[Congressional Record Volume 161, Number 6 (Tuesday, January 13, 2015)]
[House]
[Pages H341-H354]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROMOTING JOB CREATION AND REDUCING SMALL BUSINESS BURDENS ACT
Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 27, I call
up 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, and ask for its immediate consideration.
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.
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
[[Page H342]]
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, 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
[[Page H343]]
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--
(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
[[Page H344]]
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 (Mr. Smith of Nebraska). Pursuant to House
Resolution 27, the gentleman from Texas (Mr. Hensarling) and the
gentlewoman from California (Ms. Maxine Waters) each will control 30
minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days within which to revise and extend their remarks
and include extraneous materials on H.R. 37, currently under
consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, for the sake of the American people, for the sake of all
of those who are underemployed, who are unemployed still today in this
economy, let us hope that the third time is the charm.
The bill that is before us today, substantially authored by the
gentleman from Pennsylvania (Mr. Fitzpatrick), the Promoting Job
Creation and Reducing Small Business Burdens Act, was on the floor in a
substantially identical version in the 113th Congress.
This bill, to ease the burdens on small businesses, on job creators
to help foster capital creation, so that people can be put back to
work, so that people can have good careers, so that people can pay
their mortgages and pay their health care premiums, substantially in
the same form passed in the last Congress 320-102; regrettably then,
the United States Senate, under Democrat control, took up no portion of
the bill.
It was last week that a slightly different version of the bill was
brought to this House floor under what we know as our suspension
calendar, which is reserved for bills that typically enjoy broad
bipartisan support; regrettably, it proved to be about a dozen votes
short because a number of my friends from the other side of the aisle
apparently decided that they were for the bill before they were against
the bill. They changed their minds in approximately 7 days.
Now, Mr. Speaker, this is a very simple bill. There were 11 different
modest provisions, all of which enjoyed broad bipartisan support, again
which were modest, modest attempts to ensure that small businesses
could still survive in an otherwise onerous Washington regulatory
climate.
Mr. Speaker, we had a bill that, even combined--and it is quite
common for us to roll up bills for the sake of efficiency, bills that
are quite similar in nature--was 30 pages long. Not 300, not 3,000--it
wasn't the 2,000 pages of ObamaCare, not the 2,000 pages of Dodd-
Frank--it was merely 30 pages.
Now, what is included in this bill? Well, included in this bill is
H.R. 634, which passed this body 411-12. It includes H.R. 5471, which
passed the House by voice vote, not a dissenting vote that I recall. It
includes H.R. 801 that passed the House 417-4. It includes H.R. 2274,
the bill that passed the House 422-0.
I could go on and on, but of the bills that are rolled up to ensure
greater capital formation and regulatory relief for our smaller
business enterprises, all of these passed either the committee or the
House with overwhelming bipartisan support, and now--now--the minority
is coming to this floor and somehow crying foul. Again, many were for
it before they were against it.
I don't know how we can look our constituents in the eyes and know
that, even today, they continue to suffer in this economy and not do
something to help them.
What this is really all about, Mr. Speaker, is there is a division.
There is a division within the Democrat Party. According to press
reports, some Democrats have reportedly told their fellow Democrats
that if they dare to vote for a bill that makes a clarification or
modification to Dodd-Frank, they aren't real Democrats.
It is interesting that yesterday, President Obama signed into law a
modification of Dodd-Frank. I know the President is not a Republican,
but according to some Democrats, apparently by signing a modification
to Dodd-Frank, he is not apparently a Democrat, either, so I am not
really sure what he is.
It is fascinating that a former chairman, Barney Frank, of the House
Financial Services Committee, one of my predecessors, in previous
testimony before our committee, indicated a number of changes to Dodd-
Frank that he thought would be proper, so according to some Democrats,
apparently Barney Frank is no longer a Democrat, either.
What this is really getting at, Mr. Speaker, is of the 11 bills that
are rolled up into this 30-page document, some of them either clarify
or modify provisions of Dodd-Frank, and for some Members of the
Democratic Party, apparently, Dodd-Frank has now been elevated beyond
ideology to religion, and there can be no changes in a 2,000-page bill
that we know is fraught with unintended consequences.
Yet there are some on the other side of the aisle that say, ``no
changes, no changes,'' yet President Obama signed a change into law.
Former Chairman Frank has indicated a number of changes he would
consider.
It is time to get beyond the religion. It is time to get beyond the
ideology. It is time to get America back to work. It is time to start
growing this economy
[[Page H345]]
from Main Street up, not Washington down, because that is not working,
Mr. Speaker.
It is time to do what everybody claims they want to do, and that is
work on a bipartisan basis. All of these bills passed with overwhelming
bipartisan majorities, and now, because of this almost religious zeal
for the Dodd-Frank brand, again, some of my Democratic colleagues have
decided that they were for it before they were against it.
It is time to put America back to work. It is time to enact H.R. 37,
Promoting Job Creation and Reducing Small Business Burdens Act. Let's
make sure the third time is the charm.
I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, if at first you don't succeed, try, try again. Usually,
we tell that saying to children to encourage them to achieve greater
things, but it seems that when it comes to Congress, it is what Wall
Street keeps telling House Republicans.
Mr. Speaker, Republicans thought they could sneak this bill by last
week through a fast-track process on the House floor, a process with
limited debate and no opportunity for amendments. They thought they
could ram through this gift to a handful of the biggest Wall Street
banks on just the 2nd day of this new Congress right after we had
reconvened.
Well, the American people were watching, and the Democrats here in
the House told them ``no.'' The Republican bill failed. Now, here they
are; they are at it again. Now, H.R. 37 is back on the floor again,
without the opportunity to amend it and with limited debate.
{time} 2015
The only difference is that Republicans have reduced how many votes
are needed to guarantee passage. That's right. Rather than fix the bill
to win broad support, Republicans just changed the rule to make sure
the tainted bill passes.
And what does this bill do? Well, for one, it takes a part of Wall
Street reform's Volcker rule and delays it for yet another 2 years.
Remember that the Volcker rule is the part of Dodd-Frank that stops
government-supported banks from gambling with bank depositors' money.
And this extra 2-year delay comes on top of a 3-year delay that our
regulators carefully crafted to ease the megabanks' transition.
This particular part of the law that Republicans want to see delayed
applies to what are known as collateralized loan obligations, or CLOs.
CLOs are bundles of leveraged loans, loans often issued by private
equity firms to facilitate corporate buyouts that can harm American
jobs. The loans are sliced and diced into packages and sold off to
investors, including banks that hold customers' deposits. The packages
often also contain credit default swaps or other derivatives that can
make the position even riskier.
Somehow, Wall Street bankers--the supposedly smartest people in the
room--can't seem to comply with a law passed in 2010 by--that's right--
2017. Seven long years isn't enough. The Republicans and the banks want
nearly a decade.
In addition to that, the Republican bill wouldn't just let the banks
hold on to these CLOs. The bill would let the banks accumulate new CLOs
also. That's right. The banks could actively trade in and out of these
investments, unlike the rules carefully crafted by the Federal Reserve.
We saw the Republican playbook at the end of last year with the so-
called swaps push-out rule. They hope they can jam these bills through
Congress by attaching them to must-pass legislation. And most of all,
they hope these issues are way too complicated or too technical for the
American people to understand or care about. But the American people
really do understand. They remember how our economy was nearly brought
to its knees in 2008, and they recognize that we can't let Wall Street
slowly chip away at reforms designed to prevent that kind of large-
scale financial crisis from happening again.
And President Obama gets it, too. That is why the White House said he
would veto this legislation if it got to his desk. And so one cannot
help but wonder why are we here on the floor after 8 o'clock in the
evening with an attempt to push through something that was jammed into
a package of bills? Many of those bills had been heard either in
committee or on the floor, but one portion of this bill had not. And so
is this simply an attempt to ram down one segment that they fear real
debate on, ram it down the throats of the Members of this Legislature
and the citizens of this country, hiding it in this package, hoping
that we won't get it?
What is worse is that this legislation has been brought to the floor
without regard for any regular order. The nine new members on the
Financial Services Committee will not get a chance to hear testimony on
it at all. And in just the 2nd week of their term, 52 new Members of
the House are expected to vote on it, having complicated deregulation
shoved down their throats. Democrats offered 13 amendments, one of them
bipartisan, but none of these amendments will be considered or debated.
Why? Because my colleagues on the other side are not interested in
legislation but, rather, in political theater.
We cannot let this casual disregard for the legislative process
stand. We want to see reforms sensibly implemented. We want to work
with regulators to get the rules right, and we want our largest banks
to stop gambling and go back to facilitating growth in the real
economy. But that is difficult to do when my Republican counterparts
continue pushing legislation that masquerades as technical fixes but
really makes substantive changes to the Dodd-Frank reform law. And then
they package completely reckless legislation with other provisions that
are either necessary or sensible.
Democrats know better, President Obama knows better, and the American
people know better. So I would urge my colleagues to vote ``no'' on
this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield myself 20 seconds to say that
this highly controversial bill that the ranking member alludes to
passed on the House floor by voice vote, and this particular financing
helps companies like Dunkin' Donuts, American Airlines, Burger King,
and Goodyear Tire put people to work in America--hardly Wall Street.
The head of the Independent Community Bankers has said it is necessary
to protect community banks, and that is why we are here today.
Mr. Speaker, I am now happy to yield 3 minutes to the gentleman from
Georgia (Mr. Austin Scott) on behalf of the Agriculture Committee,
which shares jurisdiction on this bill.
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I rise in support of H.R.
37, the Promoting Job Creation and Reducing Small Business Burdens Act.
As chairman of the Agriculture Subcommittee on Commodity Exchanges,
Energy and Credit, I specifically want to highlight and voice my
support for the past work of the Agriculture Committee on the three
titles of this bill that we worked on.
First of all, title I of this bill, the Business Risk Mitigation and
Price Stabilization Act, will provide much-needed relief to American
farmers, businesses, and job creators who rely on derivatives to manage
the risk inherent in the daily operation of their farms and businesses.
It will do so by reinforcing congressional intent that those market
participants who have been exempted from clearing their trades are also
exempted from corresponding margin requirements.
These exemptions make sure that end users do not have to divert
working capital to margin requirements, thus keeping those dollars at
work in the economy. I am pleased that this provision was included in
this package, as well as in the TRIA authorization that was recently
approved by both the House and the Senate.
Also under the Ag Committee's jurisdiction is title II of H.R. 37,
pertaining to the treatment of interaffiliate transactions. This well-
reasoned provision was passed by the Congress multiple times in the
113th Congress and also will prevent the tie-up of working capital. It
will do so by ensuring that transactions between affiliates within
[[Page H346]]
a single corporate group are not regulated as swaps.
If such transactions are subject to the same regulations as swaps,
companies could be subject to double margin requirements. Since
interaffiliate swaps pose no systemic risk to the economy or the
marketplace, such redundant regulation would provide no additional risk
reduction while substantially raising costs that would ultimately be
passed on to the consumers. Title II of H.R. 37 will prevent that
misguided regulatory scheme and allow American businesses to continue
utilizing their established and efficient centralized trading models.
Finally, the corrections made by title V of H.R. 37 will ensure that
regulators and market participants have access to a global set of swap
market data.
Dodd-Frank currently requires indemnification agreements from foreign
regulators requesting information from U.S. swap data repositories or
derivatives clearing organizations. These agreements state that the
foreign regulator will abide by certain confidentiality requirements
and indemnify the U.S. Commission for any expenses arising from
litigation relating to the request for information.
Unfortunately, the concept of indemnification does not exist in many
foreign jurisdictions. As such, some foreign regulators cannot agree to
these indemnification requirements. This may hinder our ability to make
a workable data-sharing arrangement with those regulators and
ultimately fragment the marketplace by encouraging them to establish
their own data repositories. H.R. 37 narrowly addresses this potential
data-sharing problem by simply removing the indemnification
requirements from current law. Existing provisions requiring certain
confidentiality obligations will remain in place.
Mr. Speaker, I would like to thank Mr. Fitzpatrick for working to
include these provisions in today's bill. I strongly encourage my
colleagues to support this legislative package aimed at reducing
regulatory burdens and promoting economic growth.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield 5 minutes to
the distinguished gentleman from Massachusetts (Mr. Lynch).
Mr. LYNCH. Mr. Speaker, I want to thank the gentlewoman for yielding
and for her great work on this issue.
Mr. Speaker, I rise in strong opposition to H.R. 37, the so-called
Promoting Job Creation and Reducing Small Business Burdens Act.
I served on the Financial Services Committee during the 2008
financial crisis, and I had an opportunity to witness the harmful
impact that lack of regulation had on hardworking families around our
Nation at a total cost of more than $22 trillion, according to the
Government Accountability Office. My constituents--and many of yours--
lost their homes, their jobs, and their retirement savings during that
period. Many pension funds today continue to suffer and are on the
brink of collapse because of the reckless policies that were observed
during that time by many of our major banks.
While I voted against the bailout of the Wall Street banks who were
rewarded with bonuses as a result of the bailout, I did have the honor
of helping to assist in reforming our financial system through the
enactment of the Dodd-Frank Wall Street Reform and Consumer Protection
Act. I regret the bill under consideration today rolls back many of
those reforms that my colleagues and I fought so hard to adopt.
I would note that after being defeated last week under a suspension
process that offered no opportunity for amendments, this bill now has
inexplicably been brought to the House floor under a closed rule that
again does not include any of the 14 amendments that were filed with
the Rules Committee. At a minimum, a bill that does so much harm to our
financial system necessitates the normal committee process and
additional time for debate.
H.R. 37 contains 11 separate bills, a few of them which I support,
others I strongly oppose. Portions of H.R. 37 have entirely new
provisions that the members of the committee and of this Congress have
not had the opportunity to thoroughly analyze.
By the way, if you desire a good review of this legislation, in this
past Sunday's New York Times there is an article written by Gretchen
Morgenson that I think is extremely well-written and goes into great
detail beyond the time that I am allocated here tonight.
Title II of this bill would allow banks with commercial business to
trade derivatives privately rather than on clearinghouses. This would
increase risk and reduce transparency for these transactions. My
amendment, which was not accepted, would have improved the provisions
by prohibiting systematically important financial institutions, whose
collapse would pose a serious risk to our financial system, from
claiming the exemption under this title.
Title VIII of this bill includes new language that has not been
considered by the Financial Services Committee under regular order. If
passed, title VIII would give banks an additional 2 years to comply
with the provisions of the Volcker rule that mandates that banks divest
collateralized loan obligations--packages of risky debt.
The SPEAKER pro tempore. The time of the gentleman has expired.
Ms. MAXINE WATERS of California. I yield the gentleman an additional
2 minutes.
Mr. LYNCH. I thank the gentlewoman.
This 2-year extension is in addition to the extension we already
provided by the regulation last year. That further delay adds
unnecessary risk to our financial system. And that is why I sponsored
another amendment to remove this additional 2-year delay, so banks will
be required to comply with this provision of the Volcker rule no later
than July 21, 2017.
Again, title XI of this bill modifies the SEC rule 701 by allowing
private companies to compensate their employees up to $10 million in
company securities without having to provide those employees with
certain basic financial disclosures about the company stock.
I strongly support employees receiving equity benefits from their
firms in which they work, but those benefits should be tangible and
real. We all remember Enron and WorldCom where employees were pressured
to buy stock as part of their compensation, and at the end of the day,
that stock was completely worthless.
Why can't we enable employees to receive some equity in the company
in which they work and ensure that those workers get accurate financial
disclosure as part of that deal? This is why I offered three amendments
to reform title XI in order to make certain workers get accurate
information about the equities shares that they are receiving from the
companies they work for. Unfortunately, the Rules Committee chose to
deny all the amendments to this bill.
In closing, this harmful bill uses the veneer of job creation to
provide special treatment for well-connected corporations and financial
institutions while doing very little for the workers that it professes
to help.
Mr. Speaker, I urge my colleagues to vote ``no'' on this bill, and,
again, I thank the gentlewoman for yielding.
[From NYTimes.com, Jan. 10, 2015]
Kicking Dodd-Frank in the Teeth
(By Gretchen Morgenson)
The 114th Congress has been at work for less than a week,
but a goal for many of its members is already evident: a
further rollback of regulations put in place to keep markets
and Main Street safe from reckless Wall Street practices.
The attack began with a bill that narrowly failed in a
fast-track vote on Wednesday in the House of Representatives.
It is scheduled to come up again in the House this week.
The bill, introduced by Representative Michael Fitzpatrick,
a Pennsylvania Republican who is a member of the House
Financial Services Committee, has three troublesome elements.
First, it would let large banks hold on to certain risky
securities until 2019, two years longer than currently
allowed. It would also prevent the Securities and Exchange
Commission from regulating private equity firms that conduct
some securities transactions. And, finally, the bill would
make derivatives trading less transparent, allowing unseen
risks to build up in the system.
Of course, you wouldn't know any of this from the name of
the bill: the Promoting Job Creation and Reducing Small
Business Burdens Act. Or from the mild claim that the bill
was intended only ``to make technical corrections'' to the
Dodd-Frank legislation of 2010.
Here's the game plan for lawmakers eager to relax the
nation's already accommodating
[[Page H347]]
financial regulations: First, seize on complex and esoteric
financial activities that few understand. Then, make
supposedly minor tweaks to their governing regulations that
actually wind up gutting them.
``We're going to see repeated attempts to go in with
seemingly technical changes that intimidate regulators and
keep them from putting teeth in regulations,'' predicted
Marcus Stanley, policy director at Americans for Financial
Reform, a nonpartisan, nonprofit coalition of more than 200
consumer and civic groups across the country. ``If we return
to the precrisis business as usual, where it's routine for
people to accommodate Wall Street on these technical changes,
they're just going to unravel the postcrisis regulation piece
by piece. Then, we'll be right back where we started.''
The bill was put forward on the second day of the new
Congress, in an expedited process, which didn't allow for
debate among members. This process is supposed to be reserved
for noncontroversial bills and requires support from a two-
thirds majority to prevail. It fell just short of achieving
that level, with a vote of 276 to 146, overwhelmingly backed
by Republicans and opposed by most Democrats.
A central element of the bill chipped away at part of the
Volcker Rule, the regulation intended to reduce speculative
trading activities among federally insured banks. The bill
would give the institutions holding collateralized loan
obligations--bundles of debt--two additional years to sell
those stakes.
The sales were required under the Volcker Rule, which bars
banks from ownership in or relationships with hedge funds or
private equity firms, many of which issue and oversee these
instruments. Like the mortgage pools that wreaked such havoc
with United States banks in the most recent crisis, C.L.O.s
can pose high risks for banks.
The creation of such securities has been torrid recently;
$124.1 billion was issued last year, compared with $82.61
billion in 2013, according to S&P Capital IQ. Among the banks
with the largest C.L.O. exposures are JPMorgan Chase and
Wells Fargo; according to SNL Financial, a research firm,
JPMorgan Chase held $30 billion and Wells Fargo $22.5 billion
in the third quarter of 2014, the most recent figures
available. The next-largest stake--$4.7 billion--was held by
the State Street Corporation.
Given the size of these positions, it's not surprising the
institutions want more time to jettison them. But the new
legislation represents Wall Street's second reprieve on these
instruments. After banks objected to the sale of their
holdings last spring, the Federal Reserve gave them two years
beyond the initial 2015 deadline to get rid of them.
Now they want another two years.
Although the top three banks had unrealized gains in their
C.L.O. holdings in the third quarter, SNL said some banks
were facing losses. And that was before the collapse in the
price of oil, which has undoubtedly pummeled some of these
securities.
A second deregulatory aspect in the Fitzpatrick bill
relates to the lucrative private equity industry, which
remains loosely regulated. The bill would exempt some private
equity firms from registering as brokerage firms with the
S.E.C. Under securities law, such registration is required of
firms that receive fees for investment banking activities,
like providing merger advice or selling debt securities.
Private equity firms are typically registered only as
investment advisers, so submitting to broker-dealer
regulation would result in more frequent examinations and
more rules.
These firms don't like that. But their investors could
benefit from closer regulatory scrutiny of costly conflicts
of interest in these operations. For example, a private
equity firm providing merger advice to a company its
investors own in a fund portfolio--not an arm's-length
transaction--could easily charge more for those services than
an unaffiliated firm would.
Finally, the bill's changes in derivatives would reduce
transparency and increase risks in this arena by allowing
Wall Street firms with commercial businesses like oil and gas
or other commodities operations--to trade derivatives
privately and not on clearinghouses.
Trading on clearinghouses generates accurate price data
that help both banks and regulators value these instruments.
Because these clearinghouses perform risk management,
problematic positions are easier to spot.
If this change goes through, it will be the second recent
victory on derivatives for big banks. Last month, Congress
reversed a part of the Dodd-Frank law barring derivatives
from being traded in federally insured units of banks.
Taxpayers may be on the hook for bailouts, therefore, if
losses occur in the banks' derivatives books.
The Dodd-Frank law, as written back in 2010, was by no
means a comprehensive fix for a risky banking system. And it
is more vulnerable to attack, in part, because of its
complexity and design. Dodd-Frank delegated so much rule-
making to regulators that it essentially invited the
institutions they oversee to fight them every inch of the
way.
And when Congress backs the industry in these battles, it's
no contest.
Still, it is remarkable to watch the same financial
institutions that almost wrecked our nation's economy work to
heighten risks in the system.
``The truth about Dodd-Frank is it's pretty moderate and
pretty compromised already,'' Mr. Stanley of Americans for
Financial Reform said. ``Any further compromise and it tends
to collapse into nothingness.''
Which is exactly what Wall Street seems to be hoping for.
{time} 2030
Mr. HENSARLING. Mr. Speaker, I yield myself 10 seconds.
I continue to be fascinated by my Democratic colleagues whose
rhetoric is against Wall Street, yet they vote in Dodd-Frank to codify
a taxpayer bailout fund for Wall Street into that legislation. They
designate firms too big to fail so their rhetoric is aimed at Wall
Street but they hurt Main Street, who we are trying to help now.
I yield 5 minutes to the gentleman from Kentucky (Mr. Barr), who is
the author of the title that helps so many of our small businesses
grow.
Mr. BARR. Mr. Speaker, I thank the chairman for his leadership on
this important package, and I thank the gentleman from Pennsylvania
(Mr. Fitzpatrick) for his leadership, and I rise in strong support of
his legislation, H.R. 37, the Promoting Job Creation and Reducing Small
Business Burdens Act.
Indeed, this bill is about jobs and it is about economic growth. And
it is about jobs on Main Street. Make no mistake about it: essentially
the same legislative package passed the House last fall by a bipartisan
vote of 320-102. If I may, I want to talk a little bit about title VIII
of this legislation, which passed the House last April by voice vote,
and it contains language from a bill I introduced in the last Congress,
H.R. 4167, the Restoring Proven Financing for American Employers Act.
I worked closely with my colleague across the aisle, Congresswoman
Maloney of New York, to craft sound, commonsense, bipartisan language
to clarify the Volcker rule while maintaining its original legislative
intent regarding the treatment of collateralized loan obligations.
Now let's just talk a little bit about the Volcker rule and what it
does. As currently structured, this rule will substantially disrupt the
market for CLOs, a vital source of capital for mid-sized and emerging
growth American companies that cannot cost-effectively access the
corporate bond market. There are two negative impacts of this rule.
First of all, it will have a serious negative impact on banks, many
small- and medium-sized community banks, and it is estimated that banks
will have to divest or restructure up to $70 billion of CLO notes under
this rule if unchanged.
Second, it will compromise credit availability for American companies
that are beneficiaries of this innovative source of credit.
Today, CLOs hold approximately $350 billion of senior secured
commercial and industrial loans to some of the most dynamic, job-
producing companies in America. One of these companies, Tempur Sealy
International, the world's largest manufacturer of mattresses,
foundations, pillows, and other bedding products, is headquartered in
my district.
So it seems to me that the medicine being prescribed by the Volcker
rule, forcing banks to sell billions of dollars of CLO paper in a fire-
sale scenario, and the loss of credit availability for a wide range of
Main Street businesses, growing companies, job-producing employers
would be a far more damaging result to jobs and the economy than the
perceived disease, banks ever suffering losses from holding AAA CLO
paper, which is fundamentally different and distinguishable from the
mortgage-backed securities that led to the run-up to the financial
crisis.
It is important to note what this bill does and what this title does,
and what it does not do. It doesn't do away with the Volcker rule. If
you listened to my colleagues on the other side of the aisle, you would
think that we are totally doing away with the Volcker rule. That is not
what this does. What it does is it grandfathers legacy CLOs and
prevents a fire sale of these CLOs.
So without the adoption of this grandfather provision, the Volcker
rule would effectively operate to make illegal certain investments that
were perfectly legal and safe when they were made. In other words, the
Volcker rule as currently written applies retroactively to CLOs,
attaching legal consequences to investment decisions
[[Page H348]]
made by private parties who did not anticipate these consequences at
the time the decision was made. Such retroactivity will profoundly and
negatively disrupt the plans and settled expectations of CLO investors,
and this will create turmoil in the commercial credit market and force
banks to sell billions of existing CLO debt. As a result, the cost of
financing will increase and access to credit will dry up, and this will
reduce liquidity in America's capital markets.
Let me make a point here. Much has been said about Wall Street versus
Main Street. This is about Main Street jobs. The U.S. Chamber of
Commerce, the Independent Community Bankers Association, and the
American Bankers Association all talk about how this will help. Our
bill, our fix, will help community banks grow capital and support local
economic development and job creation on Main Street.
The Bipartisan Policy Center says that forcing a select group of
banks to sell these assets over a short time is not the optimal
solution. Such an action would create an environment of institutions
forced to sell, and buyers who can purchase CLOs at extraordinarily
cheap prices, and this would create unnecessary losses at banks and
produce windfall profits for those who can demand to buy them at below
market rates.
The CLO provision represents a small and commonsense solution, not a
rollback of Dodd-Frank by any means. It keeps the Volcker rule
completely intact and simply provides phased-in compliance to banks of
all sizes that made sound investment decisions, allowing for a finite
universe of well-performing legacy CLOs to be sold or paid off.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. I yield an additional 1 minute to the gentleman.
Mr. BARR. Mr. Speaker, I thank the chairman.
It will keep the Volcker rule completely intact, and simply provide
phased-in compliance to banks of all sizes that made sound investment
decisions, allowing the finite universe of well-performing legacy CLOs
to be sold or paid off over an added 2 years rather than forcing these
legacy CLOs into a fire sale.
The proprietary trading ban is retained entirely for all new CLO
issuances.
So in conclusion, there has been a lot of talk about deregulation. As
for the canard that deregulation was to blame for the financial crisis,
that story line has been thoroughly debunked. The crisis was caused by
the government's own housing policies, which fostered the creation of
25 million subprime and other low-quality mortgages, almost 50 percent
of all the mortgages in the United States that defaulted at
unprecedented rates.
In contrast, CLOs were not the root cause of the crisis. CLOs
performed very well during the crisis. Regulators have many tools to
ensure bank CLOs do not pose financial risks. CLO AAA or AA notes, in
fact, have never defaulted. I urge my colleagues to support this
commonsense Main Street jobs bill.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
There are so many inaccuracies in some of the testimony that I am
hearing from the opposite side of the aisle that I don't know where to
start to try to clear up some of the points that they are attempting to
make.
First of all, let me start with this business about how community
banks are going to be hurt. This is simply an attempt to hide behind
community banks and scare the Members of this body into believing that
if they don't support this bill, that somehow their community banks are
going to suffer.
The FDIC said that 95 percent of CLOs owned by banks are owned by
those with more than $50 billion in assets, with the preponderance
owned by Citi, JPMorgan Chase, and Wells Fargo.
Specifically, JPMorgan Chase has $33.5 billion worth of CLOs; Wells
Fargo has $24.1 billion worth of CLOs; and Citi has $4.7 billion worth
of CLOs.
So what are we talking about when we use this kind of messaging to
claim that somehow we are going to hurt these small banks? That is
absolutely not true. And I want to tell you, the community banks have
not been in the background putting out tremendous sums of money on this
lobbying effort. According to The New York Times:
The current efforts to undermine Dodd-Frank have been
textbook lobbying. In the first three quarters of last year,
the securities and investment industry spent nearly $74
million on lobbying on 704 registered lobbyists.
So get this picture. We keep seeing attempts by any means necessary
from the opposite side of the aisle to push controversial legislation
into packaged bills, some of those bills having been supported either
in committee or on the floor. It is not enough that they lost when they
put this on the suspension calendar. They have come back with a rule
that does not allow for any debate, and they are determined to win this
by majority vote, even in the face of a veto. Who are they trying to
protect?
If it is true that 95 percent of the CLOs owned by banks are owned by
those with more than $50 billion in assets, and I told you who has a
preponderance, then that is who is being protected. It is the biggest
banks in America--Citi, JPMorgan Chase, and Wells Fargo. That is who is
being protected. This money I am talking about, $74 million on lobbying
704 lobbyists, these are the big banks spending the money lobbying on
this legislation.
And so this business about protecting Main Street, about protecting
the small businesses, simply attempts to misguide and mislead, knowing
that most folks really don't understand the CLO market, that this
legislation, along with many other pieces of legislation, are
complicated. Dodd-Frank is an attempt to reform what had gone terribly
wrong in this country. We have seen attempt after attempt, probably
more than 100 attempts in the Financial Services Committee, to try and
undermine Dodd-Frank, to get rid of Dodd-Frank, to break it up piece by
piece, and again by any means necessary.
And so if you can answer why all these attempts, why all of this
money is being spent, why we're protecting just these three big banks
in America, then you can see that this is not about Main Street, this
is not about small businesses. This is now about relationships between
too many Members of this House and of this Congress with the biggest
banks in America, who are determined to destroy Dodd-Frank. And they
have tried all of these tactics and they have tried somehow to make
people believe that we don't care about this fire sale that we are
going to cause the big banks.
Well, let me just say this. No, I don't worry about causing a fire
sale of the big banks. I am not here to protect the big banks. I am
truly here to protect Main Street and small business entrepreneurs and
business people in this country.
Mr. Speaker, I would like to talk further about title VIII and how it
does not benefit small businesses. CLOs comprised only of actual loans
are exempt from the Volcker rule entirely. We are only talking about
CLOs that contain other instruments like credit default swaps, interest
rate swaps, commercial paper-backed securities, et cetera.
The Volcker rule will have a minimum impact on the CLO market.
Nothing in the rule says that other buyers of CLOs need to stop their
purchases. Nonbanks like hedge funds or insurance companies can
continue to purchase or trade CLOs. The restriction only affects banks,
big banks, which have tremendous access to taxpayer subsidies through
the FDIC and the Federal Reserve borrowing window.
Various Wall Street research analysts have said that the market
``shrugged off'' the Volcker rule and that the industry can do just
fine moving forward. In fact, 2014 saw record issuances for new,
Volcker-compliant CLOs.
Banks will have 5 years, including 3 years worth of extensions, to
comply with this provision. The Republicans now want to give them 7
years. Our position is this: enough is enough. Eventually the Volcker
rule has to become operational or else Dodd-Frank becomes meaningless.
{time} 2045
These CLOs are typically leverage loans. It should buy private equity
firms to facilitate corporate buyouts of
[[Page H349]]
large companies. This is more about facilitating private equity than
helping Main Street businesses.
For example, leverage buyouts are when a private equity firm pays for
a controlling interest in a company by taking out a loan against that
company, saddling the company with debt. The aim is to reduce costs,
often by firing workers and slashing employee pay and benefits in order
to quickly resell the leaner company for a profit. So this isn't about
job creation; this is about job destruction.
Mr. Speaker, I reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, at this time, I am very happy to yield 4
minutes to the gentleman from Pennsylvania (Mr. Fitzpatrick), who is
the sponsor of this job-creating legislation.
Mr. FITZPATRICK. Mr. Speaker, I thank the chairman.
It is really hard to believe that a package of bills that comes to
the floor which individually passed the House 422-0, another bill
passes by voice vote, another bill passes 414-3, have become so
controversial--become so controversial why? Because they are about to
become law and they should become law. These are smart, technical
reforms to an overly burdensome law, Dodd-Frank, that are bipartisan.
All of these bills have Democrat and Republican cosponsors, all of
them have gained Democrat and Republican support in the committee and
on the floor of the House, and these bills should pass.
I want to thank Chairman Hensarling for his longstanding leadership
in reining in out-of-control Washington regulators that are hurting
small business and Main Street lenders.
Mr. Speaker, smart regulations allow the private sector to innovate
and create jobs while protecting taxpayers and consumers; however, one-
size-fits-all regulations hurt the economy by treating small- and
medium-sized companies as if they are large multinational corporations.
No Main Street small business, manufacturer, farmer, or rancher
caused the financial crisis; yet they are subject to thousands of new
pages of regulations that were supposedly designed for big Wall Street
firms. Mr. Speaker, that is not fair.
That is why I have introduced this bill. It is a bipartisan package
of commonsense jobs bills that provides regulatory relief to help grow
the economy from Main Street up, not from Washington down.
This bill is made up of individual measures that previously passed
either the House or the Financial Services Committee with overwhelming
bipartisan support during the 113th Congress. It is a recognition of
the fact that regulations, no matter how well-intentioned, can be made
more targeted and can be made more effective.
More than 400 new regulations imposed on our Nation's small- and
medium-sized companies impedes their ability to access the capital
needed to grow, innovate, and create jobs. These regulations may have
been targeting Wall Street, but their burden falls heavily on Main
Street.
That is what this bill seeks to fix. These legislative prescriptions
represent serious bipartisan commitments to make our regulatory system
more responsive to the needs of the workers and the local businesses
that we all represent.
The American people want Republicans and Democrats to work together
to strengthen our economy and help the private sector create jobs like
only it can. Good-paying jobs and greater opportunities are the
foundations of real economic growth, growth that is strong and growth
that is sustainable, growth that lifts people up from poverty.
That kind of growth can't come from Washington, and it won't happen
unless small business owners, entrepreneurs, and workers have the
freedom and the opportunity to use their God-given talents and
creativity to earn their success.
Mr. Speaker, there is a lot of talk in this town about bipartisanship
and finding middle ground here in our Nation's Capitol; yet, at this
very moment, groups on both the far left and the far right stand in the
way of even incremental progress by pulling Members of both parties to
the extremes.
I know that if things are going to get done in this body, it will be
from strong bipartisan support from principled, yet pragmatic,
lawmakers willing to put politics to the side and work together for the
common good. As someone who seeks out that course, I would like to
recognize those Members willing to look past the demagoguery and
misinformation in order to support this bill.
I have high hopes that this Congress can restore the faith of our
constituents in the legislative process and the role of Congress in
strengthening our Main Street economy, and we can start with this bill.
I urge my colleagues to join me in voting ``yes'' on the bill and, in
doing so, putting aside bill posturing in favor of bipartisan reforms
to get people back to work.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Despite what my colleagues on the opposite side of the aisle have
said, this package of bills does not simply constitute a technical set
of changes to Dodd-Frank or to our securities laws. In fact, these
changes are substantive and the package is widely opposed.
My friends on the opposite side of the aisle keep talking about they
are protecting Main Street, but let me recite for you what Main Street
is saying about this bill. Let me read for you some highlights of the
opposition letters we have received in addition to opposition from
President Obama, Secretary Lew, and former Federal Reserve Chair Paul
Volcker himself.
Main Street is represented by, number one, Americans for Financial
Reform. Americans for Financial Reform says that H.R. 37 ``includes
numerous changes that could have significant negative impacts on
regulators' ability to police the financial markets, so that they
function safely and transparently.''
They go on to oppose title VII of this bill, citing a Wall Street
Journal article outlining how regulators are increasingly warning banks
about the looser underwriting standard for leverage loans.
Further, representing Main Street, the AFL-CIO says of H.R. 37, that
they oppose the bill because it ``would loosen key Dodd-Frank
protections wisely put in place after the 2008 financial collapse.''
The Leadership Conference on Civil and Human Rights notes about H.R.
37: ``One lesson of the financial crisis is that deregulation in areas
that appear technical and arcane can have significant impacts on the
financial system and, thus, on the well-being of ordinary families,
particularly in the communities we represent.''
Finally, Public Citizen noted about H.R. 37 that we should not
provide more CLO relief because ``the largest banks dominate
ownership,'' as I demonstrated a moment ago, ``of CLOs.''
Mr. Speaker, I think we should heed the warning of Main Street, the
warning of these groups who truly represent Main Street.
With that, I reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, I am very happy now to yield 1 minute to
the gentleman from North Carolina (Mr. Pittenger), a member of the
committee.
Mr. PITTENGER. Mr. Speaker, I thank the leadership and Mr.
Fitzpatrick.
Today, I rise in support of H.R. 37, the Promoting Job Creation and
Reducing Small Business Burdens Act. We are here, once again, debating
simple measures aimed at growing the economy and relieving some of the
unnecessary burdens imposed by the Dodd-Frank legislation.
Even Tim Geithner, the former Secretary of the Treasury, stated that
the Volcker rule and implications of it being regulated were not
material in the demise and harm due to major institutions, rather as a
result of extended credit.
This legislation included in this bill is bipartisan, which is why so
many of my colleagues already voted in support of it in the 113th
Congress and again last week.
This is a jobs bill. The relief we can give to small business today
directly impacts their ability to create jobs. For instance, although
small companies are at the forefront of technological innovation and
job creation, they often face significant obstacles in obtaining
capital in the financial markets.
[[Page H350]]
These obstacles are often due to the largest burden that securities
regulations, which are typically written for large public companies,
place on small companies when they seek to go public.
We need competitive markets that encourage innovation, and we need to
a develop regulatory environment that acknowledges the differences
between small, private, and start-up companies and well-established
public companies.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
There has been a lot of talk about bipartisan support or lack of.
There have been a lot of talks about how the Republicans have been able
to get Democratic votes and that, somehow, we should be happy, we
should be satisfied, and that they really don't understand why it is
that we are opposing not only the bill, but the tactics that have been
used in several attempts to pass legislation with controversial bills
tucked into the big package.
Let me give you a summary of amendments that Republicans refuse to
consider as we have attempted to work with them.
Mr. Ellison and Mr. Issa offered a bipartisan amendment to strike
title VII of the bill, so that all public companies will have to report
their financial statements in a computer-readable format. Mr. Sherman
and Ms. Kuster both offered amendments striking the CLO title.
In a similar vein, because Republicans refuse to hold debate on the
CLO title, Mr. Kildee and Mr. Capuano offered an amendment to require
the regulators to first determine that such a delay was, indeed, in the
public interest.
Mr. Lynch also proposed to revise the delay from 2019 to a date we
previously considered and approved in the House, 2017. This revised
date is one that we had thoroughly considered in the House. We never
considered in the House an extension for 2 more years to 2019.
In an effort to prevent the spread of systemic threats, Mr. Lynch
proposed that an affiliate of a financial institution, whose failure
could pose a systemic risk to our economy, should be required to clear
its derivatives.
Mr. Lynch raised a concern that companies, like GE Capital, might be
able to take large bets in one part of their company, but receive
relief from rules intended to mitigate those risks in another. Mr.
Lynch also offered three amendments on title XI, all intended to ensure
that employees understand their compensation.
Elsewhere in the bill, Mr. Capuano offered an amendment to title X,
requiring companies to disclose political campaign contributions. In
the same title, Mr. Ellison required the SEC to finalize its Dodd-Frank
rules related to executive compensation data within 60 days.
Mr. Grijalva proposed an amendment to restore the swaps push-out
provision that Republicans eliminated by attaching it to the CR/Omnibus
last month. Mr. Ellison and Mr. Grijalva also proposed a substitute
amendment to focus this Congress on something that would help our
economy, ending budget sequestration.
Finally, I propose that we find a way to pay for part of the budget
of the cash-strapped SEC by imposing a user fee on investment advisers.
This is a commonsense proposal that has been supported by investment
advisers, investment advocates, former Republican Chairman Spencer
Bachus, SEC Chair White, and the State securities regulators.
Despite the fact that the SEC can only examine an adviser on average
once a decade, our committee didn't even consider this issue last
Congress.
That is an effort, Mr. Speaker and Members, to show that we have
attempted to work with the opposite side of the aisle. We have
attempted to offer commonsense amendments that have been absolutely
rejected without any consideration being given to them.
We find ourselves here on the floor at 9 this evening, attempting to
debate a bill that is going nowhere, that has been issued by the
President, a veto message. We are here debating again about whether or
not we are putting our taxpayers and Main Street and our small
businesses at risk, going back to some of the same tactics, some of the
same ways that were used by the banks that brought us to the point of a
recession, almost a depression.
Somehow in this short period of time, we have forgotten what happened
in 2008, we have forgotten about how many businesses were destroyed,
small businesses were destroyed, we have forgotten how many elderly
folks lost money in their 401(k)'s, we have forgotten how many homes
were foreclosed on, we have forgotten about how we brought this country
to the brink of a disaster.
{time} 2100
And so let me just say that Dodd-Frank is an attempt for reform. And
it is not even a tough reform. As a matter of fact, many of us consider
it rather mild. But we have on this side of the aisle been fighting day
in and day out in our committee to try and just see the implementation
of Dodd-Frank rather than the destruction of an attempt to reform an
industry that caused great harm to this society.
And so with that, Mr. Speaker, I yield back the balance of my time.
Mr. HENSARLING. Mr. Speaker, I now yield 2\1/2\ minutes to the
gentleman from Wisconsin (Mr. Duffy), the chairman of our Oversight and
Investigations Subcommittee.
Mr. DUFFY. Mr. Speaker, I listened to the ranking member talk about
this bill tonight and you would think the sky is falling if this CLO
portion of our package is passed. The problem with that argument is
that 53 of the Democrats on the Financial Services Committee, with
Republicans, voted to pass this package last year. Only three Democrats
dissented--only three. Then it passed this House floor by a voice vote.
If this bill was so disastrous for the American economy, I would ask
my good friend across the aisle: At 9 o'clock on a Tuesday night where
Members of Congress have nothing going on, where are the Democrats?
Where is the outrage with this package?
There is only one. There is only one, because many Democrats in the
last Congress voted for this bill because they agreed with it. It
didn't get anywhere because it fell into Harry Reid's trash bin.
The Volcker rule directed under Dodd-Frank was supposed to stop big
banks from using insured customer funds to engage in risky investments.
CLOs had a default rate of less than one-half of 1 percent. These are
safe. This wasn't the cause of the financial crisis. The cause was
Fannie and Freddie securitizing loans that had no documentation, no
verification of income, and subprime mortgages. In Dodd-Frank, the root
cause of the financial crisis wasn't addressed because Fannie and
Freddie weren't even brought up.
When we talk about Dodd-Frank, the ranking member is so concerned
about Dodd-Frank being chipped away, but the CLO issue wasn't even in
Dodd-Frank. Section 619 of Dodd-Frank states:
Nothing in this section shall be construed to limit or
restrict the ability of a banking entity or nonbank financial
company supervised by the Federal Reserve Board to sell or
securitize loans in a manner otherwise permitted by law.
CLOs were excluded in Dodd-Frank, which the ranking member voted for.
But not only that, in the first proposal of the Volcker rule, CLOs
weren't even included.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. I yield the gentleman an additional 10 seconds.
Mr. DUFFY. They were not included. It was only in the final rule that
we realized that CLOs were so dangerous.
This is a political ploy. Join the American people, join common
sense, and join some of your fellow Democrats. Let's support this
reform package.
Mr. HENSARLING. Mr. Speaker, I am now happy to yield 2\1/2\ minutes
to the gentleman from Michigan (Mr. Huizenga), chairman of the Monetary
Policy Trade Subcommittee.
Mr. HUIZENGA of Michigan. Mr. Speaker, I, too, share my friend from
Wisconsin's frustration at this. This is sort of like saying we are
going to have a cookie that is getting baked here on the House floor
and our friends across the aisle approve of the eggs, they approve of
the butter, they approve of the sugar, and they approve of the
chocolate clips, but they don't want the final
[[Page H351]]
product. I am confused as to why we cannot put all these ingredients
together and get this done finally. The American people are begging us
to get this work done. That is why I rise today, Mr. Speaker: to
support H.R. 37.
Part of that bill has my bill from the last Congress, H.R. 2274.
Excessive and unnecessary regulations have been hurting our economy,
increasing costs to consumers and investors, reducing wage growth, and
restricting access to private sector capital that our Nation's job
creators need in order to grow the economy and create jobs.
This unanimously passed bipartisan legislation is a compilation of
commonsense regulatory relief bills that have been carefully crafted to
help grow the economy for Main Street and not from Washington, D.C. My
bill actually is part of that.
Eleven of these bills have previously been passed by this very body
or at the Financial Services Committee with overwhelming bipartisan
support. In fact, my bill idea came not from anybody on Wall Street,
not from anybody in Washington, D.C., but from a mergers and
acquisitions lawyer back in my district in Grand Rapids, Michigan, who
said: We've been struggling with this problem and we need some help
because we cannot get the SEC to move on this.
So that is why I put together the Small Business Mergers,
Acquisitions, Sales, and Brokerage Simplification Act, and this has
been kindly rolled into this larger package.
It has been estimated that approximately $10 trillion of privately
owned, small family-owned-type businesses will be sold or, worse yet,
closed in the coming years as baby boomers retire. I don't think any of
us would think that that is a good thing. Mergers and acquisitions
brokers play a critical role in facilitating the transfer of these
smaller privately held companies. Who benefits? Small communities and
the workers that they employ and that live in those areas. This
bipartisan provision would create a simplified system for brokers
performing services in connection with the transfer of ownership of
these smaller privately held companies.
In today's highly charged political environment, however, it is hard
because it would be nice to show the American people that we have
positive, effective initiatives that should be passed.
Mr. HENSARLING. Mr. Speaker, I am now very happy to yield 1\1/2\
minutes to the gentleman from the ``Live Free or Die'' State of New
Hampshire (Mr. Guinta), a member of the committee.
Mr. GUINTA. Thank you, Mr. Chairman, for yielding.
Mr. Speaker, I am happy to rise today in support of, and as a
cosponsor of, H.R. 37.
Mr. Speaker, back in April 2012, President Obama signed into law the
JOBS Act, a bipartisan piece of legislation which makes it easier for
small companies, small businesses, to access capital markets by easing
the burden of certain securities regulations.
Despite its sweeping scope, the Dodd-Frank Act does little to spur
the type of capital formation that is essential for any real and
lasting economic recovery to take hold in our Nation. Without access to
capital, business slows, and without regulatory certainty, capital
disappears.
A small company should not be subject to the same regulatory demands
and requirements that a Fortune 500 company is required to meet. That
is why H.R. 37 follows on the success of the bipartisan JOBS Act and
continues the Financial Services Committee's extensive examination of
finding bipartisan solutions.
This package includes 10 pieces of legislation that my friend from
California, the ranking member, supported and endorsed and voted for in
the past. We need to make it easier for small companies to access
public and private markets so that they can grow, hire, and provide
greater economic opportunities for our citizens.
Contrary to this rhetoric we hear this evening, H.R. 37 is not a
massive repeal of Dodd-Frank. It is a bill that recognizes Dodd-Frank
is not perfect. It is a bill that recognizes market disruptions are not
a smart result.
Mr. HENSARLING. Mr. Speaker, I am now happy to yield 1\1/2\ minutes
to the gentleman from Arizona (Mr. Schweikert), a member of the
committee.
Mr. SCHWEIKERT. Mr. Speaker, I will try to speak fast. I have missed
all of you in my couple years' absence.
Have you ever had a moment where you are heading towards the
microphone and you are starting to wonder if some of the debate you
have been just listening to is a little bit tongue-in-cheek?
Can we do a quick explanation of CLOs, these collateralized loans? It
is commercial paper. That is what the vast majority of it is. It has
been around for a very long time.
Now, here is the absurdity that is coming in. If I have commercial
paper that is made up of marginal loans, 2 years from now the bank
continues to get to own that. But if that paper, that collateralized
managed debt actually has a covenant in it that, if something goes
wrong, I get to reach in and grab some of the equity of the company,
all of a sudden they can't hold that. So the more secure CLOs you don't
get to own in 2 years; the more marginal you do get to keep on the
banks' books.
This is, first, absurd. But it is perfectly rational to say: Look,
why don't we take this part that expires in 2 years and push it out 2
more years so there can be an orderly unwinding of a fairly absurd
rule? But the rule is the rule.
So a lot of this debate around the CLOs, I am sorry, it is great
hyperbole, but it has almost nothing to do with what the actual product
does. And understand, over the last 20 years, CLOs that were AA or
higher, not a single instrument went bad.
Mr. HENSARLING. Mr. Speaker, how much time do I have remaining?
The SPEAKER pro tempore. The gentleman from Texas has three-quarters
of a minute remaining.
Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, what we have really witnessed here is a debate between
the left and the far left, and the far left doesn't want the left to
work on a bipartisan basis. That is sad. I think that is what the
American people want us to do. The American people, by and large, don't
want to occupy Wall Street. They just want to quit bailing it out, and
bailing it out is exactly what the Dodd-Frank Act does. It is time to
grow this economy from Main Street up, not Washington down, and that is
what the big debate is.
Almost every bill here, Mr. Speaker, is a modest bill to help small
businesses, to help capital formation to put America back to work. They
passed on an overwhelmingly bipartisan basis.
Let's show the American people that we can do it. Don't let the far
left torpedo America's hopes and dreams. I encourage all the House
Members to support this legislation.
Mr. Speaker, I yield back the balance of my time.
Mr. CONAWAY. Mr. Speaker, I rise again 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 work of the
Agriculture Committee on the 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
Corrections.
Margin Requirements
I am pleased that the Business Risk Mitigation and Price
Stabilization Act was included as Title I of this bill, and even more
so, that this provision was already approved by both chambers as a part
of TRIA reauthorization. This Title puts in statute important
protections for American businesses. To grow our economy, businesses
should use their scarce capital to buy new equipment, hire more
workers, build new facilities, and invest in the future. They cannot do
that if they are required to hold money in margin accounts to fulfill a
misguided regulation.
Inter-affiliate Transactions
Title II of H.R. 37, regarding the Treatment of Inter-Affiliate
Transactions, was passed by the House multiple times in the 113th
Congress and will also provide additional certainty to American
business. It will do so by preventing the redundant regulation of
harmless inter-affiliate transactions that would unnecessarily tie up
the working capital of companies with no added protections for the
market, or benefits to 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, simplify
their financial dealings, and to reduce their counterparty credit risk.
[[Page H352]]
Title II of H.R. 37 will allow American businesses to continue
utilizing this efficient, time-tested business model.
Indemnification Requirements
Finally, Title V of H.R. 37 makes much needed corrections to the swap
data repository and clearinghouse indemnification requirements in 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 that 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 information.
However, while the concept of indemnification is well-established
within U.S. tort law, it does not exist in many foreign jurisdictions,
making it impossible for some foreign regulators to agree to these
indemnification requirements. This threatens to make data sharing
arrangements with foreign regulators unworkable.
H.R. 37 mitigates the problem by simply removing the indemnification
provisions in Dodd-Frank. However, the required written agreement
mandating certain confidentiality obligations is left in place. So
rather than stripping down Dodd-Frank, as we are so often accused, this
change will actually serve to enhance market transparency and risk
mitigation, by ensuring that 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 bills in the 113th Congress, I appreciate Mr.
Fitzpatrick's work to bring these provisions together in a package that
reduces regulatory burdens and promotes economic growth. I strongly
urge my colleagues to support the legislation.
House of Representatives,
Committee on Agriculture,
Washington, DC, January 13, 2014.
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 an 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,''
[[Page H353]]
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.
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 be- cause 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 nonfinancial 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
[[Page H354]]
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.
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.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 27, the previous question is ordered on
the bill.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. Pursuant to clause 1(c) of rule XIX, further
consideration of H.R. 37 is postponed.
____________________