Whole House on the state of 
     the Union had under consideration the bill (H.R. 4413) to 
     reauthorize the Commodity Futures Trading Commission, to 
     better protect futures customers, to provide end users with 
     market certainty, to make basic reforms to ensure 
     transparency and accountability at the Commission, to help 
     farmers, ranchers, and end users manage risks to help keep 
     consumer costs low, and for other purposes:

  Mr. HUDSON. Mr. Chair, I submit the following exchange of letters:

                                         Coalition for Derivatives


                                                    End-Users,

                                                    June 17, 2014.
     Re End-User Support for Adding Derivatives End-User Bills to 
         the Commodity Futures Trading Commission Reauthorization 
         Bill.

     Hon. Frank D. Lucas,
     Chairman, House Committee on Agriculture, House of 
         Representatives, Washington, DC.
     Hon. Collin C. Peterson,
     Ranking Member, House Committee on Agriculture, House of 
         Representatives, Washington, DC.
       Dear Chairman Lucas and Ranking Member Peterson: The 
     Coalition for Derivatives End-Users is writing to thank you 
     and the other members of the Committee on Agriculture for 
     incorporating language into H.R. 4413 that would protect 
     derivatives end-users from harmful and unnecessary margin and 
     clearing requirements. H.R. 4413, the Customer Protection and 
     End-User Relief Act, reauthorizes the Commodity Futures 
     Trading Commission (``CFTC'') and was approved in your 
     Committee by voice vote on April 9, 2014. The Coalition 
     strongly supports your bill and hopes that it will pass the 
     House on a bipartisan basis.
       Your bill incorporates H.R. 634, the Business Risk 
     Mitigation and Price Stabilization Act of 2013, which would 
     ensure that non-financial derivatives end-users are not 
     subject to unnecessary margin requirements. This bill passed 
     the House of Representatives last year 411-12. Your bill also 
     incorporates key provisions of H.R. 677, the Inter-Affiliate 
     Swap Clarification Act, which was reported favorably out of 
     both the House Financial Services and House Agriculture 
     Committees last year. These provisions would exempt certain 
     swaps with centralized treasury units (``CTUs'') of non-
     financial end-users from clearing requirements.
       A recent Coalition survey of chief financial officers and 
     corporate treasurers, released on March 26, 2014, underscores 
     the urgent need for the end-user provisions contained in your 
     reauthorization bill. The survey found that 86 percent of 
     respondents indicated that fully collateralizing over-the-
     counter derivatives would adversely impact business 
     investment, acquisitions, research & development and job 
     creation.
       Nearly half of our survey respondents use CTUs to execute 
     OTC derivatives. The CFTC has issued no-action relief so that 
     some end-users that employ CTUs may avail themselves of the 
     clearing exception. However, our survey found that, of those 
     respondents that utilize a CTU structure, 69 percent do not 
     qualify for the CFTC's no-action relief or are unsure about 
     whether they could rely on the relief.
       We thank you for your efforts to address the concerns of 
     derivatives end-users. Throughout the legislative process, 
     the Coalition has supported efforts to increase transparency 
     in the derivatives markets and enhance financial stability 
     for the U.S. economy through thoughtful new regulation while 
     avoiding needless costs. Your bill would help end-users to 
     focus their efforts and capital less on needless regulation 
     and more on innovation, growth and job creation.
           Sincerely,
     Agricultural Retailers Association.
     Business Roundtable.
     Financial Executives International.
     National Association of Corporate Treasurers.
     National Association of Manufacturers.
     U.S. Chamber of Commerce.
                                  ____
                                  
                                        Chamber of Commerce of the


                                     United States of America,

                                                    June 19, 2014.
       To the Members of the U.S. House of Representatives: The 
     U.S. Chamber of Commerce, the world's largest business 
     federation representing the interests of more than three 
     million businesses of all sizes, sectors, and regions, as 
     well as state and local chambers and industry associations, 
     and dedicated to promoting, protecting, and defending 
     America's free enterprise system, strongly supports H.R. 
     4413, the ``Customer Protection and End-User Relief Act,'' a 
     bipartisan bill that would reauthorize the Commodity Futures 
     Trading Commission (CFTC), and make a number of important 
     reforms designed to promote smart regulation, enhance 
     accountability at the CFTC, and protect Main Street 
     businesses from onerous and unintended derivatives 
     regulation.
       The Chamber is particularly supportive of provisions in 
     H.R. 4413 that would help preserve the ability of commercial 
     end users to manage their financial risks by using 
     derivatives. Congress clearly intended to shield non-
     financial companies from certain regulatory requirements 
     contained in the Dodd-Frank Act--a mandate that unfortunately 
     has not been carried out fully by regulatory

[[Page E1101]]

     agencies--and last year the House voted 411-12 to pass 
     legislation to exempt end users from margin requirements. 
     H.R. 4413 includes that critical exemption and a number of 
     other fixes that would ensure non-financial companies would 
     be protected from burdensome and unnecessary regulations, 
     consistent with Congress's clear intent almost four years 
     ago.
       The Chamber also supports provisions in this bill intended 
     to promote transparency and accountability in the CFTC's 
     rulemaking process, including a requirement to conduct a 
     cost-benefit analysis for new rules, and the creation of an 
     Office of the Chief Economist to support such analysis. Cost-
     benefit analysis has been a fundamental tool of effective 
     government for more than three decades, and these 
     requirements would help protect Main Street businesses, 
     investors, and consumers from some of the unintended 
     consequences of regulation.
       Additionally, H.R. 4413 contains a number of sensible 
     provisions that would promote principles of good governance, 
     including providing market participants with more certainty 
     regarding ``no action'' letters issued by the CFTC staff, and 
     a requirement that the CFTC develop internal risk control 
     mechanisms in order to protect sensitive market data. These 
     are common sense measures that would help make the CFTC a 
     more effective and accountable regulator, and the Chamber 
     appreciates their inclusion in this bill.
       The Chamber strongly urges you to vote in favor of H.R. 
     4413 and may consider including votes on, or in relation to, 
     this bill in our annual How They Voted scorecard.
           Sincerely,
     R. Bruce Josten.
                                  ____



                                          Business Roundtable,

                                    Washington, DC, June 16, 2014.
     Hon. John Boehner,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Frank Lucas,
     Chairman, Committee on Agriculture, House of Representatives, 
         Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, Washington, DC.
     Hon. Collin Peterson,
     Ranking Member, Committee on Agriculture, House of 
         Representatives, Washington, DC.
       Dear Speaker Boehner, Minority Leader Pelosi, Chairman 
     Lucas, and Ranking Member Peterson: On behalf of the more 
     than 200 member CEOs who lead major American companies 
     operating in every sector of the U.S. economy, I wish to 
     convey Business Roundtable's strong endorsement of H.R. 4413, 
     the Customer Protection and End-User Relief Act, as reported 
     by the House Committee on Agriculture, which would 
     reauthorize the U.S. Commodity Futures Trading Commission 
     (CFTC).
       In particular, Business Roundtable strongly supports 
     important provisions included in H.R. 4413 that will reform 
     derivatives regulation to focus more effectively on 
     addressing potential systemic economic risk.
       H.R. 4413 incorporates H.R. 634, the Business Risk 
     Mitigation and Price Stabilization Act of 2013, which would 
     ensure that non-financial derivatives end-users, who pose no 
     systemic risk to the U.S. economy, are not subject to 
     unnecessary margin requirements. This bill passed the House 
     of Representatives last year by a strong bipartisan vote of 
     411-12 and is needed more than ever due to the uncertainty 
     associated with differing margin proposals from the financial 
     regulators.
       H.R. 4413 also incorporates key provisions of H.R. 677, the 
     Inter-Affiliate Swap Clarification Act, which was reported 
     favorably out of both the House Financial Services and House 
     Agriculture Committees last year. The language in H.R. 4413 
     would ensure that end-users are not subject to clearing 
     requirements applicable to banks simply because they trade 
     through efficient, cost-effective centralized treasury units 
     (CTUs).
       A recent survey conducted by the Coalition for Derivatives 
     End-Users of chief financial officers and corporate 
     treasurers underscores the urgent need for the end-user 
     provisions in H.R. 4413. Eighty-six percent of respondents 
     indicated that fully collateralizing over-the-counter (OTC) 
     derivatives would adversely impact business investment, 
     acquisitions, research and development, and job creation, and 
     more than nine in ten end-users indicated that a margin 
     requirement would cause them to alter their hedging strategy.
       Nearly half of the survey respondents use CTUs to execute 
     OTC derivatives. The CFTC has issued no-action relief so that 
     some end-users that employ CTUs may avail themselves of the 
     clearing exception. However, the survey found that of those 
     respondents that utilize a CTU structure, 69 percent do not 
     qualify for the CFTC's no-action relief or are unsure about 
     whether they could rely on the relief. Thus, a legislative 
     solution is essential.
       Business Roundtable supports efforts to increase 
     transparency in the derivatives markets and enhance financial 
     stability for the U.S. economy through thoughtful new 
     regulation while avoiding needless costs. We appreciate you 
     moving this legislation forward and urge the House of 
     Representatives to pass this vital, bipartisan legislation to 
     ensure that derivatives regulation addresses real economic 
     risks without adversely affecting non-financial end-users who 
     utilize derivatives to reduce risk.
           Sincerely,
     Alexander M. Cutler,
       Chairman and Chief Executive Officer, Eaton; Chair, 
     Corporate Governance Committee, Business Roundtable.

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