[Congressional Record Volume 161, Number 2 (Wednesday, January 7, 2015)]
[House]
[Pages H71-H82]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROMOTING JOB CREATION AND REDUCING SMALL BUSINESS BURDENS ACT
Mr. FITZPATRICK. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 37) to make technical corrections to the Dodd-Frank Wall
Street Reform and Consumer Protection Act, to enhance the ability of
small and emerging growth companies to access capital through public
and private markets, to reduce regulatory burdens, and for other
purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 37
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 ``Promoting Job Creation and
Reducing Small Business Burdens Act''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--BUSINESS RISK MITIGATION AND PRICE STABILIZATION ACT
Sec. 101. Margin requirements.
Sec. 102. Implementation.
TITLE II--TREATMENT OF AFFILIATE TRANSACTIONS
Sec. 201. Treatment of affiliate transactions.
TITLE III--HOLDING COMPANY REGISTRATION THRESHOLD EQUALIZATION ACT
Sec. 301. Registration threshold for savings and loan holding
companies.
TITLE IV--SMALL BUSINESS MERGERS, ACQUISITIONS, SALES, AND BROKERAGE
SIMPLIFICATION ACT
Sec. 401. Registration exemption for merger and acquisition brokers.
Sec. 402. Effective date.
TITLE V--SWAP DATA REPOSITORY AND CLEARINGHOUSE INDEMNIFICATION
CORRECTIONS
Sec. 501. Repeal of indemnification requirements.
TITLE VI--IMPROVING ACCESS TO CAPITAL FOR EMERGING GROWTH COMPANIES ACT
Sec. 601. Filing requirement for public filing prior to public
offering.
Sec. 602. Grace period for change of status of emerging growth
companies.
Sec. 603. Simplified disclosure requirements for emerging growth
companies.
TITLE VII--SMALL COMPANY DISCLOSURE SIMPLIFICATION ACT
Sec. 701. Exemption from XBRL requirements for emerging growth
companies and other smaller companies.
Sec. 702. Analysis by the SEC.
Sec. 703. Report to Congress.
Sec. 704. Definitions.
TITLE VIII--RESTORING PROVEN FINANCING FOR AMERICAN EMPLOYERS ACT
Sec. 801. Rules of construction relating to collateralized loan
obligations.
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TITLE IX--SBIC ADVISERS RELIEF ACT
Sec. 901. Advisers of SBICs and venture capital funds.
Sec. 902. Advisers of SBICs and private funds.
Sec. 903. Relationship to State law.
TITLE X--DISCLOSURE MODERNIZATION AND SIMPLIFICATION ACT
Sec. 1001. Summary page for form 10-K.
Sec. 1002. Improvement of regulation S-K.
Sec. 1003. Study on modernization and simplification of regulation S-K.
TITLE XI--ENCOURAGING EMPLOYEE OWNERSHIP ACT
Sec. 1101. Increased threshold for disclosures relating to compensatory
benefit plans.
TITLE I--BUSINESS RISK MITIGATION AND PRICE STABILIZATION ACT
SEC. 101. 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. 102. IMPLEMENTATION.
The amendments made by this title 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.
TITLE II--TREATMENT OF AFFILIATE TRANSACTIONS
SEC. 201. TREATMENT OF AFFILIATE TRANSACTIONS.
(a) In General.--
(1) Commodity exchange act amendment.--Section
2(h)(7)(D)(i) of the Commodity Exchange Act (7 U.S.C.
2(h)(7)(D)(i)) is amended to read as follows:
``(i) In general.--An affiliate of a person that qualifies
for an exception under subparagraph (A) (including affiliate
entities predominantly engaged in providing financing for the
purchase of the merchandise or manufactured goods of the
person) may qualify for the exception only if the affiliate
enters into the swap to hedge or mitigate the commercial risk
of the person or other affiliate of the person that is not a
financial entity, provided that if the hedge or mitigation of
such commercial risk is addressed by entering into a swap
with a swap dealer or major swap participant, an appropriate
credit support measure or other mechanism must be
utilized.''.
(2) Securities exchange act of 1934 amendment.--Section
3C(g)(4)(A) of the Securities Exchange Act of 1934 (15 U.S.C.
78c-3(g)(4)(A)) is amended to read as follows:
``(A) In general.--An affiliate of a person that qualifies
for an exception under paragraph (1) (including affiliate
entities predominantly engaged in providing financing for the
purchase of the merchandise or manufactured goods of the
person) may qualify for the exception only if the affiliate
enters into the security-based swap to hedge or mitigate the
commercial risk of the person or other affiliate of the
person that is not a financial entity, provided that if the
hedge or mitigation such commercial risk is addressed by
entering into a security-based swap with a security-based
swap dealer or major security-based swap participant, an
appropriate credit support measure or other mechanism must be
utilized.''.
(b) Applicability of Credit Support Measure Requirement.--
The requirements in section 2(h)(7)(D)(i) of the Commodity
Exchange Act and section 3C(g)(4)(A) of the Securities
Exchange Act of 1934, as amended by subsection (a), requiring
that a credit support measure or other mechanism be utilized
if the transfer of commercial risk referred to in such
sections is addressed by entering into a swap with a swap
dealer or major swap participant or a security-based swap
with a security-based swap dealer or major security-based
swap participant, as appropriate, shall not apply with
respect to swaps or security-based swaps, as appropriate,
entered into before the date of the enactment of this Act.
TITLE III--HOLDING COMPANY REGISTRATION THRESHOLD EQUALIZATION ACT
SEC. 301. REGISTRATION THRESHOLD FOR SAVINGS AND LOAN HOLDING
COMPANIES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended--
(1) in section 12(g)--
(A) in paragraph (1)(B), by inserting after ``is a bank''
the following: ``, a savings and loan holding company (as
defined in section 10 of the Home Owners' Loan Act),''; and
(B) in paragraph (4), by inserting after ``case of a bank''
the following: ``, a savings and loan holding company (as
defined in section 10 of the Home Owners' Loan Act),''; and
(2) in section 15(d), by striking ``case of bank'' and
inserting the following: ``case of a bank, a savings and loan
holding company (as defined in section 10 of the Home Owners'
Loan Act),''.
TITLE IV--SMALL BUSINESS MERGERS, ACQUISITIONS, SALES, AND BROKERAGE
SIMPLIFICATION ACT
SEC. 401. REGISTRATION EXEMPTION FOR MERGER AND ACQUISITION
BROKERS.
Section 15(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78o(b)) is amended by adding at the end the following:
``(13) Registration exemption for merger and acquisition
brokers.--
``(A) In general.--Except as provided in subparagraph (B),
an M&A broker shall be exempt from registration under this
section.
``(B) Excluded activities.--An M&A broker is not exempt
from registration under this paragraph if such broker does
any of the following:
``(i) Directly or indirectly, in connection with the
transfer of ownership of an eligible privately held company,
receives, holds, transmits, or has custody of the funds or
securities to be exchanged by the parties to the transaction.
``(ii) Engages on behalf of an issuer in a public offering
of any class of securities that is registered, or is required
to be registered, with the Commission under section 12 or
with respect to which the issuer files, or is required to
file, periodic information, documents, and reports under
subsection (d).
``(C) Rule of construction.--Nothing in this paragraph
shall be construed to limit any other authority of the
Commission to exempt any person, or any class of persons,
from any provision of this title, or from any provision of
any rule or regulation thereunder.
``(D) Definitions.--In this paragraph:
``(i) Control.--The term `control' means the power,
directly or indirectly, to direct the management or policies
of a company, whether through ownership of securities, by
contract, or otherwise. There is a presumption of control for
any person who--
``(I) is a director, general partner, member or manager of
a limited liability company, or officer exercising executive
responsibility (or has similar status or functions);
``(II) has the right to vote 20 percent or more of a class
of voting securities or the power to sell or direct the sale
of 20 percent or more of a class of voting securities; or
``(III) in the case of a partnership or limited liability
company, has the right to receive upon dissolution, or has
contributed, 20 percent or more of the capital.
``(ii) Eligible privately held company.--The term `eligible
privately held company' means a company that meets both of
the following conditions:
``(I) The company does not have any class of securities
registered, or required to be registered, with the Commission
under section 12 or with respect to which the company files,
or is required to file, periodic information, documents, and
reports under subsection (d).
``(II) In the fiscal year ending immediately before the
fiscal year in which the services of the M&A broker are
initially engaged with respect to the securities transaction,
the company meets either or both of the following conditions
(determined in accordance with the historical financial
accounting records of the company):
``(aa) The earnings of the company before interest, taxes,
depreciation, and amortization are less than $25,000,000.
``(bb) The gross revenues of the company are less than
$250,000,000.
``(iii) M&A broker.--The term `M&A broker' means a broker,
and any person associated with a broker, engaged in the
business of effecting securities transactions solely in
connection with the transfer of ownership of an eligible
privately held company, regardless of whether the broker acts
on behalf of a seller or buyer, through the purchase, sale,
exchange, issuance, repurchase, or redemption of, or a
business combination involving, securities or assets of the
eligible privately held company, if the broker reasonably
believes that--
``(I) upon consummation of the transaction, any person
acquiring securities or assets of the eligible privately held
company, acting alone or in concert, will control and,
directly or indirectly, will be active in the management of
the eligible privately held company or the business conducted
with the assets of the eligible privately held company; and
``(II) if any person is offered securities in exchange for
securities or assets of the eligible privately held company,
such person will,
[[Page H73]]
prior to becoming legally bound to consummate the
transaction, receive or have reasonable access to the most
recent year-end balance sheet, income statement, statement of
changes in financial position, and statement of owner's
equity of the issuer of the securities offered in exchange,
and, if the financial statements of the issuer are audited,
the related report of the independent auditor, a balance
sheet dated not more than 120 days before the date of the
offer, and information pertaining to the management,
business, results of operations for the period covered by the
foregoing financial statements, and material loss
contingencies of the issuer.
``(E) Inflation adjustment.--
``(i) In general.--On the date that is 5 years after the
date of the enactment of this paragraph, and every 5 years
thereafter, each dollar amount in subparagraph (D)(ii)(II)
shall be adjusted by--
``(I) dividing the annual value of the Employment Cost
Index For Wages and Salaries, Private Industry Workers (or
any successor index), as published by the Bureau of Labor
Statistics, for the calendar year preceding the calendar year
in which the adjustment is being made by the annual value of
such index (or successor) for the calendar year ending
December 31, 2014; and
``(II) multiplying such dollar amount by the quotient
obtained under subclause (I).
``(ii) Rounding.--Each dollar amount determined under
clause (i) shall be rounded to the nearest multiple of
$100,000.''.
SEC. 402. EFFECTIVE DATE.
This Act and any amendment made by this Act shall take
effect on the date that is 90 days after the date of the
enactment of this Act.
TITLE V--SWAP DATA REPOSITORY AND CLEARINGHOUSE INDEMNIFICATION
CORRECTIONS
SEC. 501. REPEAL OF INDEMNIFICATION REQUIREMENTS.
(a) Derivatives Clearing Organizations.--Section 5b(k)(5)
of the Commodity Exchange Act (7 U.S.C. 7a-1(k)(5)) is
amended to read as follows:
``(5) Confidentiality agreement.--Before the Commission may
share information with any entity described in paragraph (4),
the Commission shall receive a written agreement from each
entity stating that the entity shall abide by the
confidentiality requirements described in section 8 relating
to the information on swap transactions that is provided.''.
(b) Swap Data Repositories.--Section 21(d) of the Commodity
Exchange Act (7 U.S.C. 24a(d)) is amended to read as follows:
``(d) Confidentiality Agreement.--Before the swap data
repository may share information with any entity described in
subsection (c)(7), the swap data repository shall receive a
written agreement from each entity stating that the entity
shall abide by the confidentiality requirements described in
section 8 relating to the information on swap transactions
that is provided.''.
(c) Security-Based Swap Data Repositories.--Section
13(n)(5)(H) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(n)(5)(H)) is amended to read as follows:
``(H) Confidentiality agreement.--Before the security-based
swap data repository may share information with any entity
described in subparagraph (G), the security-based swap data
repository shall receive a written agreement from each entity
stating that the entity shall abide by the confidentiality
requirements described in section 24 relating to the
information on security-based swap transactions that is
provided.''.
(d) Effective Date.--The amendments made by this Act shall
take effect as if enacted as part of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Public Law 111-
203) on July 21, 2010.
TITLE VI--IMPROVING ACCESS TO CAPITAL FOR EMERGING GROWTH COMPANIES ACT
SEC. 601. FILING REQUIREMENT FOR PUBLIC FILING PRIOR TO
PUBLIC OFFERING.
Section 6(e)(1) of the Securities Act of 1933 (15 U.S.C.
77f(e)(1)) is amended by striking ``21 days'' and inserting
``15 days''.
SEC. 602. GRACE PERIOD FOR CHANGE OF STATUS OF EMERGING
GROWTH COMPANIES.
Section 6(e)(1) of the Securities Act of 1933 (15 U.S.C.
77f(e)(1)) is further amended by adding at the end the
following: ``An issuer that was an emerging growth company at
the time it submitted a confidential registration statement
or, in lieu thereof, a publicly filed registration statement
for review under this subsection but ceases to be an emerging
growth company thereafter shall continue to be treated as an
emerging market growth company for the purposes of this
subsection through the earlier of the date on which the
issuer consummates its initial public offering pursuant to
such registrations statement or the end of the 1-year period
beginning on the date the company ceases to be an emerging
growth company.''.
SEC. 603. SIMPLIFIED DISCLOSURE REQUIREMENTS FOR EMERGING
GROWTH COMPANIES.
Section 102 of the Jumpstart Our Business Startups Act
(Public Law 112-106) is amended by adding at the end the
following:
``(d) Simplified Disclosure Requirements.--With respect to
an emerging growth company (as such term is defined under
section 2 of the Securities Act of 1933):
``(1) Requirement to include notice on form s-1.--Not later
than 30 days after the date of enactment of this subsection,
the Securities and Exchange Commission shall revise its
general instructions on Form S-1 to indicate that a
registration statement filed (or submitted for confidential
review) by an issuer prior to an initial public offering may
omit financial information for historical periods otherwise
required by regulation S-X (17 C.F.R. 210.1-01 et seq.) as of
the time of filing (or confidential submission) of such
registration statement, provided that--
``(A) the omitted financial information relates to a
historical period that the issuer reasonably believes will
not be required to be included in the Form S-1 at the time of
the contemplated offering; and
``(B) prior to the issuer distributing a preliminary
prospectus to investors, such registration statement is
amended to include all financial information required by such
regulation S-X at the date of such amendment.
``(2) Reliance by issuers.--Effective 30 days after the
date of enactment of this subsection, an issuer filing a
registration statement (or submitting the statement for
confidential review) on Form S-1 may omit financial
information for historical periods otherwise required by
regulation S-X (17 C.F.R. 210.1-01 et seq.) as of the time of
filing (or confidential submission) of such registration
statement, provided that--
``(A) the omitted financial information relates to a
historical period that the issuer reasonably believes will
not be required to be included in the Form S-1 at the time of
the contemplated offering; and
``(B) prior to the issuer distributing a preliminary
prospectus to investors, such registration statement is
amended to include all financial information required by such
regulation S-X at the date of such amendment.''.
TITLE VII--SMALL COMPANY DISCLOSURE SIMPLIFICATION ACT
SEC. 701. EXEMPTION FROM XBRL REQUIREMENTS FOR EMERGING
GROWTH COMPANIES AND OTHER SMALLER COMPANIES.
(a) Exemption for Emerging Growth Companies.--Emerging
growth companies are exempted from the requirements to use
Extensible Business Reporting Language (XBRL) for financial
statements and other periodic reporting required to be filed
with the Commission under the securities laws. Such companies
may elect to use XBRL for such reporting.
(b) Exemption for Other Smaller Companies.--Issuers with
total annual gross revenues of less than $250,000,000 are
exempt from the requirements to use XBRL for financial
statements and other periodic reporting required to be filed
with the Commission under the securities laws. Such issuers
may elect to use XBRL for such reporting. An exemption under
this subsection shall continue in effect until--
(1) the date that is five years after the date of enactment
of this Act; or
(2) the date that is two years after a determination by the
Commission, by order after conducting the analysis required
by section 702, that the benefits of such requirements to
such issuers outweigh the costs, but no earlier than three
years after enactment of this Act.
(c) Modifications to Regulations.--Not later than 60 days
after the date of enactment of this Act, the Commission shall
revise its regulations under parts 229, 230, 232, 239, 240,
and 249 of title 17, Code of Federal Regulations, to reflect
the exemptions set forth in subsections (a) and (b).
SEC. 702. ANALYSIS BY THE SEC.
The Commission shall conduct an analysis of the costs and
benefits to issuers described in section 701(b) of the
requirements to use XBRL for financial statements and other
periodic reporting required to be filed with the Commission
under the securities laws. Such analysis shall include an
assessment of--
(1) how such costs and benefits may differ from the costs
and benefits identified by the Commission in the order
relating to interactive data to improve financial reporting
(dated January 30, 2009; 74 Fed. Reg. 6776) because of the
size of such issuers;
(2) the effects on efficiency, competition, capital
formation, and financing and on analyst coverage of such
issuers (including any such effects resulting from use of
XBRL by investors);
(3) the costs to such issuers of--
(A) submitting data to the Commission in XBRL;
(B) posting data on the website of the issuer in XBRL;
(C) software necessary to prepare, submit, or post data in
XBRL; and
(D) any additional consulting services or filing agent
services;
(4) the benefits to the Commission in terms of improved
ability to monitor securities markets, assess the potential
outcomes of regulatory alternatives, and enhance investor
participation in corporate governance and promote capital
formation; and
(5) the effectiveness of standards in the United States for
interactive filing data relative to the standards of
international counterparts.
SEC. 703. REPORT TO CONGRESS.
Not later than one year after the date of enactment of this
Act, the Commission shall provide the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate a report
regarding--
[[Page H74]]
(1) the progress in implementing XBRL reporting within the
Commission;
(2) the use of XBRL data by Commission officials;
(3) the use of XBRL data by investors;
(4) the results of the analysis required by section 702;
and
(5) any additional information the Commission considers
relevant for increasing transparency, decreasing costs, and
increasing efficiency of regulatory filings with the
Commission.
SEC. 704. DEFINITIONS.
As used in this title, the terms ``Commission'', ``emerging
growth company'', ``issuer'', and ``securities laws'' have
the meanings given such terms in section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c).
TITLE VIII--RESTORING PROVEN FINANCING FOR AMERICAN EMPLOYERS ACT
SEC. 801. RULES OF CONSTRUCTION RELATING TO COLLATERALIZED
LOAN OBLIGATIONS.
Section 13(c)(2) of the Bank Holding Company Act of 1956
(12 U.S.C. 1851(c)(2)) is amended--
(1) by striking ``A banking entity or nonbank financial
company supervised by the Board'' and inserting the
following:
``(A) General conformance period.--A banking entity or
nonbank financial company supervised by the Board''; and
(2) by adding at the end the following:
``(B) Conformance period for certain collateralized loan
obligations.--
``(i) In general.--Notwithstanding subparagraph (A), a
banking entity or nonbank financial company supervised by the
Board shall bring its activities related to or investments in
a debt security of a collateralized loan obligation issued
before January 31, 2014, into compliance with the
requirements of subsection (a)(1)(B) and any applicable rules
relating to subsection (a)(1)(B) not later than July 21,
2019.
``(ii) Collateralized loan obligation.--For purposes of
this subparagraph, the term `collateralized loan obligation'
means any issuing entity of an asset-backed security, as
defined in section 3(a)(77) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(77)), that is comprised primarily of
commercial loans.''.
TITLE IX--SBIC ADVISERS RELIEF ACT
SEC. 901. ADVISERS OF SBICS AND VENTURE CAPITAL FUNDS.
Section 203(l) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-3(l)) is amended--
(1) by striking ``No investment adviser'' and inserting the
following:
``(1) In general.--No investment adviser''; and
(2) by adding at the end the following:
``(2) Advisers of sbics.--For purposes of this subsection,
a venture capital fund includes an entity described in
subparagraph (A), (B), or (C) of subsection (b)(7) (other
than an entity that has elected to be regulated or is
regulated as a business development company pursuant to
section 54 of the Investment Company Act of 1940).''.
SEC. 902. ADVISERS OF SBICS AND PRIVATE FUNDS.
Section 203(m) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-3(m)) is amended by adding at the end the
following:
``(3) Advisers of sbics.--For purposes of this subsection,
the assets under management of a private fund that is an
entity described in subparagraph (A), (B), or (C) of
subsection (b)(7) (other than an entity that has elected to
be regulated or is regulated as a business development
company pursuant to section 54 of the Investment Company Act
of 1940) shall be excluded from the limit set forth in
paragraph (1).''.
SEC. 903. RELATIONSHIP TO STATE LAW.
Section 203A(b)(1) of the Investment Advisers Act of 1940
(15 U.S.C. 80b-3a(b)(1)) is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(C) that is not registered under section 203 because that
person is exempt from registration as provided in subsection
(b)(7) of such section, or is a supervised person of such
person.''.
TITLE X--DISCLOSURE MODERNIZATION AND SIMPLIFICATION ACT
SEC. 1001. SUMMARY PAGE FOR FORM 10-K.
Not later than the end of the 180-day period beginning on
the date of the enactment of this Act, the Securities and
Exchange Commission shall issue regulations to permit issuers
to submit a summary page on form 10-K (17 C.F.R. 249.310),
but only if each item on such summary page includes a cross-
reference (by electronic link or otherwise) to the material
contained in form 10-K to which such item relates.
SEC. 1002. IMPROVEMENT OF REGULATION S-K.
Not later than the end of the 180-day period beginning on
the date of the enactment of this Act, the Securities and
Exchange Commission shall take all such actions to revise
regulation S-K (17 C.F.R. 229.10 et seq.)--
(1) to further scale or eliminate requirements of
regulation S-K, in order to reduce the burden on emerging
growth companies, accelerated filers, smaller reporting
companies, and other smaller issuers, while still providing
all material information to investors;
(2) to eliminate provisions of regulation S-K, required for
all issuers, that are duplicative, overlapping, outdated, or
unnecessary; and
(3) for which the Commission determines that no further
study under section 1003 is necessary to determine the
efficacy of such revisions to regulation S-K.
SEC. 1003. STUDY ON MODERNIZATION AND SIMPLIFICATION OF
REGULATION S-K.
(a) Study.--The Securities and Exchange Commission shall
carry out a study of the requirements contained in regulation
S-K (17 C.F.R. 229.10 et seq.). Such study shall--
(1) determine how best to modernize and simplify such
requirements in a manner that reduces the costs and burdens
on issuers while still providing all material information;
(2) emphasize a company by company approach that allows
relevant and material information to be disseminated to
investors without boilerplate language or static requirements
while preserving completeness and comparability of
information across registrants; and
(3) evaluate methods of information delivery and
presentation and explore methods for discouraging repetition
and the disclosure of immaterial information.
(b) Consultation.--In conducting the study required under
subsection (a), the Commission shall consult with the
Investor Advisory Committee and the Advisory Committee on
Small and Emerging Companies.
(c) Report.--Not later than the end of the 360-day period
beginning on the date of enactment of this Act, the
Commission shall issue a report to the Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a);
(2) specific and detailed recommendations on modernizing
and simplifying the requirements in regulation S-K in a
manner that reduces the costs and burdens on companies while
still providing all material information; and
(3) specific and detailed recommendations on ways to
improve the readability and navigability of disclosure
documents and to discourage repetition and the disclosure of
immaterial information.
(d) Rulemaking.--Not later than the end of the 360-day
period beginning on the date that the report is issued to the
Congress under subsection (c), the Commission shall issue a
proposed rule to implement the recommendations of the report
issued under subsection (c).
(e) Rule of Construction.--Revisions made to regulation S-K
by the Commission under section 1002 shall not be construed
as satisfying the rulemaking requirements under this section.
TITLE XI--ENCOURAGING EMPLOYEE OWNERSHIP ACT
SEC. 1101. INCREASED THRESHOLD FOR DISCLOSURES RELATING TO
COMPENSATORY BENEFIT PLANS.
Not later than 60 days after the date of the enactment of
this Act, the Securities and Exchange Commission shall revise
section 230.701(e) of title 17, Code of Federal Regulations,
so as to increase from $5,000,000 to $10,000,000 the
aggregate sales price or amount of securities sold during any
consecutive 12-month period in excess of which the issuer is
required under such section to deliver an additional
disclosure to investors. The Commission shall index for
inflation such aggregate sales price or amount every 5 years
to reflect the change in the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor Statistics,
rounding to the nearest $1,000,000.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Pennsylvania (Mr. Fitzpatrick) and the gentleman from Minnesota (Mr.
Ellison) each will control 20 minutes.
The Chair recognizes the gentleman from Pennsylvania.
General Leave
Mr. FITZPATRICK. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and to include extraneous materials for the Record on
H.R. 37, currently under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
Mr. FITZPATRICK. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, thank you for the time and for the opportunity to again
bring this bill before the House as a piece of a larger strategy that
will bring greater jobs and more opportunity to the American people and
to American families.
I am proud to once again sponsor the Promoting Job Creation and
Reducing Small Business Burdens Act, a bill which includes the language
of pro-growth measures debated and passed last Congress in the
Financial Services Committee and in the Agriculture Committee.
While these proposals aren't flashy, they represent bipartisan
efforts to remove the burdensome weight of one-size-fits-all regulation
that has, sadly, become the norm for Washington. While often well-
intentioned, many of
[[Page H75]]
these top-down regulations hurt small businesses and emerging
businesses in critical sectors like biotechnology.
As the Representative of one of the Nation's fastest-growing biotech
regions just outside Philadelphia, I have experienced firsthand the
impact of this vibrant industry in southeastern Pennsylvania. Employing
thousands of hardworking men and women, this sector harnesses the best
of our STEM community and what it has to offer in our efforts to create
treatments and cures for devastating diseases from diabetes and
Alzheimer's to cancer and HIV/AIDS.
For these businesses, government overregulation often treats the
little guy the same as big multinational corporations, tying them in
costly red tape at the expense of their ability to research, to
develop, to innovate, and to hire.
This bill takes a meaningful step toward ensuring smarter, tailored
regulations which unleash businesses, like biotech companies in my
district, to invest in themselves and in their workers. But biotech
workers wouldn't be the only ones to benefit. So would employees at
retailers like grocery chain Wegmans.
Employing 44,000 people, including 8,200 in the Commonwealth of
Pennsylvania, Wegmans is constantly ranked among the Nation's best
places to work by Fortune magazine, a grade they attribute to their
employee ownership opportunities, which allow their workers to have a
stake in the business that they work for.
However, a little-known piece of regulatory overreach is hamstringing
these opportunities, an overreach recognized and adjusted by this
legislation. By creating a more realistic regulatory environment, this
bill provides relief to businesses looking to retain their best
employees, while allowing workers to invest in the company and in their
own futures.
In lieu of the failed Washington efforts of the past which tried to
simply legislate more jobs into existence, the Promoting Job Creation
and Reducing Small Business Burdens Act is very much a jobs bill
because it addresses these job-creating needs. By reining in
government's heavyhanded approach to regulating the economy, we can
provide a bipartisan path toward getting people back to work, helping
businesses grow, and ensuring hardworking Americans keep more of their
hard-earned money.
{time} 1315
Mr. Speaker, the challenges facing our economy are steep. However,
they are no more daunting than the challenges we have overcome in the
past in the way that Americans have always approached adversity: head
on, with American ingenuity, practicality, and a commitment of leaders
on both sides of the aisle to act in the best interests of the working
men and women we represent.
The ushering in of this new Congress gives us the perfect opportunity
for Members of both parties to unite around efforts to put the American
worker back in the driver's seat and to establish a bipartisan playbook
for advancing common goals. Now is the time, and the Promoting Job
Creation and Reducing Small Business Burdens Act is an important part
of that process. I urge my colleagues to support this legislation.
I reserve the balance of my time.
House of Representatives,
Committee on Agriculture,
Washington, DC, January 7, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services, Rayburn House
Office Building, Washington, DC.
Dear Chairman Hensarling: I am writing concerning H.R. 37.
``Promoting Job Creation and Reducing Small Business Burdens
Act.''
As you know, provisions of H.R. 37 are within the
jurisdiction of the Committee on Agriculture. In order to
expedite floor consideration of the bill, the Committee on
Agriculture will forgo action on H.R. 37. Further, the
Committee will not oppose the bill's consideration on the
suspension calendar. This is also being done with the
understanding that it does not in any way prejudice the
Committee with respect to the appointment of conferees or its
jurisdictional prerogatives on this or similar legislation.
I would appreciate your response to this letter, confirming
this understanding with respect to H.R. 37, and would ask
that a copy of our exchange of letters on this matter be
included in the Congressional Record during Floor
consideration.
Sincerely.
K. Michael Conaway,
Chairman.
____
House of Representatives,
Committee on Financial Services,
Washington, DC, January 7, 2015.
Hon. K. Michael Conaway,
Chairman, Committee on Agriculture, Longworth House Office
Building, Washington, DC.
Dear Chairman Conaway: Thank you for your letter of even
date herewith regarding H.R. 37, the Promoting Job Creation
and Reducing Small Business Burdens Act.
I am most appreciative of your decision to forego
consideration of H.R. 37 so that it may move expeditiously to
the House floor. I acknowledge that although you are waiving
formal consideration of the bill, the Committee on
Agriculture is in no way waiving its jurisdiction over any
subject matter contained in the bill that falls within its
jurisdiction. In addition, if a conference is necessary on
this legislation, I will support any request that your
committee be represented therein.
Finally, I shall be pleased to include your letter and this
letter in the Congressional Record during floor consideration
of H.R. 37.
Sincerely.
Jeb Hensarling,
Chairman.
Mr. ELLISON. Mr. Speaker, I yield myself as much time as I may
consume.
What is before us today is a mini omnibus bill that contains,
actually, 11 separate pieces of legislation, some of which may not be
controversial but some of which are incredibly controversial and do not
belong in this legislation. This is not an emergency. We have a new
Congress. This bill should go through the regular order. Unlike the
TRIA bill we just talked about, this bill is a bill which should and
must go through the regular order, and it is absolutely inappropriate
for the suspension calendar.
Our Republican friends would have us believe that this is just some
benign piece of legislation, yet this bill contains not only procedural
problems but substantive problems which have never seen the light of
day in any committee. Some of the legislation has only been public for
about 24 hours, and what is particularly frightening is that the text
of the bill has changed at least three times since Tuesday. We just got
started yesterday in talking about the importance of regular order, and
we are already violating those claims and promises.
Mr. Speaker, the House of Representatives should return to regular
order with this piece of legislation, and I urge my colleagues to
reject it. Regular order, whereby legislation is debated at a hearing,
marked up by a committee, and then finally considered by the whole
House, is the process by which we vet legislation. That is not going on
right here and right now, and there is no good reason for it. We do
this to ensure that we fully understand the changing law. Nevertheless,
Republicans have come here to suspend the rules and to consider a
package of 11 bills which will ease the oversight of Wall Street firms,
large banks, multinational corporations, and certain brokers.
It should be pointed out right now that the ranking member of the
House Financial Services Committee, Maxine Waters, who is unable to be
in Washington due to personal matters she has to address, has issued a
call to reject this piece of legislation for many of the reasons I am
articulating now.
I think it is also important to point out that there are 52 Members
of Congress who were sworn in yesterday and who represent more than 30
million Americans who will have to vote on bills affecting a collateral
firm's pledge, when they borrow money, affecting what information must
be disclosed about certain brokers and financial statements of firms,
without the opportunity to offer changes. This is the absolute
antithesis of regular order, and this bill is not appropriate. We urge
a ``no.''
I would like to talk a little bit about the specific reasons this
bill is bad. Members should know that this is not the identical bill
that came through in the fall. It has very important changes. If you
voted for it last fall, that is no reason to vote for this bill now.
First, the Volcker rule. This bill undercuts an important part of the
Dodd-Frank Wall Street Reform and Consumer Protection Act. The Volcker
rule was intended to prevent deposit-taking banks--banks that use money
insured by the Federal Government, the people's money--from making bets
[[Page H76]]
and using taxpayer-insured funds. The Federal Reserve went out of its
way to try to ease the transition to a safer system, but this bill
would give megabanks an additional 2 years, totaling 5 years, to sell
off certain securities in which they retain ownership rights--5 more
years of risk, 5 more years of massive profit-taking. This provision,
which almost certainly juices the profits of big, megabanks like
Citigroup and JPMorgan, has never been vetted. The public has not even
had a day to review the text. It is wrong that bills that help Wall
Street and multinational corporations get fast-tracked on day 2 of this
Congress while bills that help working families get slowed up for
years, literally.
Just last month, Republicans successfully handed Citigroup and other
megabanks a multibillion-dollar gift by repealing another reform
measure, known as the ``swaps push-out,'' which was intended to prevent
another Great Recession. The repeal of that provision allowed the
megabanks to continue to borrow money from the Federal Reserve lending
window, which is currently at about zero percent interest, to finance
their risky derivatives. Experts have weighed in. Let me read for the
Record the statement by the CEO of Better Markets:
``It's all about the bonus pool,'' said Dennis Kelleher,
president and CEO of Better Markets, a financial reform
nonprofit. ``The attack on the Volcker rule has been nonstop
because proprietary trading is about big-time bets that
result in big-time bonuses. Wall Street has been fighting it
from day one, and they're not going to stop.''
If you believe that there are things in this mini omnibus, or this
megabill, that might be worth your support, understand that this
particular provision has not been vetted anywhere. For that reason
alone they are literally trying to sneak it in, and you should vote
against it.
Also, this particular bill includes three other provisions that
weaken the Dodd-Frank Wall Street Reform and Consumer Protection Act.
These provisions take away the authority of regulators who are charged
with ensuring that everybody plays by the same rules so that, if at
some point in the future, we find out that our financial system is
threatened, our regulators will be unable to take decisive action to
fix the problems that they can fix today.
After witnessing the effect that one type of derivative--the credit
default swap--had in spreading losses from the subprime mortgage market
around the world, I would like to know why our first order of business
in this Congress is to roll back the financial reforms that this
Congress deliberated on and passed over an 18-month period following
the 2008 financial crisis.
This bill undermines investor protections. It includes three
provisions that have the potential to leave investors worse off than
they are today. As we proclaim small investors and workers and all of
these things, why are we undermining investor protections? In one
instance, the bill exempts individuals who would broker a merger of a
privately owned company to be exempt from SEC regulations. Since this
legislation passed in a previous Congress, the SEC has taken action to
make this unnecessary. However, if we pass this bill today, we will
undermine a few basic investor protections that the SEC has retained.
For example, the SEC determined that bad actors, such as convicted
securities fraudsters, should not be able to take advantage of a carve-
out. However, by voting ``yes,'' you are saying that it is okay for
people convicted of fraud to sell other things, like franchises or the
restaurant down the street. Another provision would allow 75 percent of
all public companies to no longer report their financial statements in
computer readable formats. When everything is online today and when
investors rely on computers to crunch the financials of various
companies, this bill comes across as a huge step backwards.
My colleagues want to address this bill, and I think it is important
that they do. So, at this point, I am going to urge a ``no'' vote.
I reserve the balance of my time.
Mr. FITZPATRICK. Mr. Speaker, I now yield 4 minutes to the gentleman
from Texas (Mr. Conaway), who is the chairman of the Agriculture
Committee.
Mr. CONAWAY. I thank my colleague from Pennsylvania for allowing me
to speak on his bill.
Mr. Speaker, I rise today in support of H.R. 37, the Promoting Job
Creation and Reducing Small Business Burdens Act.
I am especially proud of and would like to highlight the past work of
the Agriculture Committee on the three titles of this bill under its
jurisdiction: the Business Risk Mitigation and Price Stabilization Act;
a provision on the treatment of affiliate transactions; and a provision
regarding swap data repository and clearinghouse indemnification
correction.
As I noted in the debate earlier today on TRIA, the Business Risk
Mitigation and Price Stabilization Act is legislation to clarify
Congress' intent to exempt non-financial businesses from a misguided
regulatory requirement to post margin requirements on their hedging
activities. Clearing and margining, while appropriate for some
transactions, are not appropriate for end users hedging real-world
commercial risks. Their hedging activities are not large enough to
present a systemic risk, and a margin requirement represents a
significant and needless expense with little value to the overall
financial system.
Title I puts in statute protections for American businesses. To grow
our economy, businesses should use their scarce capital to buy new
equipment, to hire more workers, to build new facilities, and to invest
in the future. They cannot do that if they are required to hold money
in margin accounts to fulfill a misguided regulation.
Similarly, title II, regarding the treatment of interaffiliate
transactions, was also passed by the House multiple times in the 113th
Congress, and it will provide additional certainty to American
businesses. It will do so by preventing the redundant regulation of
harmless interaffiliate transactions that would unnecessarily tie up
the working capital of companies, with no added protections for the
market or benefits to our consumers. Today, businesses across the
Nation rely on the ability to centralize their hedging activities. This
consolidation of a hedging portfolio across a corporate group allows
businesses to reduce costs, to simplify their financial dealings, and
to reduce their counterparty credit risk. Title II of this bill will
allow American businesses to continue utilizing this efficient, time-
tested model.
Finally, title V of H.R. 37 provides much-needed corrections to the
swap data repository and clearinghouse indemnification requirements of
Dodd-Frank. Currently, Dodd-Frank requires a foreign regulator
requesting information from a U.S. swap data repository or derivatives
clearing organization to provide a written agreement stating it will
abide by certain confidentiality requirements and will indemnify the
U.S. Commissions for any expenses arising from litigation relating to
the request for that information.
The concept of indemnification--requiring a party to contractually
agree to pay for another party's possible litigation expenses--is
established within U.S. tort law and does not exist in many foreign
jurisdictions. Thus, it is not possible for some foreign regulators to
agree to these indemnification requirements. This requirement threatens
to make data-sharing arrangements with foreign regulators unworkable.
H.R. 37 mitigates this problem by simply removing the indemnification
provisions in Dodd-Frank while maintaining the prerequisite written
agreement requiring certain confidentiality obligations will be met.
So, rather than stripping down Dodd-Frank, as we are so often accused
of doing, this change would actually serve to enhance market
transparency and risk mitigation by ensuring that regulators and market
participants have access to a global set of swap market data.
As chairman of the House Committee on Agriculture and as a cosponsor
of each of these three bills in the 113th Congress, I appreciate Mr.
Fitzpatrick's work in bringing these provisions together in a package
that reduces the regulatory burdens and that promotes economic growth.
I strongly urge my colleagues to support the legislation.
[[Page H77]]
House of Representatives,
Committee on Agriculture,
Washington, DC, January 7, 2015.
Mr. Speaker: I am pleased to see three bills that the House
Committee on Agriculture passed in the 113th Congress
included as Titles I, II, and V of H.R. 37, ``Promoting Job
Creation and Reducing Small Business Burdens Act.''
H.R. 634, H.R. 5471, and H.R. 742, which were also included
as Subtitles A, B, and C of Title III of H.R. 4413,
``Customer Protection and End-User Relief Act,'' from the
113th Congress, provide important protections to end-users
from costly margining requirements and needless regulatory
burdens; as well as correct an unworkable provision in Dodd-
Frank which required foreign regulators to break their local
laws in order to access the market data they needed to
enforce their laws.
In support of these titles, I would like to request that
the pertinent portions of the Committee on Agriculture report
to accompany H.R. 4413 in the 113th Congress be included in
the appropriate place in the Congressional Record.
Sincerely,
K. Michael Conaway,
Chairman.
____
Title 3--End-User Relief
subtitle A--end-user exemption from margin requirements
Section 311--End-user margin requirements
Section 311 amends Section 4s(e) of the Commodity Exchange
Act (CEA) as added by Section 731 of the Dodd-Frank Act to
provide an explicit exemption from margin requirements for
swap transactions involving end-users that qualify for the
clearing exception under 2(h)(7)(A).
``End-users'' are thousands of companies across the United
States who utilize derivatives to hedge risks associated with
their day-to-day operations, such as fluctuations in the
prices of raw materials. Because these businesses do not pose
systemic risk, Congress intended that the Dodd-Frank Act
provide certain exemptions for end-users to ensure they were
not unduly burdened by new margin and capital requirements
associated with their derivatives trades that would hamper
their ability to expand and create jobs.
Indeed, Title VII of the Dodd-Frank Act includes an
exemption for non-financial end-users from centrally clearing
their derivatives trades. This exemption permits end-users to
continue trading directly with a counterparty, (also known as
trading ``bilaterally,'' or over-the-counter (OTC)) which
means their swaps are negotiated privately between two
parties and they are not executed and cleared using an
exchange or clearinghouse. Generally, it is common for non-
financial end-users, such as manufacturers, to avoid posting
cash margin for their OTC derivative trades. End-users
generally will not post margin because they are able to
negotiate such terms with their counterparties due to the
strength of their own balance sheet or by posting non-cash
collateral, such as physical property. End-users typically
seek to preserve their cash and liquid assets for
reinvestment in their businesses. In recognition of this
common practice, the Dodd-Frank Act included an exemption
from margin requirements for end-users for OTC trades.
Section 731 of the Dodd-Frank Act (and Section 764 with
respect to security-based swaps) requires margin requirements
be applied to swap dealers and major swap participants for
swaps that are not centrally cleared. For swap dealers and
major swap participants that are banks, the prudential
banking regulators (such as the Federal Reserve or Federal
Deposit Insurance Corporation) are required to set the margin
requirements. For swap dealers and major swap participants
that are not banks, the CFTC is required to set the margin
requirements. Both the CFTC and the banking regulators have
issued their own rule proposals establishing margin
requirements pursuant to Section 731.
Following the enactment of the Dodd-Frank Act in July of
2010, uncertainty arose regarding whether this provision
permitted the regulators to impose margin requirements on
swap dealers when they trade with end-users, which could then
result in either a direct or indirect margin requirement on
end-users. Subsequently, Senators Blanche Lincoln and Chris
Dodd sent a letter to then-Chairmen Barney Frank and Collin
Peterson on June 30, 2010, to set forth and clarify
congressional intent, stating:
The legislation does not authorize the regulators to impose
margin on end-users, those exempt entities that use swaps to
hedge or mitigate commercial risk. If regulators raise the
costs of end-user transactions, they may create more risk. It
is imperative that the regulators do not unnecessarily divert
working capital from our economy into margin accounts, in a
way that would discourage hedging by end-users or impair
economic growth.
In addition, statements in the legislative history of
section 731 (and Section 764) suggests that Congress did not
intend, in enacting this section, to impose margin
requirements on nonfinancial end-users engaged in hedging
activities, even in cases where they entered into swaps with
swap entities.
In the CFTC's proposed rule on margin, it does not require
margin for un-cleared swaps when non-bank swap dealers
transact with non-financial end-users. However, the
prudential banking regulators proposed rules would require
margin be posted by non-financial end-users above certain
established thresholds when they trade with swap dealers that
are banks. Many of end-users' transactions occur with swap
dealers that are banks, so the banking regulators' proposed
rule is most relevant, and therefore of most concern, to end-
users.
By the prudential banking regulators' own terms, their
proposal to require margin stems directly from what they view
to be a legal obligation under Title VII. The plain language
of section 731 provides that the Agencies adopt rules for
covered swap entities imposing margin requirements on all
non-cleared swaps. Despite clear congressional intent, those
sections do not, by their terms, exclude a swap with a
counterparty, that is a commercial end-user. By providing an
explicit exemption under Title VII through enactment of this
provision, the prudential regulators will no longer have a
perceived legal obligation, and the congressional intent they
acknowledge in their proposed rule will be implemented.
The Committee notes that in September of 2013, the
International Organization of Securities Commissions (IOSCO)
and the Bank of International Settlements published their
final recommendations for margin requirements for uncleared
derivatives. Representatives from a number of U.S.
regulators, including the CFTC and the Board of Governors
of the Federal Reserve participated in the development of
those margin requirements, which are intended to set
baseline international standards for margin requirements.
It is the intent of the Committee that any margin
requirements promulgated under the authority provided in
Section 4s of the Commodity Exchange Act should be
generally consistent with the international margin
standards established by IOSCO.
On March 14, 2013, at a hearing entitled ``Examining
Legislative Improvements to Title VII of the Dodd-Frank
Act,'' the following testimony was provided to the Committee
with respect to provisions included in Section 311:
In approving the Dodd-Frank Act, Congress made clear that
end-users were not to be subject to margin requirements.
Nonetheless, regulations proposed by the Prudential Banking
Regulators could require end-users to post margin. This stems
directly from what they view to be a legal obligation under
Title VII. While the regulations proposed by the CFTC are
preferable, they do not provide end-users with the certainty
that legislation offers. According to a Coalition for
Derivatives End-Users survey, a 3% initial margin requirement
could reduce capital spending by as much as $5.1 to $6.7
billion among S&P 500 companies alone and cost 100,000 to
130,000 jobs. To shed some light on Honeywell's potential
exposure to margin requirements, we had approximately $2
billion of hedging contracts outstanding at year-end that
would be defined as a swap under Dodd-Frank. Applying 3%
initial margin and 10% variation margin implies a potential
margin requirement of $260 million. Cash deposited in a
margin account cannot be productively deployed in our
businesses and therefore detracts from Honeywell's financial
performance and ability to promote economic growth and
protect American jobs.--Mr. James E. Colby, Assistant
Treasurer, Honeywell International Inc.
On May 21, 2013, at a hearing entitled ``The Future of the
CFTC: Market Perspectives,'' Mr. Stephen O'Connor, Chairman,
ISDA, provided the following testimony with respect to
provisions included in Section 311:
Perhaps most importantly, we do not believe that initial
margin will contribute to the shared goal of reducing
systemic risk and increasing systemic resilience. When robust
variation margin practices are employed, the additional step
of imposing initial margin imposes an extremely high cost on
both market participants and on systemic resilience with very
little countervailing benefit. The Lehman and AIG situations
highlight the importance of variation margin. AIG did not
follow sound variation margin practices, which resulted in
dangerous levels of credit risk building up, ultimately
leading to its bailout. Lehman, on the other hand, posted
daily variation margin, and while its failure caused shocks
in many markets, the variation margin prevented outsized
losses in the OTC derivatives markets. While industry and
regulators agree on a robust variation margin regime
including all appropriate products and counterparties, the
further step of moving to mandatory IM [initial margin] does
not stand up to any rigorous cost-benefit analysis.
Based on the extensive background that accompanies the
statutory change provided explicitly in Section 311, the
Committee intends that initial and variation margin
requirements cannot be imposed on uncleared swaps entered
into by cooperative entities if they similarly qualify for
the CFTC's cooperative exemption with respect to cleared
swaps. Cooperative entities did not cause the financial
crisis and should not be required to incur substantial new
costs associated with posting initial and variation margin to
counterparties. In the end, these costs will be borne by
their members in the form of higher prices and more limited
access to credit, especially in underserved markets, such as
in rural America. Therefore, the Committee's clear intent
when drafting Section 311 was to prohibit the CFTC and
prudential regulators, including the Farm Credit
Administration, from imposing margin requirements on
cooperative entities.
[[Page H78]]
SUBTITLE B--INTER-AFFILIATE SWAPS
Sec. 321--Treatment of affiliate transactions
``Inter-affiliate'' swaps are contracts executed between
entities under common corporate ownership. Section 321 would
amend the Commodity Exchange Act to provide an exemption for
inter-affiliate swaps from the clearing and execution
requirements of the Dodd-Frank Act so long as the swap
transaction hedges or mitigates the commercial risk of an
entity that is not a financial entity. The section also
requires that an ``appropriate credit support measure or
other mechanism'' be utilized between the entity seeking to
hedge against commercial risk if it transacts with a swap
dealer or major swap participant, but this credit support
measure requirement is effective prospectively from the date
H.R. 4413 is enacted into law.
Importantly, with respect to Section 321's use of the
phrase ``credit support measure or other mechanism,'' the
Committee unequivocally does not intend for the CFTC to
interpret this statutory language as a mandate to require
initial or variation margin for swap transactions. The
Committee intends for the CFTC to recognize that credit
support measures and other mechanisms have been in use
between counterparties and affiliates engaged in swap
transactions for many years in different formats, and
therefore, there is no need to engage in a rulemaking to
define such broad terminology.
Section 321 originated from the need to provide relief for
a parent company that has multiple affiliates within a single
corporate group. Individually, these affiliates may seek to
offset their business risks through swaps. However, rather
than having each affiliate separately go to the market to
engage in a swap with a dealer counterparty, many companies
will employ a business model in which only a single or
limited number of entities, such as a treasury hedging
center, face swap dealers. These designated external facing
entities will then allocate the transaction and its risk
mitigating benefits to the affiliate seeking to mitigate its
underlying risk.
Companies that use this business model argue that it
reduces the overall credit risk a corporate group poses to
the market because they can net their positions across
affiliates, reducing the number of external facing
transactions overall. In addition, it permits a company to
enhance its efficiency by centralizing its risk management
expertise in a single or limited number of affiliates.
Should these inter-affiliate transactions be treated as all
other swaps, they could be subject to clearing, execution and
margin requirements. Companies that use inter-affiliate swaps
are concerned that this could substantially increase their
costs, without any real reduction in risk in light of the
fact that these swaps are purely for internal use. For
example, these swaps could be ``double-margined''--when the
centralized entity faces an external swap dealer, and then
again when the same transaction is allocated internally to
the affiliate that sought to hedge the risk.
The uncertainty that exists regarding the treatment of
inter-affiliate swaps spans multiple rulemakings that have
been proposed or that will be proposed pursuant to the Dodd-
Frank Act. Section 321 provides certainty and clarity as to
what inter-affiliate transactions are and how they are not to
be regulated as swaps when the parties to the transaction are
under common control.
On March, 14, 2013, at a hearing entitled ``Examining
Legislative Improvements to Title VII of the Dodd-Frank
Act,'' the following testimony was provided with respect to
efforts to address the problem with inter-affiliate swaps:
[I]nter-affiliate swaps provide important benefits to
corporate groups by enabling centralized management of
market, liquidity, capital and other risks inherent in their
businesses and allowing these groups to realize hedging
efficiencies. Since the swaps are between affiliates, rather
than with external counterparties, they pose no systemic risk
and therefore there are no significant gains to be achieved
by requiring them to be cleared or subjecting them to margin
posting requirements. In addition, these swaps are not market
transactions and, as a result, requiring market participants
to report them or trade them on an exchange or swap execution
facility provides no transparency benefits to the market--if
anything, it would introduce useless noise that would make
Dodd-Frank's transparency rules less helpful.--Hon. Kenneth
E. Bentsen, Acting President and CEO, SIFMA
This legislation would ensure that inter-affiliate
derivatives trades, which take place between affiliated
entities within a corporate group, do not face the same
demanding regulatory requirements as market-facing swaps. The
legislation would also ensure that end-users are not
penalized for using central hedging centers to manage their
commercial risk. There are two serious problems facing end-
users that need addressing. First, under the CFTC's proposed
inter-affiliate swap rule, financial end-users would have to
clear purely internal trades between affiliates unless they
posted variation margin between the affiliates or
met specific requirements for an exception [i]f these end-
users have to post variation margin, there is little point
to exempting inter-affiliate trades from clearing
requirements, as the costs could be similar. And let's not
forget the larger point--internal end-user trades do not
create systemic risk and, hence, should not be regulated
the same as those trades that do. Second, many end-users--
approximately one-quarter of those we surveyed--execute
swaps through an affiliate. This of course makes sense, as
many companies find it more efficient to manage their risk
centrally, to have one affiliate trading in the open
market, instead of dozens or hundreds of affiliates making
trades in an uncoordinated fashion. Using this type of
hedging unit centralizes expertise, allows companies to
reduce the number of trades with the street and improves
pricing. These advantages led me to centralize the
treasury function at Westinghouse while I was there.
However, the regulators' interpretation of the Dodd-Frank
Act confronts non-financial end-users with a choice:
either dismantle their central hedging centers and find a
new way to manage risk, or clear all of their trades.
Stated another way, this problem threatens to deny the
end-user clearing exception to those end-users who have
chosen to hedge their risk in an efficient, highly-
effective and risk-reducing way. It is difficult to
believe that this is the result Congress hoped to
achieve.--Ms. Marie N. Hollein, C.T.P., President and CEO,
Financial Executives International, on behalf of the
Coalition for Derivatives End-Users
subtitle c--indemnification requirements related to swap data
repositories
Section 331--Indemnification requirements
Section 331 strikes the indemnification requirements found
in ``Sections 725 and 728 of the Dodd-Frank Act related to
swap data gathered by swap data repositories (SDRs) and
derivatives clearing organizations (DCOs). The section does
maintain, however, that before an SDR, DCO, or the CFTC
shares information with domestic or international regulators,
they have to receive a written agreement stating that the
regulator will abide by certain confidentiality agreements.
Swap data repositories serve as electronic warehouses for
data and information regarding swap transactions.
Historically, SDRs have regularly shared information with
foreign regulators as a means to cooperate, exchange views
and share information related to OTC derivatives CCPs and
trade repositories. Prior to Dodd-Frank, international
guidelines required regulators to maintain the
confidentiality of information obtained from SDRs, which
facilitated global information sharing that is critical to
international regulators' ability to monitor for systemic
risk.
Under Sections 725 and 728 of the Dodd-Frank Act, when a
foreign regulator requests information from a U.S registered
SDR or DCO, the SDR or DCO is required to receive a written
agreement from the foreign regulator stating that it will
abide by certain confidentiality requirements and will
``indemnify'' the Commissions for any expenses arising from
litigation relating to the request for information. In short,
the concept of ``indemnification''--requiring a party to
contractually agree to pay for another party's possible
litigation expenses--is only well established in U.S. tort
law, and does not exist in practice or in legal concept in
foreign jurisdictions.
These indemnification provisions--which were not included
in the financial reform bill passed by the House of
Representatives in December 2009--threaten to make data
sharing arrangements with foreign regulators unworkable.
Foreign regulators will most likely refuse to indemnify U.S.
regulators for litigation expenses in exchange for access to
data. As a result, foreign regulators may establish their own
data repositories and clearing organizations to ensure they
have access to data they need to perform their supervisory
duties. This would lead to the creation of multiple
databases, needlessly duplicative data collection efforts,
and the possibility of inconsistent or incomplete data being
collected and maintained across multiple jurisdictions.
In testimony before the House Committee on Financial
Services in March of 2012, the then-Director of International
Affairs for the SEC, Mr. Ethiopis Tafara, endorsed a
legislative solution to the problem, stating that:
The SEC recommends that Congress consider removing the
indemnification requirement added by the Dodd-Frank Act . . .
the indemnification requirement interferes with access to
essential information, including information about the cross-
border OTC derivatives markets. In removing the
indemnification requirement, Congress would assist the SEC,
as well as other U.S. regulators, in securing the access it
needs to data held in global trade repositories. Removing the
indemnification requirement would address a significant issue
of contention with our foreign counterparts . . .
At the same hearing, the then-General Counsel for the CFTC,
Mr. Dan Berkovitz, acknowledged that they too have received
growing concerns from foreign regulators, but that they
intend to issue interpretive guidance, stating that ``access
to swap data reported to a trade repository that is
registered with the CFTC will not be subject to the
indemnification provisions of the Commodity Exchange Act if
such trade repository is regulated pursuant to foreign law
and the applicable requested data is reported to the trade
repository pursuant to foreign law.''
To provide clarity to the marketplace and remove any legal
barriers to swap data being easily shared with various
domestic and foreign regulatory agencies, this section would
remove the indemnification requirements found in Sections 725
and 728 of the Dodd-Frank Act related to swap data gathered
by SDRs and DCOs.
[[Page H79]]
On March 14, 2013, at a hearing entitled ``Examining
Legislative Improvements to Title VII of the Dodd-Frank
Act,'' Mr. Larry Thompson, Managing Director and General
Counsel, the Depository Trust and Clearing Corporation,
provided the following testimony with respect to provisions
of H.R. 742, which were included in Section 331:
The Swap Data Repository and Clearinghouse Indemnification
Correction Act of 2013 would make U.S. law consistent with
existing international standards by removing the
indemnification provisions from sections 728 and 763 of Dodd-
Frank. DTCC strongly supports this legislation, which we
believe represents the only viable solution to the unintended
consequences of indemnification. H.R. 742 is necessary
because the statutory language in Dodd-Frank leaves little
room for regulators to act without U.S. Congressional
intervention. This point was reinforced in the CFTC/SEC
January 2012 Joint Report on International Swap Regulation,
which noted that the Commissions ``are working to develop
solutions that provide access to foreign regulators in a
manner consistent with the DFA and to ensure access to
foreign-based information.'' It indicates legislation is
needed, saying that ``Congress may determine that a
legislative amendment to the indemnification provision is
appropriate.'' H.R. 742 would send a clear message to the
international community that the United States is strongly
committed to global data sharing and determined to avoid
fragmenting the current global data set for over-the-counter
(OTC) derivatives. By amending and passing this legislation
to ensure that technical corrections to indemnification are
addressed, Congress will help create the proper environment
for the development of a global trade repository system to
support systemic risk management and oversight.
Mr. ELLISON. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman
from Michigan (Mr. Kildee), who is a member of the Financial Services
Committee and an active participant on that committee.
Mr. KILDEE. I thank my friend for yielding.
Mr. Speaker, here we are on the second day of the 114th Congress. It
has not yet been 24 hours since Members of this Congress were sworn in.
What we have before us is a package of 11 complex bills with
significant implications for our financial system--and I want to make
this very clear, as my friend pointed out--some of which have not gone
through the process of scrutiny by the Financial Services Committee or
the regular legislative process. Some of it has and some of it has not,
but it has not been at all by this Congress. This is not an emergency.
Unlike TRIA, which expired before we left, there is not a time-
sensitive nature of this question.
It is really important to me--and especially as now a second-term
Member--to remember what it was like to show up here and to have things
put in front of us that we had not really had a chance to fully and
thoroughly vet.
{time} 1330
The regular order--as was spoken about yesterday--it is critical for
the minority to have access to the process, and it is only done through
the regular legislative process.
This legislation just continues to give and give and give to Wall
Street.
Despite the fact that my principal objection is with the lack of
adherence to regular order and the process of legislating,
substantively, there are problems with this legislation. Wall Street
banks, whose banks and traders recklessly drove this country into a
financial crisis, are being rewarded yet again, and I can't accept it.
I can't support it.
What is really interesting to me is that here we are, less than 24
hours since we have been in Congress, yet in the last Congress, when
Main Street had its needs, when unemployed people couldn't get Federal
unemployment benefits, we couldn't get a hearing; we couldn't get a
vote on the floor of the House for legislation that was bipartisan,
that had an equal number of Democrats and Republicans supporting it.
When Wall Street asks, we suspend the rules in less than a day
without taking a breath and move to fit their needs into our schedule.
But when Main Street needs help, Congress didn't give an answer. This
is not right.
We have got to get back to regular order. We talk about it all the
time. We hear it on both sides. This is not a good start for the 114th
Congress, to suspend the rules and deal with new language that many of
us have just seen this morning, to pass legislation that is a gift-
wrapped present to Wall Street. I can't support it. I urge my
colleagues to reject this legislation.
Mr. FITZPATRICK. Mr. Speaker, I yield 3 minutes to the gentleman from
Virginia (Mr. Hurt), a member of the Financial Services Committee.
Mr. HURT of Virginia. Mr. Speaker, I rise in support of the Promoting
Job Creation and Reducing Small Business Burdens Act. I would like to
thank Mr. Fitzpatrick and Chairmen Hensarling and Garrett for their
leadership on increasing access to capital for small businesses.
As we begin a new Congress, I am glad to see that the House will
continue its laser focus on enacting policies to help spur job creation
throughout the country. Even though we have seen modest economic
growth, I continue to hear from my constituents about the impacts of
unnecessary and overly burdensome regulations on job creation,
especially regulations that disproportionately affect smaller public
companies and those considering accessing capital in the public
markets.
One such requirement is related to the use of eXtensible Business
Reporting Language, XBRL, which was mandated by the SEC in 2009. While
the SEC's rule is well intended, this requirement has become another
example of a regulation where the costs outweigh the potential
benefits. These small companies expend tens of thousands of dollars or
more complying with the regulation, yet there is evidence that less
than 10 percent of investors actually use XBRL, further diminishing its
potential benefits.
That is why last Congress, the gentlewoman from Alabama,
Representative Sewell, and I authored the bipartisan Small Company
Disclosure Simplification Act, which is incorporated into title VII of
H.R. 37. I would like to thank Representative Sewell for her diligent
work on this legislation, which passed the Financial Services Committee
last Congress with bipartisan support.
This provision will provide an optional exemption for emerging growth
companies and smaller public companies from the requirement to file
their information in XBRL with the SEC, in addition to the information
that they already file.
Additionally, this title requires the SEC to perform a cost-benefit
analysis on the rule's impact on smaller public companies, something it
failed to adequately address in the original rule, and also to provide
additional information to Congress on how the SEC and the market are
using XBRL.
Whether a supporter or a sceptic of XBRL, these provisions will help
provide a pathway for the SEC to focus on developing a system of
disclosure for smaller companies that eliminates unnecessary costs
while achieving greater benefits.
I believe H.R. 37 offers a practical step forward on these regulatory
requirements in line with the intent of the original JOBS Act, ensuring
that our regulatory structure is not disproportionately burdening
smaller companies and disincentivizing innovative startups from
accessing the public markets.
I ask my colleagues to join me in voting ``yes'' on H.R. 37 so that
we can continue to promote capital access in the public markets and
spur job growth in communities all across this great country.
Mr. ELLISON. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman
from Massachusetts (Mr. Lynch), who is the former subcommittee ranking
member on the Oversight Committee and is an active member on the
Financial Services Committee.
Mr. LYNCH. I thank the gentleman for yielding.
Mr. Speaker, if I may, I would like to just amplify some of the
concerns raised by the gentleman from Michigan (Mr. Kildee) in his
remarks about the fact that here we are, just the second day of this
Congress, and we have a group of 11 bills that have been rolled up.
There are many new provisions here that have never seen a hearing,
unfortunately. This is not the open process that we had hoped for and
had spoken about just yesterday.
We have had very limited opportunity to review some of these new
sections. Again, they have not had a hearing. They have not gone
through regular order.
H.R. 37 contains 11 separate bills, some of which I support, but some
of which I oppose strongly. Portions of H.R. 37 have entirely new
provisions that most Members have not had the opportunity to thoroughly
analyze.
[[Page H80]]
For example, title XI of this bill modifies SEC rule 701 on stock-
sharing. It allows private companies to compensate their employees up
to $10 million in company stock without having to provide the employees
with certain basic financial disclosures about the company. I voted
against a similar bill, H.R. 4571, in the last Congress when it was
marked up.
But I also want to point out, that while I strongly support employees
receiving equity benefits from the firms in which they work, those
benefits should be tangible and real. We all remember Enron and
WorldCom, where the company, as compensation to those employees,
actually pressured them into buying company stock and did not provide
full information to them. And eventually, those shares were worthless.
So you had thousands of workers being partly compensated in company
stock, and the stock was worth zero.
Now we are going to expand this opportunity from $5 million to $10
million a year that each company will be able to pay their employees
with company stock, and they don't have any obligation because part of
this bill does not require them to make any type of a disclosure, Mr.
Speaker. And there is no opportunity for those employees to get
accurate financial information about whether the stock that they are
being paid with is worth anything. It is just a bad road to go down.
In closing, this bill uses the veneer of job creation to provide
special treatment for the well-connected corporations, mergers and
acquisition advisers, and financial institutions while doing very
little to address the needs of those workers.
With that, I urge my colleagues to vote ``no'' on the bill.
Mr. FITZPATRICK. Mr. Speaker, I yield 3 minutes to the gentleman from
Arkansas (Mr. Crawford), a member of the Agriculture Committee.
Mr. CRAWFORD. I thank my colleague from Pennsylvania (Mr.
Fitzpatrick) for his leadership on this.
Mr. Speaker, I rise in strong support of H.R. 37 and would
particularly like to comment on title V. In order to provide market
transparency, the Dodd-Frank law requires post-trade reporting to Swap
Data Repositories, or SDRs, as they are called, so that regulators and
market participants have access to realtime market data that help
identify systemic risk in the financial system. So far, we have made
great strides in reaching this goal, but unfortunately, a provision in
the law threatens to undermine our progress unless we fix it.
Currently, Dodd-Frank includes a provision requiring a foreign
regulator to indemnify a U.S.-based SDR for any expenses arising from
litigation relating to a request for market data. Unlike the rest of
the world, though, the concept of indemnification is only established
within U.S. tort law. As a result, foreign regulators have been
reluctant to comply with this provision, and international regulatory
coordination is being thwarted.
While the intent of the provision was to protect market
confidentiality, in practice, it threatens to fragment global data on
swap markets. Without effective coordination between international
regulators and SDRs, monitoring and mitigating global systemic risk is
severely limited.
H.R. 37 fixes this problem by removing the indemnification provisions
in Dodd-Frank. This has broad bipartisan support, and a separate bill
to do this was unanimously approved last year by the House Ag Committee
and the House Financial Services Committee. Additionally, last year,
the SEC testified to the Financial Services Committee that a
legislative solution was needed, saying: ``In removing the
indemnification requirement, Congress would assist the SEC, as well as
other regulators, in securing the access it needs to data held in
global trade repositories.''
If left unresolved, the indemnification provision in Dodd-Frank has
the potential to effectively reduce transparency and undo the great
progress already being made through the cooperative efforts of more
than 50 regulators worldwide. In passing this legislation, we will
ensure that regulators will have access to a global set of swap market
data, which is essential to maintaining the highest degree of market
transparency and risk mitigation. I strongly urge my colleagues to vote
``yes'' on this bill.
Mr. ELLISON. Mr. Speaker, may I inquire, how much time does the
Democratic side have remaining?
The SPEAKER pro tempore. The gentleman from Minnesota has 7 minutes
remaining.
Mr. ELLISON. At this time, Mr. Speaker, I yield 2 minutes to the
gentleman from Massachusetts (Mr. Capuano), who was the ranking member
on the Financial Services Committee for the Subcommittee on Housing and
Insurance.
Mr. CAPUANO. I thank the gentleman for yielding.
Mr. Speaker, on the last bill, the TRIA bill, when we were still
arguing about it, some people on the other side accused people like me,
who support the TRIA bill, of being in favor of corporate welfare. Now,
as a liberal on most issues, I don't think many people would confuse me
with someone who was generally in favor of corporate welfare, but I
will take it.
On this bill--because I am going to oppose it on one basic
provision--I am going to be called ``against jobs.''
Rhetoric is cheap. Titles of bills don't mean anything. And in this
bill, particularly the provision that was just spoken about, title V--
there are plenty of things in this bill that I like that I would be
happy to vote for. Bring them up separately, and I will. There are a
couple of things here that I don't like too much, but we can find
common ground on it. But all of that pales when you look at one
provision in here that guts the Volcker rule.
It is simple: in 2006, collateralized debt obligations pretty much
brought the world economy to its knees and hurt not just Wall Street,
but hurt me, hurt my neighbors, hurt my family, and hurt a lot of
average Americans because we allowed our financial service industry to
gamble with somebody else's money.
And of course they gambled. They won a lot of money. And then when
they lost, they didn't lose their money. They lost our money, and we
had to come in with a bailout.
This is a corporate bailout--not with taxpayer money, but with
depositor money, depositors who are not interested in giving their
money to an institution so that they can gamble it on risky items that
they will see no benefit from. That is what the Volcker rule says: if
you want to gamble, use your money. Good luck. Don't gamble with my
money unless I say so.
That is all the Volker rule says. It has worked pretty well. The
economy is recovering. Everybody knows that. Everybody agrees with it.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. ELLISON. I yield the gentleman an additional 30 seconds.
Mr. CAPUANO. This bill will allow three, only three of our Wall
Street institutions--which control 70 percent of the collateralized
loan obligation business; three of them control 70 percent of the
business--to gamble with depositors' money again without those
depositors having a say in it.
When they collapse and depositors lose their money, those of you who
vote for this bill will have to explain it to them. This is
unnecessary. It is inappropriate. And we should not be voting for this
bill, mostly because of that single provision.
Mr. FITZPATRICK. Mr. Speaker, I would just note that the provision
that the gentleman from Massachusetts (Mr. Capuano) is referring to was
heard in committee. The title of the bill passed in the committee with
well over 50 votes. It passed unanimously on the floor of the House by
voice vote, and not a single Democrat rose to object to the bill, but
that was last year.
Right now, Mr. Speaker, I yield 3 minutes to the gentleman from
Arkansas (Mr. Womack).
Mr. WOMACK. Mr. Speaker, I thank the gentleman from Pennsylvania (Mr.
Fitzpatrick) for bringing this collection of bills to the House floor.
I would also like to express my gratitude to Representatives Himes,
Delaney, and Wagner for working with me on one of the underlying bills,
the bipartisan H.R. 801, in the last Congress.
Mr. Speaker, in this new Congress, adding jobs to our economy is a
top priority. And passing the Promoting Job Creation and Reducing Small
Business Burdens Act is an opportunity for us to create a better
environment for private sector growth and job creation.
[[Page H81]]
{time} 1345
Title III, also known as H.R. 801, is no exception, and I am proud to
rise in support of its passage.
A year ago this month, I came to this floor to speak on the
underlying bill which passed overwhelmingly in this Chamber 417-4.
While it is unfortunate the bill was never considered by the Senate, it
is clear today that in the 114th Congress, its prospects are better.
Small financial institutions are essential to the communities they
serve. They have a deep and abiding love for the towns they serve
because these towns are their towns, and our constituents--small
business owners, farmers, hardworking Americans--rely on these
institutions to meet payroll, to purchase equipment, or to buy a car or
home.
Unfortunately, Mr. Speaker, these financial institutions have come
under fire from Washington because of its regulatory overreach, forcing
them to spend increasing shares of their resources to comply with
onerous regulations--requirements intended for larger banks--instead of
having the flexibility they need to serve their communities.
Let's be clear: small community banks and savings and loan holding
companies were not the cause of the financial crisis, and I don't
believe they should be treated as though they were the cause. I am not
alone. In the 112th Congress, the House and Senate acted to eliminate
some of these unnecessary burdens by passing the JOBS Act.
Among other things, the bill raised the registration threshold for
bank holding companies from 500 to 2,000 shareholders and increased the
deregistration threshold from 300 to 1,200 shareholders, better
positioning these banks to increase small business lending and, in
turn, promote economic growth in our communities; but due to an
oversight in the JOBS Act, it did not explicitly extend these new
thresholds to savings and loan holding companies as well.
As a cosponsor of the JOBS Act, I can say with absolute certainty
that wasn't our intent, and I subsequently supported report language in
the approps bill of Financial Services to clarify and ensure that
savings and loan holding companies should be treated in the same manner
as bank and bank holding companies. Additionally, Representative Himes
and I have written to the FCC and asked that they use their authority
to carry out our original intent.
In spite of these actions and the House passage of H.R. 801 last
Congress, we are still without successful resolution to the problem.
Today's vote can change that, Mr. Speaker, and I urge my colleagues to
support this bill and the overall legislation.
Mr. ELLISON. Mr. Speaker, last Congress, H.R. 4167 passed. I voted
against it, but it is not the same as the language in title VIII which
is in this bill today, which extends by 2 years the delay we requested,
totaling 5 years. It is not the same legislation. This bill, title
VIII, has not passed before. It is new.
Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Al
Green).
Mr. AL GREEN of Texas. Mr. Speaker, my colleague, the Honorable Ted
Poe, will recognize this name. The Honorable Lee Duggan, a district
court judge in Houston, Texas, reminded young lawyers that we live in a
world where it is not enough for things to be right, they must also
look right, and this bill doesn't look right. It doesn't look right
when you combine 11 bills into one overnight and then present that to
the floor without any amendments being available to the bill.
We should not allow a poison-pill process to develop at the genesis
of this Congress. If we do it now, we will continue to do it. I think
we have to concern ourselves not only with these 11 bills, but with the
many other bills that are to follow. We can never allow this to start
the new Congress. We should prevent it.
I would also add this. I am all for doing a lot of things with a
hurry-up process. I would like to see us do something about minimum
wage; we are not doing anything about minimum wage at all thus far. I
would like to see us do something about comprehensive immigration
reform; that will be a piecemeal deal if it ever becomes a bill.
Mr. Speaker, I stand with those who believe that the process ought to
be fair. It ought to favor the openness that allows for amendments. I
say to you that this is not right, and it doesn't even look right.
Mr. FITZPATRICK. Mr. Speaker, I reserve the balance of my time.
Mr. ELLISON. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Illinois, Jan Schakowsky.
Ms. SCHAKOWSKY. Mr. Speaker, I thank the gentleman for yielding.
Mr. Speaker, at the end of last year, over my strenuous objections,
we wrapped up a big present for Wall Street. We put taxpayers back on
the hook for losses that are connected to certain derivatives trading,
among the riskiest bets that banks make.
Well, Christmas is over, and Hanukkah is over, but the gifts keep on
coming for Wall Street. Within this bill is another provision that cuts
at the heart of the Dodd-Frank Wall Street reform legislation. It
delays a portion of the Volcker rule, which bans federally insured
banks from making those risky bets or investing in risky funds,
including packages known as collateralized loan obligations, or CLOs.
Mortgage-backed securities brought our economy almost crumbling to
the ground in 2008, and we are still recovering. Taxpayers bailed out
the big banks; yet for millions of homeowners who were forced from
their homes and millions of others who are still under water, there
hasn't been any assistance. People are right to be angry about this,
and they are right to object to this new giveaway to Wall Street
interests.
CLOs are similar to toxic mortgage-backed securities. The only
difference is that instead of bad mortgages, these packages involve
junk-rated corporate loans and a mix of other risky assets.
The Office of the Comptroller of the Currency said last month that
the corporate debt market is overheating and becoming increasingly
dangerous, and CLOs are the big reason why. This has all the markings
of another economy-crushing disaster.
Who gets the upside if Wall Street is able to continue packaging and
selling CLOs with taxpayer backing? Wall Street. Who loses if and when
those bets go wrong? The rest of us. It is heads, Wall Street wins;
tails, everybody else loses.
Mr. Speaker, as Dennis Kelleher of Better Markets said, ``The attack
on the Volcker rule has been nonstop.''
The SPEAKER pro tempore. The time of the gentlewoman has expired.
Mr. ELLISON. I yield the gentlewoman an additional 15 seconds.
Ms. SCHAKOWSKY. Mr. Speaker, the truth is that the American people
deserve better, and we are tired of really bad Wall Street giveaways
being tacked on to other legislation. This looks like a Republican
strategy to put Wall Street over Main Street.
Mr. FITZPATRICK. Mr. Speaker, I reserve the balance of my time.
Mr. ELLISON. Mr. Speaker, this big bill may have some things that are
not bad, but it also contains a bill that delays protection of our
economy and families from Wall Street gambling, and it should be voted
down.
We urge a very strong ``no'' on this bill. Go back, do it right,
follow the process, regular order, and maybe we could make some
progress here.
I yield back the balance of my time.
Mr. FITZPATRICK. Mr. Speaker, I yield myself such time as I may
consume.
The bill before us today is here on the same procedure the Terrorism
Risk Insurance Act reauthorization was here; we just debated that bill
on the floor. They are both coming up under a suspension of the rules,
and TRIA reauthorization last term, like these bills, were debated
either in committee or on the floor in the full House.
The distinguished minority whip, in speaking about the TRIA bill,
said that it is always the right time to do the right thing. In
addition, he decried the process that delayed the reauthorization of
TRIA--I agree with him on that--and he said there were well over 250
votes for the last year and a half for the reauthorization of TRIA.
I would submit and ask the Record to reflect, Mr. Speaker, the
provisions of this bill, and we have heard about the 11 provisions, all
of which went through the committee or the full House.
Title I amends Dodd-Frank and passed the House 411-12. It was
introduced as a bipartisan bill, went
[[Page H82]]
through the committee, had a committee hearing, both sides had
witnesses, and all the questions were asked. There was a markup. At the
markup, there were amendments. The bill passed the committee. It came
to the floor of the House and passed 411-12.
Title II passed the committee 50-10. Title III passed on the full
House after passing the committee 417-4. Title IV passed the House 422-
0. Each one of these provisions were bipartisan, and they passed in a
strong fashion on a vote either in the committee or the House.
Mr. Speaker, just yesterday, we were sent back here. We took the oath
of office, sent by our constituents to do the right thing, to work
together where we can, to identify problems, to address those problems,
and to get stuff done, especially when it regards the American economy,
small businesses, and the ability to get people to work to create jobs.
Each one of these titles in this bill identifies a problem in the
economy, addresses it in a bipartisan way, and the time is now to pass
this bill.
I urge my colleagues to vote ``yes'' on H.R. 37, pass the bill and
send it to the Senate. With that, Mr. Speaker, I yield back the balance
of my time.
Ms. JACKSON LEE. Mr. Speaker, I rise in strong opposition to H.R. 37,
The Promoting Job Creation and Reducing Small Business Burdens Act of
2015.
This Trojan Horse legislation is actually a combination of eleven
separate bills, ten of which were authored by Republican members of the
Committee.
I believe that Members should be afforded the opportunity to offer
amendments and have a full and fair debate on these bills. However, by
considering this package under Suspension of the Rules, Republicans
begin the new year by denying Members the opportunity to thoroughly
debate a measure that will have far-reaching impact.
Let's be clear: regulators have made tremendous progress in
implementing the Dodd-Frank Act. The Consumer Financial Protection
Bureau has already returned $4.6 billion to 15 million consumers who
have been subjected to unfair and deceptive practices, some of whom
live in my Congressional District in Houston.
The CFPB has established a qualified mortgage rule, ensuring that
borrowers who are extended mortgage credit actually have the ability to
repay the loan, and has established new rules-of-the-road for mortgage
servicers.
In addition, the CFPB has worked with the Department of Defense to
develop financial protections for service members and veterans, and
established a national database to aide consumers with complaints about
debt collectors, credit card companies, and credit rating agencies,
among others. Let us not turn back the clock on American consumers who
already have seen the benefits of the CFPB's efforts.
The Volcker Rule has forced banks to sell-off their standalone
proprietary trading desks, and banks have shifted away from speculative
trading to investments in the real economy. Shareholders of U.S.
corporations now have the ability to have a ``say-on-pay,'' voting to
approve or disapprove executive compensation.
In addition Mr. Speaker, the Securities and Exchange Commission (SEC)
has recovered more than $9.3 billion in civil fines and penalties since
2011, leveraging enhanced authorities provided by Dodd-Frank. The SEC
has also established an Office of the Whistleblower to aid them in
policing securities market violations, which has already received more
than 6,573 tips from 68 countries. Further, private funds are making
systemic risk reports to regulators, helping them to understand
previously opaque risks.
To implement the Dodd-Frank Act, the CFTC has completed 65 final
rules, orders, and guidance documents resulting in the registration and
enhanced oversight of 102 Swap Dealers, two Major Swap Participants, 22
Swap Execution Facilities, and four Swap Data Repositories. In
addition, the CFTC has established rules governing mandatory clearing,
exchange trading, and reporting of the entire $400 trillion notional
swaps market.
It should also be noted that since Dodd-Frank's passage, stability in
the market has led to significant economic growth. Nearly 9.7 million
private sector payroll jobs have been created since February 2010.
There are now nearly 900,000 more workers employed in the private
sector than before recession-related job losses began in early 2008.
The unemployment rate has fallen by 3.9 percentage points since its
peak of 10.0 percent in October 2009 and currently stands at 6.1
percent--its lowest level since September 2008. Real GDP has grown 10.2
percent since its trough in 2009, and now stands 5.5 percent higher
than its pre-recession peak in late 2007. That in and of itself is news
that the media should be discussing.
Moreover, the housing market is recovering, with home prices rising,
negative equity falling dramatically, and measures of mortgage distress
improving. The S&P 500 has risen by 85 percent since July 21, 2010 and
has recently reached new peaks.
However, this progress has been regularly stymied by a concerted
effort by the Majority to underfund regulators' operations,
relentlessly pressure them to weaken regulations, and otherwise erect
roadblocks to implementation. As a result, the progress regulators have
made to implement the law remains precarious.
I urge my colleagues to reject this legislation and have a full
debate on its merits.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Pennsylvania (Mr. Fitzpatrick) that the House suspend
the rules and pass the bill, H.R. 37.
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. ELLISON. Mr. 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.
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