[Congressional Record (Bound Edition), Volume 159 (2013), Part 11]
[House]
[Pages 16507-16519]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    SWAPS REGULATORY IMPROVEMENT ACT

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 391, I call 
up the bill (H.R. 992) to amend provisions in section 716 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act relating to 
Federal assistance for swaps entities, and ask for its immediate 
consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 391, the bill 
is considered read.
  The text of the bill is as follows:

                                H.R. 992

       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 ``Swaps Regulatory Improvement 
     Act''.

     SEC. 2. REFORM OF PROHIBITION ON SWAP ACTIVITY ASSISTANCE.

       Section 716 of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act (15 U.S.C. 8305) is amended--
       (1) in subsection (b)--
       (A) in paragraph (2)(B), by striking ``insured depository 
     institution'' and inserting ``covered depository 
     institution''; and
       (B) by adding at the end the following:
       ``(3) Covered depository institution.--The term `covered 
     depository institution' means--
       ``(A) an insured depository institution, as that term is 
     defined in section 3 of the Federal Deposit Insurance Act (12 
     U.S.C. 1813); and
       ``(B) a United States uninsured branch or agency of a 
     foreign bank.'';
       (2) in subsection (c)--
       (A) in the heading for such subsection, by striking 
     ``Insured'' and inserting ``Covered'';
       (B) by striking ``an insured'' and inserting ``a covered'';
       (C) by striking ``such insured'' and inserting ``such 
     covered''; and
       (D) by striking ``or savings and loan holding company'' and 
     inserting ``savings and loan holding company, or foreign 
     banking organization (as such term is defined under 
     Regulation K of the Board of Governors of the Federal Reserve 
     System (12 C.F.R. 211.21(o)))'';
       (3) by amending subsection (d) to read as follows:
       ``(d) Only Bona Fide Hedging and Traditional Bank 
     Activities Permitted.--
       ``(1) In general.--The prohibition in subsection (a) shall 
     not apply to any covered depository institution that limits 
     its swap and security-based swap activities to the following:
       ``(A) Hedging and other similar risk mitigation 
     activities.--Hedging and other similar risk mitigating 
     activities directly related to the covered depository 
     institution's activities.
       ``(B) Non-structured finance swap activities.--Acting as a 
     swaps entity for swaps or security-based swaps other than a 
     structured finance swap.
       ``(C) Certain structured finance swap activities.--Acting 
     as a swaps entity for swaps or security-based swaps that are 
     structured finance swaps, if--
       ``(i) such structured finance swaps are undertaken for 
     hedging or risk management purposes; or
       ``(ii) each asset-backed security underlying such 
     structured finance swaps is of a credit quality and of a type 
     or category with respect to which the prudential regulators 
     have jointly adopted rules authorizing swap or security-based 
     swap activity by covered depository institutions.
       ``(2) Definitions.--For purposes of this subsection:
       ``(A) Structured finance swap.--The term `structured 
     finance swap' means a swap or security-based swap based on an 
     asset-backed security (or group or index primarily comprised 
     of asset-backed securities).
       ``(B) Asset-backed security.--The term `asset-backed 
     security' has the meaning given such term under section 3(a) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).'';
       (4) in subsection (e), by striking ``an insured'' and 
     inserting ``a covered''; and
       (5) in subsection (f)--
       (A) by striking ``an insured depository'' and inserting ``a 
     covered depository''; and
       (B) by striking ``the insured depository'' each place such 
     term appears and inserting ``the covered depository''.

  The SPEAKER pro tempore. The bill shall be debatable for 1 hour 
equally divided and controlled by the chair and ranking minority member 
of the Committee on Agriculture and the chair and ranking minority 
member of the Committee on Financial Services.
  The gentleman from Texas (Mr. Conaway), the gentleman from Georgia 
(Mr. David Scott), the gentleman from Texas (Mr. Hensarling), and the 
gentlewoman from California (Ms. Waters) each will control 15 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Hensarling).


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material in the Record on H.R. 992, 
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 4 minutes.
  Mr. Speaker, America's economy remains stuck in the slowest, weakest, 
nonrecovery recovery of modern times. Millions of our fellow countrymen 
remain unemployed, underemployed. Many because of ObamaCare just had 
their hours cut, and millions lie awake at night wondering how they 
will make ends meet.
  Regrettably, those who create jobs in America for our constituents 
are drowning in a sea of red tape which is preventing them from hiring 
new workers. I still vividly remember the day

[[Page 16508]]

when one of my constituents in east Texas came to me as he shut down 
his small business due to red tape and he said, Congressman, it got to 
the point where I just thought my government didn't want me to succeed.
  Mr. Speaker, today we have an opportunity to ensure that businesses 
succeed in America, succeed in hiring new workers. Today, just like 
yesterday, Mr. Speaker, Republicans and Democrats can again pass 
bipartisan legislation that will help grow our economy. This 
legislation is H.R. 992, and I commend the bipartisan group of members 
who introduced the bill: Mr. Hultgren, Mr. Himes, Mr. Hudson, and Mr. 
Maloney.
  As chairman of the Financial Services Committee, I also want to thank 
the members of the committee who joined together and approved this bill 
on an overwhelmingly bipartisan vote of 53-6. Mr. Speaker, the vote was 
53-6. This bipartisan bill will relieve manufacturers, farmers, 
ranchers, and Main Street businesses of unintended consequences of one 
section of the Dodd-Frank Act.
  Many Americans may not realize it, but farmers, ranchers, 
manufacturers, and other employees use a financial product called a 
derivative to manage risk and protect themselves from extreme 
fluctuations in the price of things like fuel, fertilizer, and 
commodities.
  For example, a company like John Deere will do an interest rate swap 
as they finance a tractor for a farmer in east Texas in my district, 
and that derivative is directly linked to the cost of that tractor for 
my constituent.
  Companies like Southwest Airlines who operate in my hometown of 
Dallas, Texas, they will use derivatives to lock in cheaper fuel prices 
when the price of crude oil is on the rise. This keeps the cost of 
flying more affordable for customers, like the grandmother in Mesquite, 
Texas, who travels to visit her grandchildren in Kansas City.
  Perhaps a farmers co-op in Nebraska will use derivatives to finance 
fixed-price diesel for truckers who haul cattle. Perhaps a hospital in 
Los Angeles may use derivatives to hedge against the rising interest 
rates when financing a big investment like more beds or new lifesaving 
technology.
  Although not one single patient, not one single farmer, not one 
single grandmother, not one single trucker caused the financial crisis, 
they were all swept into section 716 of Dodd-Frank.
  Section 716 requires financial institutions to push out almost all of 
their derivatives business into separate entities. This not only 
increases transaction costs, which are ultimately paid by the 
consumers, it also makes our financial system less secure by forcing 
swap trading out of regulated institutions.

                              {time}  1245

  In fact, Mr. Speaker, Federal Reserve Chairman Ben Bernanke said 
section 716 ``would make the U.S. financial system less resilient, 
weaken our financial stability, and make our economy more susceptible 
to systemic risk.''
  To those who are loath to ever amend Dodd-Frank, no less of an 
authority than Barney Frank himself, former chairman of the committee, 
said: ``It addresses the valid criticisms of section 716 without 
weakening the financial reform laws, important derivative safeguards or 
prohibitions on bank proprietary trading.''
  So again, Mr. Speaker, no law is perfect. We would be derelict in our 
duty if we didn't put the American people back to work and pass this 
law.
  I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield 4 minutes to the gentleman from 
Minnesota (Mr. Peterson), the ranking member of the Committee on 
Agriculture.
  Mr. PETERSON. I thank the gentlelady.
  I rise in strong opposition to H.R. 992, commonly known as the swap 
push-out bill. This bill would effectively gut important financial 
reforms and put taxpayers potentially on the hook for big banks' risky 
behavior.
  In 2008, I voted against the TARP because I didn't think the Federal 
Government should be bailing out the mess both regular banks and so-
called investment banks like Goldman Sachs got themselves into with 
derivatives trading.
  Section 716 of the Dodd-Frank law ensures that, hopefully, we won't 
find ourselves in that situation again. The provision is a modest 
measure designed to prevent the Federal Government from bailing out or 
subsidizing bank activity that is not related to the business of 
banking.
  Originally, section 716, a Senate provision, would have forced banks 
to spin all of their swap activity into a separate affiliate. The House 
version of Dodd-Frank had no such requirement.
  In a compromise, the final version of section 716 allows the banks to 
hold on to swaps for hedging purposes and swaps related to the business 
of banking, primarily, interest rate swaps and foreign exchange swaps.
  Under Dodd-Frank, banks are required to move commodity swaps, 
including energy and agriculture swaps, non-cleared, non-investment 
grade credit default swaps, credit default swaps on asset-backed 
securities, and equity swaps to a separate affiliate. This represents 
barely 10 percent of the world of the swap market. So banks can keep 90 
percent in the bank.
  Apparently this isn't good enough for some of these big banks, which 
is why we are here today with H.R. 992, trying to gut the Dodd-Frank 
provisions and keep playing in 99 percent of the swap market, which is 
pretty much the status quo.
  H.R. 992 also makes it easier for banks to hide commodity 
manipulation from regulators. In recent months, we have seen JPMorgan 
charged with settling cases of alleged energy market manipulation and 
the start of an investigation of Goldman Sachs for aluminum 
manipulation.
  The Federal Reserve is even reconsidering its decision letting banks 
get involved with owning commodities. Until the big banks are held 
accountable for the activities in the commodity swaps market, I am 
reluctant to repeal limits Congress already has put in place.
  Since the passage of Dodd-Frank, it is clear that Wall Street has not 
learned its lesson. The loss experienced by JPMorgan through 
derivatives trading in the ``London Whale'' incident is proof of that. 
At some point, another bank is going to find itself in similar trouble 
and run to the government with its hands out for assistance.
  Frankly, I think the American people are sick and tired of the banks 
asking for taxpayer help when they get in trouble from risky trading 
activities.
  In the past, I have joined our Democratic Agriculture Committee 
members in support of legislation to change Dodd-Frank, and I have 
supported those efforts because those bills reaffirmed what Congress 
intended with the original law, like protecting derivatives end-users.
  Well, these end-users also share my concerns. The Commodity Markets 
Oversight Coalition, representing commodity-dependent industries, 
businesses and end-users that rely on functional, transparent and 
competitive commodity derivative markets as a hedging and price 
discovery tool, they also oppose H.R. 992.
  H.R. 992 repeals a key, if modest, reform component of Dodd-Frank. My 
colleagues are certainly free to vote as they wish, but I urge them to 
be careful because people will remember this vote.
  I urge my colleagues, if they are smart, to oppose H.R. 992 so we 
don't put our taxpayer dollars at risk for bank swap activities that 
are not related to their banking business.
  Mr. HENSARLING. Mr. Speaker, I am very pleased now to yield 4 minutes 
to the gentleman from Illinois (Mr. Hultgren), the chief Republican 
sponsor of the Swaps Regulatory Improvement Act which, again, passed 
our committee on a strong bipartisan basis of 53-6.
  Mr. HULTGREN. Mr. Speaker, I come to the floor today with tremendous 
pride, not because the bill we are debating is my own, but because we 
have the chance to help Main Street businesses and roll back one of the 
unintended consequences of Dodd-Frank.
  From its first addition, the Lincoln amendment, also called the swaps

[[Page 16509]]

push-out or spin-off provision, has been hotly debated. Section 716 of 
Dodd-Frank initially prohibited all swaps activities. However, the 
conference process yielded some measure of compromise by exempting 
foreign exchange and interest rate swaps back in.
  By doing this, the conferees acknowledged that swaps are not 
inherently disruptive. In fact, swaps are a prudent and necessary 
activity for many businesses.
  When oil prices spike or corn prices plummet, farmers and 
manufacturers rely on financial products like swaps to weather the 
uncertainty. Many of these businesses use banks as counterparties, 
where they have longstanding relationships with trusted institutions. 
Limiting banks' ability to serve their customers will cost these 
customers more as they are forced to find new, less stable partners.
  Section 716, as it stands now, would force certain swaps out of 
Federal, prudential regulators' supervision and push them into 
affiliated entities that are not subject to the same oversight and 
regulation. This is why some of the loudest critics of the push-out 
provision have been Federal regulators, like the Federal Reserve 
Chairman Bernanke and Paul Volcker.
  I know Ranking Member Waters and many members of the House from both 
sides of the aisle share these concerns. Moving swaps out of banks, 
while intended to reduce risk, may actually increase it.
  This is one of the reasons I introduced H.R. 992. The Swaps 
Regulatory Improvement Act leaves the most opaque swaps spun-off to 
affiliates, the kind of swaps that exacerbated the 2008 crisis. Those 
are still forced out.
  However, banks will be allowed to provide other types of swap 
contracts to their customers, such as equity, credit, and commodity 
swaps, which are very important to my home State, Illinois.
  All of these activities are subject to the new swaps regime created 
by title VII, including reporting and registration requirements, 
clearing, margin, and business conduct standards. These activities 
would also be subject to a finalized Volcker Rule, meaning they would 
generally be for legitimate hedging purposes or client facing, not 
proprietary.
  In the committee report from the last Congress, former Chairman 
Barney Frank, Ranking Member Waters, and other minority members of the 
committee noted that this bill ``addresses the valid criticisms of 
section 716 without weakening the financial reform law's important 
derivative safeguards or prohibitions on bank proprietary trading.''
  This is every bit as true of the bill we are considering today as it 
was in the last Congress. H.R. 992 addresses the valid criticisms of 
section 716, ``concerns . . . about whether pushing . . . swaps out of 
banks is the best way to mitigate against future system failure,'' to 
quote Ranking Member Waters.
  This bill strengthens regulatory oversight of these products. H.R. 
992 does not weaken title VII's derivatives safeguards or the 
prohibition of bank proprietary trading.
  H.R. 992 will keep costs lower for Main Street businesses that use 
swaps to hedge risks. H.R. 992 will help prevent derivatives market 
displacement and help promote U.S. competitiveness.
  This bill addresses nonpartisan concerns with a bipartisan solution. 
I thank my Democratic colleagues for being willing to consider targeted 
fixes to Dodd-Frank. We can find common ground on financial regulation. 
We can work together for the American people, and we can fix Dodd-Frank 
without dismantling its important accomplishments.
  So I ask my colleagues to support this bill. Talk to your hospitals, 
bankers, and farmers. They will tell you that swaps are an important, 
common business tool. Forcing higher costs on these transactions will 
only stifle job creation and economic growth.
  H.R. 992 is a sound bill and strikes, in the words of Ranking Member 
Waters, the ``right balance.''
  Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
  The financial crisis of 2008 wreaked untold havoc on the U.S. 
economy. This disaster, which was intensified by the use of 
derivatives, set back hardworking Americans for generations. At the 
same time, it bailed out many of the Nation's largest banks.
  The Dodd-Frank Act sought to put our financial markets back together 
by, for example, creating comprehensive oversight and reforms for 
derivatives markets, as well as prohibitions on banks betting with 
taxpayers' resources.
  H.R. 992 would undo some of these reforms before our regulators, Wall 
Street's cops, have a chance to finish them, especially the Volcker 
Rule. Congress passed the Volcker Rule to stop banks from using 
customer deposits, backed by the taxpayer, for trades intended to only 
benefit the bank and not its customers. The rule, when finalized, will 
define legitimate bank activities like hedging and market making, but 
prevent other behavior that would leave the taxpayer and the economy 
hurting.
  In the same vein, Congress passed the Lincoln amendment, the 
provision that H.R. 992 would gut, to insulate the taxpayer by 
``pushing out'' certain derivatives from the insured bank, while also 
making broad exceptions for swaps that bank customers overwhelmingly 
use.
  The Bipartisan Policy Center also recognized a connection between the 
Volcker Rule and the Lincoln amendment, noting that a ``well-executed 
Volcker Rule would simultaneously accomplish the intended goal of the 
Lincoln amendment.''
  In case America forget, JPMorgan reminded all of us of the importance 
of setting limits on bank activity. In 2012, 4 years after the crisis, 
JPMorgan Chase's ``London Whale'' caused the bank to lose more than $6 
billion in a few months. What were purportedly hedges using complicated 
derivatives transactions were later transformed by the bank's focus on 
profit into what would likely be banned under Volcker.
  The sense of urgency to separating the taxpayer-supported bank from 
the investment bank is shared across the aisle. Let me just tell you, 
in March of this year, Representative Jeb Hensarling said that, 
``Certainly, we have to do a better job ring-fencing, fire-walling, 
whatever metaphor you want to use, between an insured depository 
institution and a noninsured investment bank.''
  Yet, 3 years after the passage of Dodd-Frank, and 5 years after the 
financial crisis, we still do not have a ban on the very behavior that 
hurt our economy.
  Instead, H.R. 992 eliminates one taxpayer protection, the Lincoln 
amendment, by now allowing banks to engage in 99 percent of the swaps 
market without the taxpayer knowing how robust the monitoring and 
oversight of such activities will be.
  Mr. Speaker, H.R. 992 is a step backward in repairing our economy. 
This view is shared by the Commodity Markets Oversight Coalition, a 
nonpartisan alliance of American industries, businesses, consumers, and 
derivatives users.
  Similarly, the White House, the AFL-CIO, CalPERS, the Teamsters, 
Public Citizen, and Americans for Financial Reform all strongly oppose 
H.R. 992.
  Former Republican chairman of the FDIC, Sheila Bair, who strongly 
defended taxpayers during the crisis, noted immediately after the 
Financial Services Committee passed H.R. 992, ``Repeal of section 716 
moves in the wrong direction. In an area as complex as this, I wish, I 
just wish Congress would at least wait for the regulators.''
  I do too. Vote ``no'' on H.R. 992.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1300

  Mr. HENSARLING. Mr. Speaker, at this time I am happy to yield 1 
minute to the gentleman from Florida (Mr. Crenshaw).
  Mr. CRENSHAW. I thank the gentleman for yielding.
  Mr. Speaker, let me just simply say, as chairman of the 
Appropriations Subcommittee on Financial Services and General 
Government, my subcommittee has oversight over the SEC

[[Page 16510]]

and is charged with funding the SEC; and their budget has increased 
about 200 percent over the last 10 years. That is more than most 
agencies. That is a lot of money, and a lot of that is caused by all of 
the rules and regulations that they are asked to pass over and over 
again. Dodd-Frank is part of that problem.
  I think this bill seeks to alleviate that problem by saying, look, we 
can protect investors. We can have orderly and fair capital markets; 
but we don't need to go overboard on regulation. Certainly derivatives 
are complicated financial instruments. They need regulation. But that 
is what this bill provides. And I would say that the great overwhelming 
majority are not responsible for the financial crisis.
  If we pass this legislation, we can help save those people that use 
these instruments. We can also help the SEC not have to draft so many 
unnecessary rules and regulations, and that will save taxpayers as 
well.
  Ms. WATERS. Mr. Speaker, I yield 2 minutes to the gentleman from 
Massachusetts, Representative Lynch, the ranking member of the 
subcommittee on the Committee on Oversight and Government Reform.
  Mr. LYNCH. I thank the gentlelady for yielding, and I want to 
associate myself with her earlier remarks on this bill, as well as the 
remarks of Mr. Peterson of Minnesota.
  Mr. Speaker, I rise today in strong opposition to H.R. 992, the 
misleadingly named Swaps Regulatory Improvement Act. If you need to 
know one thing about this bill, it is that a vote for this bill is a 
vote to provide taxpayer funding and backing for the kind of reckless 
derivative trading that brought our economy to the brink of 
catastrophic collapse. It is as simple as that.
  The bill before us today would repeal the provision in the Dodd-Frank 
reform law that requires too-big-to-fail banks to push their risky 
derivative dealings out of banks that receive taxpayer support and into 
separately capitalized subsidiaries.
  This bill is not a regulatory improvement. It is a giveaway to Wall 
Street, and it is an abdication of the duty of this body to protect 
taxpayers from Wall Street speculators.
  I want to point out a couple of things that have been, I think, 
misleading here. Dodd-Frank already allows banks to keep derivatives 
that they use for bona fide hedging purposes or for traditional banking 
activities within the insured bank. Interest rate and foreign exchange 
swaps, which make up 90 percent of swaps volume, are the most likely to 
be used by end-users to manage their risk; and those are already exempt 
from the push-out under section 716. So end-users can already benefit 
from 90 percent of the swaps that are out there.
  Moving risky derivatives activity outside of the insured banks will 
ensure that the risks to the banks--those that are traditional and 
measurable--and the speculative derivative risks, which are totally 
unmeasured and unexpected, those are not commingled, which make bank 
risks easy to understand for regulators and actually leads to better 
regulation.
  Finally, I want to call my colleagues' attention to an article about 
this very bill that appeared yesterday in The New York Times on the 
front page of the Business section.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. WATERS. I yield an additional 30 seconds to the gentleman.
  Mr. LYNCH. I appreciate that.
  Go read yesterday's New York Times. It says on the front page of the 
Business section, To Wall Street, Washington, D.C., ``might seem like 
enemy territory. But even as Federal regulators and prosecutors extract 
multibillion-dollar penalties from the Nation's biggest banks, Wall 
Street can rely on at least one ally here'' in Washington. And that 
ally is the House of Representatives.
  We ought to change our position, stand with the taxpayers, stand with 
the investors, stand with the people that we were elected here to 
represent and tell Wall Street where to go on this. They get enough 
breaks as it is. We ought to stand up for the American people and 
protect them for a change.
  Mr. HENSARLING. Mr. Speaker, I am now pleased to yield 2 minutes to 
the gentleman from New Jersey (Mr. Garrett), the chairman of the 
Financial Services Subcommittee on Capital Markets and GSEs.
  Mr. GARRETT. I thank the chairman.

       I think the compromise language we are considering today 
     strikes the right balance, and I urge my colleagues to 
     support that approach, and I thank the Members for working 
     together to help us to get to this point.

  Mr. Speaker, those are not my words. Those are the words of the 
ranking member last year when similar language and similar legislation 
was coming down and she supported this legislation. So I want to 
associate myself with her support of this legislation.
  And why did she do so? Well, because she also said, The provision 
that we are talking about was something in the bill with section 716 
that said ``the House Members were able to consider less carefully than 
other sections of Dodd-Frank, since the provision didn't come through 
under regular order in our Chamber.''
  In other words, she recognized the fact that this provision in the 
bill was added late in the dead of night and had never come through 
committee for consideration.
  She also realized, and I quote again, that ``legitimate concerns have 
been raised about whether pushing a significant portion of swaps out of 
banks is the best way to mitigate against future systemic risk.''
  So, again, I wish to associate myself with those words of the ranking 
member who, in the past, has supported the very same legislation that 
we have here before us today.
  And why do she and I both support this legislation? Because it is 
good for Main Street. It is good for farmers. It is good for small 
ranchers. It is good for small businesses. She recognized then, as I do 
now, that what we need to do is to try to spur on our economy, make 
sure that there are not impediments, that we don't overly complicate 
things in the banking sector, in the financial sector and what have 
you--that would do what? That would put our country at a competitive 
disadvantage with other countries around the world and, by so doing, 
make it harder--yes, harder--for our farmers, ranchers, Main Street 
businesses, and the like to be able to get the credit they need and to 
pay their bills and what have you.
  So I concur with her that we need to pass this legislation today.
  Ms. WATERS. I yield myself 30 seconds.
  Mr. Speaker and Members, the gentleman talked about being in step 
with me and what I supposedly said when we first dealt with this issue 
in the Financial Services Committee. And he is correct.
  But when do you learn? After JPMorgan, am I to understand that nobody 
has learned a lesson? When do they learn that Volcker is still not in 
place yet? So all I will say is that I have an opinion that must be 
recognized.
  I yield 2 minutes to the gentleman from Minnesota (Mr. Ellison), who 
happens to be the cochair of the Progressive Caucus of Congress, is the 
deputy whip, and also serves on the Financial Services Committee.
  Mr. ELLISON. Mr. Speaker, we are a day in front of Halloween, and 
here we are handing out treats to the likes of JPMorgan Chase, Citi, 
and Bank of America.
  You know, it is fitting on this day that we should be doing the 
people's business. Yet here we are handing out treats and goodies to 
huge banks so that they can be allowed--large financial institutions 
that never were held accountable--so that these institutions can be 
allowed to use cheap, federally supported, guaranteed, bank-backed 
deposits to invest in derivatives, very similar to what got our economy 
in this mess in the first place.
  Wasn't the Great Recession scary enough? Weren't we in enough 
trouble? Didn't we learn anything from the ``London Whale'' fiasco?
  This bill, the swaps push-out bill, undermines key sections of the 
Wall

[[Page 16511]]

Street Reform bill, the so-called Dodd-Frank bill, under section 716.
  Now, this bill, which is supposed to protect investors and 
consumers--in fact, right now, it seems like the ink is barely dry on 
it, and here they are trying to weaken it already. Congress passed and 
the President signed this law to ensure that investment banks use their 
own money, not the people's money, to buy derivatives, invest in hedge 
funds, or other risky activities.
  Why did we make that requirement? Well, it wasn't to punish anyone. 
It was to safeguard the public trust. We made this change because we 
wanted to protect Americans from what I would call a zombie market, 
given the Halloween theme here, from destructive economic rampages like 
the global financial crisis which lost us 12 million jobs and over $16 
trillion in wealth. We are still experiencing anemic economic growth 
following the Great Recession, and we do not need more trouble like 
this swaps bill.
  Vote ``no.''
  Mr. HENSARLING. Mr. Speaker, I yield myself 15 seconds to help my 
colleagues, who apparently haven't found time to read the underlying 
section 716, subsection (i), which reads in part:

       No taxpayer funds shall be used to prevent the receivership 
     of any swap entity resulting from swap or security-based swap 
     activity of the swaps entity.

  I would encourage my colleagues to actually read the bill.
  Now I am pleased to yield 1 minute to the gentleman from the 
volunteer State of Tennessee (Mr. Fincher).
  Mr. FINCHER. I thank the chairman.
  Mr. Speaker, I rise today in support of H.R. 992, the Swaps 
Regulatory Improvement Act. Simply put, we do not want to make the 
consumer pay more. That is what will happen if we force banks to push 
out certain swaps into separate nonbank affiliates.
  Chairman Bernanke was right about section 716: it increases costs. 
Section 716 will also drive businesses overseas where foreign 
regulators have not passed similar rules for derivatives, taking with 
them American jobs and revenue.
  We must weigh the costs and benefits of every rule or regulation and 
ensure we do not destabilize markets or place American consumers, end-
users, and financial institutions at a competitive disadvantage.
  With that, I encourage my colleagues to support H.R. 992.
  Ms. WATERS. I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I am now very pleased to yield 1 minute 
to the gentleman from South Carolina (Mr. Mulvaney).
  Mr. MULVANEY. Mr. Speaker, I am going to do something I don't 
ordinarily do. I am going to read something:

       I just want to reassure people, passing this bill--
     particularly as amended--will not in any way, shape, or form 
     reduce sensible regulation of derivatives. It will not 
     increase any exposure to the financial system from 
     derivatives. It was an unnecessary and, I think, somewhat 
     unwise amendment. The bill before us, particularly as 
     amended, will restore this to what I think is the appropriate 
     balance.

  Not my words. Not the words of the gentleman from Texas. Not even the 
words of Mr. Bernanke, Mr. Volcker, or one of my colleagues' favorite 
economists, Mark Zandi. Those are the words of the gentleman from 
Massachusetts (Mr. Frank), the guy whose name is on the bill, who 
supported this exact same initiative in the last Congress.
  There is plenty for us to disagree about, Mr. Speaker. Why we 
continue to fight about things that pass out of committee 53-6, that 
will pass here today on the floor by an overwhelming margin, I have no 
idea. But there should be some things that we could come together and 
agree on. And this, H.R. 992, is certainly one of them, and I encourage 
full support of the bill.
  Ms. WATERS. Mr. Speaker, I would like to read a statement from Ms. 
Sheila Bair who formerly chaired the FDIC. She said:

       Derivatives have many legitimate functions, but they can be 
     high risk and poorly understood because of their complexity 
     by bank managers and even regulators, as we saw with the 
     ``London Whale'' debacle. So keeping them outside of insured 
     banks and making the market fund them is the way to go. This 
     will increase market discipline and protect the FDIC.

  She said:

       I'm concerned that Members of Congress act on these issues 
     without full understanding of the ramifications. If we are 
     going to revisit derivatives regulation, I'd go in the 
     direction of more market discipline and disclosure, rather 
     than letting big derivatives dealers use insured deposits to 
     support their high-risk operations.

  The Executive Office of the President sent over a statement that 
includes these words:

       Wall Street Reform represents the most comprehensive set of 
     reforms to the financial system since the Great Depression, 
     and its derivatives provisions constitute an important part 
     of the reforms being put in place to strengthen the Nation's 
     financial system by improving transparency and reducing risks 
     for market participants.

  Again, let me refer you to Representative Hensarling who said:

       Certainly, we have to do a better job ring-fencing, fire-
     walling--whatever metaphor you want to use--between an 
     insured depository institution and a noninsured investment 
     bank.

  I ask for a ``no'' vote on this bill.
  Mr. HENSARLING. Mr. Speaker, again, I continue to be amazed at those 
who wish to decry the possibility of a Federal bailout in debating this 
bill. I wonder where their voices were yesterday when all of them, 
seemingly--the voices we hear today--defended the Federal Housing 
Administration from actually receiving a taxpayer bailout, the first in 
history.

                              {time}  1315

  So when taxpayers actually have to pay, we hear choruses of ``Que 
Sera, Sera.'' But when a private institution loses their money that the 
taxpayers didn't have to pay for, all of a sudden the sky is falling.
  I understand that the ranking member, obviously, has the opportunity 
to change her mind; but clearly she was for it before she was against 
it.
  When I hear many of my colleagues decry the lack of bipartisan 
legislation, I don't understand why Members would try to oppose it now. 
It passed overwhelmingly, 53-6.
  For those who say this is somehow gutting Dodd-Frank, apparently they 
didn't consult with the former chairman of this committee, Barney 
Frank, who is on record saying that this addresses the valid criticisms 
of section 716 without weakening the financial reform law's important 
derivatives safeguards.
  It is time, Mr. Speaker, to get America back to work. It is time to 
make commonsense, bipartisan reforms. I respect every right of every 
Member to change their mind, but I hope something that passed 53-6 to 
put America back to work, that soon this full House will pass this 
legislation; and I urge its adoption.
  I yield back the balance of my time.
  Mr. CONAWAY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the Swaps Regulatory Improvement Act, H.R. 922, is a 
commonsense, bipartisan bill that changes the application of Dodd-
Frank, but does not undermine the systemic protections the law was 
intended to create. H.R. 992 amends section 716 of the Dodd-Frank Act 
to correct an unintended consequence of a poorly vetted provision that 
was dropped into the Senate version of the bill late in the process, 
with no notice and no debate.
  Section 716 prevents banks that write certain types of swaps from 
utilizing any type of Federal banking assistance, including accessing 
the Federal Reserve's discount window and obtaining FDIC insurance. It 
would have the practical effect of requiring banks to push important 
swap activity into special-purpose, separately capitalized entities.
  While in theory section 716 may seem like a reasonable response to 
the 2008 financial collapse, in practice, these entities are less well 
capitalized, less well regulated, and unable to officially reduce risks 
by netting the effects of multiple hedging transactions.
  Across our Nation, farmers, ranchers, and other businesses rely on 
the risk-mitigating tools of the financial industry. Commodity price 
exposure, interest rate risks, and other business uncertainties are 
routinely managed

[[Page 16512]]

through swaps and other derivatives products. Requiring banks to 
separate some of these swaps into special-purpose, affiliate 
institutions will wind up costing the end-users who rely on these tools 
more for no actual reduction in system-wide risk.
  Moreover, the swap push-out requirements adopted in section 716 of 
the Dodd-Frank Act have not been considered in any other foreign 
jurisdiction, putting our banks and end-users who rely on them at a 
competitive advantage throughout the global economy.
  H.R. 992 restores an appropriate balance to risk-mitigation services 
allowed by banks. It continues to prohibit structured finance swaps--
like those that were made famous by AIG--from the books of banks, but 
it ends the need for banks to push commodity and other swaps with 
significantly lower risk profiles into separate legal entities.
  As I said earlier, H.R. 992 has broad bipartisan support. I would 
like to thank two members of my subcommittee and coauthors of this 
bill, Congressman Richard Hudson and Congressman Sean Patrick Maloney, 
for their good work in finding a bipartisan solution to this 
significant problem. I wish that all of Congress was as hardworking, 
deliberative, and cordial as the members of the Ag Committee.
  As I close, I would like to do so with the words of one of our former 
colleagues and a man who is widely regarded as knowing a thing or two 
about Dodd-Frank, former Financial Services Committee Chairman Barney 
Frank.
  In remarks made about an earlier version of this legislation, he 
said:

       I want to reassure people passing this bill, particularly 
     as amended, will not in any way, shape, or form reduce 
     sensible regulation in derivatives; it will not increase any 
     exposure to the financial system from derivatives.

  If this legislation made good sense to the coauthor of Dodd-Frank, it 
ought to be a no-brainer for this House to pass. I urge my colleagues 
to support this commonsense legislation. It is a bipartisan piece of 
legislation that will put an end to the needless uncertainty that 
section 716 is causing our farmers, ranchers, and small businessmen 
across this Nation.
  I reserve the balance of my time.
  Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield 3 minutes to the 
gentlewoman from New York (Mrs. Carolyn B. Maloney), the ranking 
Democratic member of the Subcommittee on Capital Markets and also the 
former chairman of the Financial Institutions Subcommittee on the 
Financial Services Committee.
  Mrs. CAROLYN B. MALONEY of New York. I thank the gentleman for 
yielding and for his leadership.
  Mr. Speaker, I rise in support of H.R. 992. This bill passed 
overwhelmingly out of the Financial Services Committee earlier this 
year with broad bipartisan support with a vote of 53-6.
  The whole point of the Dodd-Frank reforms was to improve the safety 
and soundness of our financial system; and H.R. 992, the bill before 
us, will help us do just that.
  This bill does not expose the taxpayer to any additional risk. In 
fact, it includes a ban on taxpayer bailout of any swaps or any use of 
taxpayer money. Under H.R. 992, truly risky swaps will still be pushed 
out of commercial banks while at the same time bank regulators can see 
all of the bank's swaps activities.
  As well intended as section 716 is, it turns out it would actually 
hinder the oversight of regulators of the derivatives market. That is 
why Barney Frank, the former chairman of the Financial Services 
Committee and, of course, the Frank in Dodd-Frank, said during the 
debate in the last Congress of this same bill that is before us now, 
H.R. 922:

       It will not in any way, shape, or form reduce sensible 
     regulation of derivatives; it will not increase any exposure 
     to the financial system from derivatives.

  The economist of Moody's, Mark Zandi, also supports this bill and has 
said that section 716, as written, actually increases systemic risk and 
creates major inefficiency in the markets.
  Even Federal Reserve Chairman Ben Bernanke opposed section 716, as 
written, stating that the way it forces these activities out of insured 
depository institutions ``would weaken both the financial stability and 
strong regulation of derivative activities.''
  So Ben Bernanke has said that our bill before us will protect safety 
and soundness. Barney Frank agrees. Mark Zandi of Moody's agrees. I 
agree. And I urge my colleagues to agree with us and support safety and 
soundness of our financial institutions by supporting H.R. 992.

                             Minority Views


                             112th Congress

       The Wall Street Reform and Consumer Protection Act 
     requires, for the first time, the regulation of over-the-
     counter derivatives, previously opaque transactions that 
     helped bring our financial system to the brink of disaster. 
     The vast majority of derivatives must now be centrally 
     cleared and publicly reported, and be backed by margin and 
     capital to ensure that swap dealers and major swap users can 
     honor their commitments. In addition, the reform law also 
     prohibits banks from placing bets with federally insured 
     deposits through the ``Volcker Rule''. Both measures serve as 
     important safeguards as we rebuild trust in our financial 
     system. As amended, H.R. 1838 would repeal portions of 
     Section 716 of the financial reform law, also known as the 
     ``push-out provision.'' Section 716 prohibits banks from 
     engaging in several types of derivatives. Questions have been 
     raised about this provision by economists and regulators 
     including FDIC's Sheila Bair, who are concerned that it might 
     interfere with a bank's ability to use derivatives to 
     diminish risk. Section 716 was not part of the original 
     House-passed version of the financial reform law. During the 
     Full Committee markup, Democrats worked with the Majority to 
     amend H.R. 1838 to continue the prohibition of complex swaps 
     employed by AIG with devastating effect. H.R. 1838, as 
     amended, addresses the valid criticisms of Section 716 
     without weakening the financial reform law's important 
     derivative safeguards or prohibitions on bank proprietary 
     trading.
       Barney Frank, Wm. Lacy Clay, Gwen Moore, James A. Himes, 
     Ruben Hinojosa, Andre Carson, Gary L. Ackerman, Al Green, 
     Stephen F. Lynch, David Scott, Maxine Waters, Carolyn B. 
     Maloney, Melvin L. Watt, Luis V. Gutierrez, Gary C. Peters, 
     Ed Perlmutter, Michael E. Capuano, and Gregory W. Meeks.
                                  ____

                                                November 14, 2011.
     Hon. Spencer Bachus,
     Chairman, House Financial Services Committee, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Bachus, As the Committee considers 
     legislation proposing changes to the financial reform law, I 
     wanted to bring your attention to a specific concern in Title 
     VII and share my views on the related legislation. As I noted 
     at the time of its passage, and have stated since, I believe 
     the Dodd-Frank reforms were important measures taken to 
     strengthen elements of our financial system and bring more 
     confidence into the markets and institutions. While some of 
     the reforms are currently in place, many still need to be 
     finalized in the rule-making process. With any measure as 
     far-reaching and robust as this law is, refinements to it can 
     prove necessary over time, especially given the broad array 
     of complex issues addressed.
       The Title VII provisions in Dodd-Frank are among the most 
     meaningful reforms but with far-reaching implications to the 
     economy. Greater transparency in derivatives transactions and 
     clearing requirements are notable improvements that will be 
     realized as they become operational. How financial 
     institutions interact with their counterparties to provide 
     access to capital and manage risk is a critical feature of 
     our system for all market participants.
       As the legislation was being considered, one provision that 
     was among the more notable was--Section 716, or the Lincoln 
     swaps push-out proposal. This part of the law effectively 
     requires that financial firms conduct certain derivatives 
     transactions outside of the bank institution and in some 
     other entity within the company. I have significant concerns 
     with this part of the law because of its potential to 
     increase systemic risk, create major inefficiencies in 
     markets, and likely have a major impact on U.S. 
     competitiveness.
       One of the primary objectives of the financial reforms 
     enacted after the 2008 failures was to provide for a way to 
     resolve large financial firms should a similar crisis develop 
     in the future. The resolution authority section of the law 
     was crafted to do so, but Section 716 works against that 
     goal. It does so because it causes firms to segment the 
     derivatives with individual counterparties and requires that 
     another entity be created to engage in the pushed-out 
     transactions. Creating new operations, and expending 
     additional capital to make them robust enough, is in contrast 
     to the resolution planning objectives of eliminating entities 
     and simplifying structure. During the winding down of either 
     the financial institution or of the

[[Page 16513]]

     counterparty, the breaking up of the derivatives activities 
     creates additional risks because separate entities will not 
     be able to net their exposures as they can if they are facing 
     one entity only. As noted by some of the prudential 
     regulators in letters objecting to this provision, Section 
     716 would create significant complications and counter the 
     efforts to resolve such firms in an orderly manner.
       For those who argue the Lincoln provision is needed to 
     guard against any future taxpayer bailout based on 
     derivatives, it is important to note that this goal is 
     accomplished by the resolution authority section of the law, 
     thus making Section 716 unnecessary. Indeed, many provisions 
     in the law limit derivatives risk without the need for the 
     push-out provision. The entirety of Title VII is intended to 
     create central counterparties to remove bilateral risk, to 
     create extensive margin requirements on uncleared swaps where 
     bilateral risk may still exist, and to fully enhance risk 
     management of derivatives. Additionally, there are 
     prohibitions on the Federal Reserve creating any assistance 
     program that does not have broad-based applicability--so the 
     regulators cannot subjectively choose one entity anymore for 
     any sort of capital infusion.
       With respect to competiveness, no other foreign 
     jurisdiction has indicated it will likely consider a measure 
     like Section 716. As such, U.S. financial firms will most 
     certainly be at a competitive disadvantage relative to their 
     foreign competitors because Section 716 does not apply to 
     those foreign firms. U.S. firms transacting with 
     counterparties in this country and abroad provide critical 
     risk management tools through derivatives transactions that 
     are much needed and will not disappear. It is wise for firms 
     with greater regulatory supervision to play a role in this 
     system. However, the ability to net such transactions off 
     each other will be lost because the counterparties will have 
     to interact with a different entity once these derivatives 
     are pushed out. Counterparties will face higher costs and 
     greater operational inefficiencies that will tie up capital. 
     The likely result will be a substantial loss of market share 
     for U.S. firms as these transactions would be shifted to 
     foreign banks.
       As the Committee examines legislation related to the 
     derivatives reforms, I strongly urge consideration and 
     support legislation that would repeal Section 716 as a way to 
     address these concerns. I appreciate your attention to this 
     matter and would welcome any further discussion on the topic 
     if you would find that helpful.
           Sincerely,
                                                       Mark Zandi.

  Mr. CONAWAY. Mr. Speaker, it is now my pleasure to yield 2\1/2\ 
minutes to the gentleman from North Carolina (Mr. Hudson), my colleague 
on the Ag Committee and coauthor of the bill.
  Mr. HUDSON. Mr. Speaker, given the bicameral and bipartisan support 
for our bill and the overwhelming consensus about the systemic risk 
created by the section we are working to reform today, I am genuinely 
surprised we are even here debating this today.
  Nevertheless, I rise to speak in support of H.R. 992, the Swaps 
Regulatory Improvement Act, which my Democrat friend from New York, 
Sean Patrick Maloney, and I have worked together on in the House 
Agriculture Committee.
  As my colleagues are aware, our bipartisan bill amends a provision in 
the Dodd-Frank Act which was included at the 11th hour to ``get 60 
votes in the Senate'' as former House Financial Services Chairman 
Barney Frank indicated during a markup of the bill back in February, 
2012.
  This section we reform with our bill was mischaracterized as an 
effort to prevent ``risky'' swaps activities in the bank. While we 
believe this provision was proposed in good faith, it simply does not 
prevent the risk that its authors intended. Moreover, this provision of 
the bill will cause many American financial institutions to operate at 
a significant disadvantage to their foreign competitors.
  Federal Reserve Chairman Ben Bernanke and former Federal Reserve 
Chairman Paul Volcker have both publicly raised concerns about section 
716.
  In the 112th Congress, the House Financial Services Democrats, 
including Chairman Frank and current Ranking Member Maxine Waters, 
endorsed H.R. 1838, agreeing that this measure addressed the valid 
criticisms of section 716 without ``weakening the financial reforms 
law's important derivative safeguards or prohibitions on bank 
proprietary trading.''
  The bill before us today is virtually identical to H.R. 1838 from the 
last Congress.
  Mr. Speaker, to echo what Federal Reserve Chairman Ben Bernanke said 
at a hearing on February 27:

       Section 716, as drafted, will not reduce risk and will 
     likely increase costs of people who use the derivatives and 
     make it more difficult for the bank to compete with foreign 
     competitors who can provide a more complete set of services.

  It is crystal clear: this section needs to be reformed.
  I ask my colleagues to support this bill and look forward to my 
Senate colleague, Kay Hagan, passing her companion bill in the Senate 
so we can get this commonsense reform completed.

                                         Board of Governors of the


                                       Federal Reserve System,

                                     Washington, DC, May 12, 2010.
     Hon. Christopher J. Dodd,
     Chairman, Committee on Banking, Housing, and Urban Affairs, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: You have asked for my views on section 
     716 of S. 3217. This section would prevent many insured 
     depository institutions from engaging in swaps-related 
     activities to hedge their own financial risks or to meet the 
     hedging needs of their customers, and would prohibit nonbank 
     swaps entities, including swap dealers, clearing agencies and 
     derivative clearing organizations, from receiving any type of 
     Federal assistance.
       The Federal Reserve has been a strong proponent of changes 
     to strengthen the regulatory framework and infrastructure for 
     over-the-counter (OTC) derivative markets to reduce systemic 
     risks, promote transparency, and enhance the safety and 
     soundness of banking organizations and other financial 
     institutions. Title VII and Title VIII of S. 3217 include 
     important provisions designed to achieve these goals. For 
     example, Title VII would require most derivative contracts to 
     be cleared through central clearinghouses and traded on 
     exchanges or open trading facilities, require information 
     concerning all other derivatives contracts to be reported to 
     trade repositories or regulators, and provide the regulatory 
     agencies significant new authorities to ensure that all swaps 
     dealers and major swap participants are subject to strong 
     capital, margin, and collateral requirements with respect to 
     their swap activities. Title VIII also includes provisions 
     designed to help ensure that centralized market utilities for 
     clearing and settling payments, securities, and derivatives 
     transactions (financial market utilities), which are critical 
     choke points in the financial system, are subject to robust 
     and consistent risk management standards--including 
     collateral, margin, and robust private-sector liquidity 
     arrangements--and do not pose a systemic risk to the 
     financial system.
       I have also frequently made clear that we must end the 
     notion that some firms are ``too-big-to-fail.'' For that 
     reason, the Federal Reserve has advocated the development of 
     enhanced and rigorous prudential standards for all large, 
     interconnected financial firms, and the enactment of a new 
     resolution regime that would allow systemically important 
     financial firms to be resolved in an orderly manner, with 
     losses imposed on the Federal Reserve to provide emergency, 
     secured credit to nondepository institutions only through 
     broad-based liquidity facilities designed to address serious 
     strains in the financial markets, and not to bail out any 
     specific firm.
       S. 3217 makes important contributions to the goals of 
     reducing systemic risk, eliminating the too-big-to-fail 
     problem, and strengthening prudential supervision. I am 
     concerned, however, that section 716 is counter-productive to 
     achieving these goals.
       In particular, section 716 would essentially prohibit all 
     insured depository institutions from acting as a swap dealer 
     or a major swap participant--even when the institution acts 
     in these capacities to serve the commercial and hedging needs 
     of its customers or to hedge the institution's own financial 
     risks. Forcing these activities out of insured depository 
     institutions would weaken both financial stability and strong 
     prudential regulation of derivative activities.
       Prohibiting depository institutions from engaging in 
     significant swaps activities will weaken the risk mitigation 
     efforts of banks and their customers. Depository institutions 
     use derivatives to help mitigate the risks of their normal 
     banking activities. For example, depository institutions use 
     derivatives to hedge the interest rate, currency, and credit 
     risks that arise from their loan, securities, and deposit 
     portfolios. Use of derivatives by depository institutions to 
     mitigate risks in the banking business also provides 
     important protection to the deposit insurance fund and 
     taxpayers as well as to the financial system more broadly. In 
     addition, banks acquire substantial expertise in assessing 
     and managing interest rate, currency, and credit risk in 
     their ordinary commercial banking business. Thus, banks are 
     well situated to be efficient and prudent providers of these 
     risk management tools to customers.
       Importantly, banks conduct their derivatives activities in 
     an environment that is subject to strong prudential Federal 
     supervision and regulation, including capital regulations 
     that specifically take account of a

[[Page 16514]]

     bank's exposures to derivative transactions. The Basel 
     Committee on Banking Supervision has recently proposed tough 
     new capital and liquidity requirements for derivatives that 
     will further strengthen the prudential standards that apply 
     to bank derivative activities. Titles I, III, VI, VII and 
     VIII of S.3217 all add provisions further strengthening the 
     authority of the Federal banking agencies and other 
     supervisory agencies to address the risks of derivatives. 
     Section 716 would force derivatives activities out of banks 
     and potentially into less regulated entities or into foreign 
     firms that operate outside the boundaries of our Federal 
     regulatory system. The movement of derivatives to entities 
     outside the reach of the Federal supervisory agencies would 
     increase, rather than reduce the risk to the financial 
     system. In addition, foreign jurisdictions are highly 
     unlikely to push derivatives business out of their banks. 
     Accordingly, foreign banks will have a competitive advantage 
     over U.S. banking firms in the global derivatives 
     marketplace, and derivatives transactions could migrate 
     outside the United States.
       More broadly, section 716 would prohibit the Federal 
     Reserve from lending to any swaps dealer or major swap 
     participant--regardless of whether it is affiliated with a 
     bank--even under a broad-based 13(3) liquidity facility in a 
     financial crisis. Experience over the past two years 
     demonstrates that such broad-based facilities can play a 
     critical role in stemming financial panics and addressing 
     severe strains in the financial markets that threaten 
     financial stability, the flow of credit to households and 
     businesses, and economic growth. These facilities will be 
     less effective if participants must choose between continuing 
     (or unwinding) derivatives positions and participating in the 
     market-liquefying facility.
       I am concerned that section 716 in its present form would 
     make the U.S. financial system less resilient and more 
     susceptible to systemic risk and, thus, is inconsistent with 
     the important goals of financial reform legislation. We look 
     forward to continuing to work with the Congress as you work 
     to enact strong regulatory reform legislation that both 
     addresses the weaknesses in the financial regulatory system 
     that became painfully evident during the crisis, and 
     positions the regulatory system to meet the inevitable 
     challenges that lie ahead in the 21st century.
           Sincerely,
     Ben Bernanke.
                                  ____

                                        New York, NY, May 6, 2010.
       Dear Mr. Chairman: A number of people, including some 
     members of your Committee, have asked me about the proposed 
     restrictions on bank trading in derivatives set out in 
     Senator Lincoln's proposed amendment to Section 716 of S. 
     3217. I thought it best to write you directly about my 
     reaction.
       I well understand the concerns that have motivated Senator 
     Lincoln in terms of the risks and potential conflicts posed 
     by proprietary trading in derivatives concentrated in a 
     limited number of commercial banking organizations. As you 
     know, the proposed restrictions appear to go well beyond the 
     proscriptions on proprietary trading by banks that are 
     incorporated in Section 619 of the reform legislation that 
     you have proposed. My understanding is that the prohibitions 
     already provided for in Section 619, specifically including 
     the Merkley-Levin amended language clarifying the extent of 
     the prohibition on proprietary trading by commercial banks, 
     satisfy my concerns and those of many others with respect to 
     bank trading in derivatives.
       In that connection, I am also aware of, and share, the 
     concerns about the extensive reach of Senator Lincoln's 
     proposed amendment. The provision of derivatives by 
     commercial banks to their customers in the usual course of a 
     banking relationship should not be prohibited.
       In sum, my sense is that the understandable concerns about 
     commercial bank trading in derivatives are reasonably dealt 
     with in Section 619 of your reform bill as presently drafted. 
     Both your Bill and the Lincoln amendment reflect the 
     important concern that, to the extent feasible, derivative 
     transactions be centrally cleared or traded on a regulated 
     exchange. These are needed elements of reform.
       I am sending copies of this letter to Secretary Geithner 
     and to Senators, Shelby, Merkley, Levin and Lincoln.
           Sincerely,
                                                     Paul Volcker.

  Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield 2 minutes to the 
distinguished gentleman from Texas (Mr. Al Green), who is also the 
ranking member of the Subcommittee on Oversight and Investigation on 
the Financial Services Committee.
  Mr. AL GREEN of Texas. Mr. Speaker, not everyone supports this 
legislation. Ranking Member Waters was mentioned. But she spoke 
eloquently today as to why she opposes H.R. 992. Mr. Frank is not here 
to speak for himself. So we cannot say that he, today, would support 
H.R. 992.
  It may be that we have the AFL-CIO opposing H.R. 992, as well Public 
Citizen, and the Commodity Markets Oversight Coalition. It may be that 
we have them opposing it because we understand, as do many others, that 
this weekend marks the 84th anniversary of the stock market crash of 
1929. It was that stock market crash that gave us Glass-Steagall in 
1933.
  Glass-Steagall provided the firewall between commercial banking and 
investment banking. It didn't let you use tax dollars in the sense that 
they are insured by FDIC to engage in investment banking.
  Well, it seems ironic that it took us 66 years to repeal Glass-
Steagall, 66 years to repeal that firewall that separated commercial 
banking from investment banking, and has taken us now little more than 
3 years to repeal, by way of evisceration, section 716 of Dodd-Frank.
  Section 716 provides a firewall. It is the firewall to protect 
investors--taxpayers, if you will--from those investors who engage in 
derivatives. This derivatives market that we are talking about is $600 
trillion to approximately $1.2 quadrillion. No one really knows. Only 
God knows how big it is.
  But what we are doing is exposing tax dollars to this derivatives 
market, and it is my hope that we will not pass this legislation 
because it will set us back.
  Let's give section 716 an opportunity to function. Glass-Steagall 
functioned for 66 years. Let's not repeal section 716 in a little more 
than 3 years.
  Mr. CONAWAY. Mr. Speaker, I yield 3 minutes to the gentlelady from 
Missouri (Mrs. Hartzler), also a member of the committee.
  Mrs. HARTZLER. Mr. Speaker, I rise today in support of the Swaps 
Regulatory Improvement Act.
  As a lifelong farmer and small business owner, I understand the need 
for farm cooperatives and manufacturing companies to manage their 
risks. H.R. 992 reforms section 716 of Dodd-Frank to ensure businesses 
can manage their long-term commodity and equity risks.
  Missouri is the Show Me State, and I ask the opposition to show me 
how section 716 benefits my constituents and decreases overall risk in 
the U.S. financial markets.
  Since the beginning, Federal Reserve Chairman Bernanke and Treasury 
Secretary Geithner have opposed section 716 of Dodd-Frank. Show me how 
section 716 decreases overall risk to the financial markets when 
Chairman Bernanke clearly stated:

       It's not evident why section 716 makes the company as a 
     whole safer. And what we do see is that it will likely 
     increase the costs of people who use the derivatives.

                              {time}  1330

  Since Dodd-Frank became law, no equivalent provisions have been 
adopted in any other foreign jurisdictions that are working through 
their own derivatives reforms.
  Show me how placing U.S. firms at a competitive disadvantage with 
international banks will ultimately benefit manufacturers in my 
district managing their interest rate risks.
  H.R. 992, however, would prevent financial institutions from forcing 
much of the derivatives business outside the bank.
  Show me why banks, which are a more heavily regulated and a more 
highly capitalized entity than a stand-alone affiliate, are not a 
better platform for regulators to monitor swap activity and to protect 
U.S. financial markets.
  Farmers in Missouri must contend with a multitude of weather and 
financial risks. They use swaps to manage their long-term price risks 
on everything from the crops they grow to the fuel that runs their 
equipment.
  Show me why we should allow section 716 to increase the costs to my 
farmers, who merely want to manage their long-term price risks through 
commodity swaps so they can focus on their real job--feeding America.
  H.R. 992 is a much-needed change that improves the U.S. financial 
system for small businesses, farmers, and job creators. Again, I 
support H.R. 992, and I urge my colleagues to vote for this 
legislation. Together, let's show the American people we are for smart 
reforms in order to allow manufacturers, businesses, and farmers to 
manage their risks in a commonsense way.

[[Page 16515]]


  Mr. DAVID SCOTT of Georgia. Mr. Speaker, I now yield 3 minutes to the 
gentleman from Connecticut, Representative Jim Himes, a leader on the 
Financial Services Committee and the chief Democratic cosponsor of this 
bill.
  Mr. HIMES. I want to thank Mr. Scott for yielding the time.
  Mr. Speaker, derivatives are complicated things. They are probably 
one of the more complicated things that we deal with in this Chamber, 
so it is worth describing in simple terms what H.R. 992 does.
  It abides by principles that I think we can all agree make some 
sense, which are those things which contributed to the meltdown of 
2008--the terrible mortgages, the derivatives that were based on those 
mortgages, the proprietary trading. Those things that contributed to 
the meltdown of 2008 should be either made unlawful or should be much 
more closely regulated than they were in the past; but those things 
that were not related in any way, shape, or form and that did not 
contribute to the meltdown of 2008 we should take a little lighter hand 
on.
  H.R. 992 says that those derivatives--the currency derivatives, the 
commodity derivatives, the equity swaps, all of these complicated 
things that weren't anywhere close to the meltdown of Bear Stearns and 
Lehman Brothers and the challenges at Citibank and at JPMorgan Chase--
will not be subject to a very aggressive measure saying that banks 
cannot trade in those derivatives.
  Now, banks trade in derivatives because they support their clients 
and trade. I emphasize ``trade'' because one of their clients will 
borrow $100 million to build in Japan. That exposes him to yen risk. 
Maybe I don't want to take yen risk, and maybe the same guy who lent me 
the money can help me offload that risk. That is the idea.
  H.R. 992 in no way allows for the risky derivatives--the 
collateralized bond obligations, all of those real estate derivatives--
to come back into the banking environment, and it in no way permits, as 
the chairman has said a number of times, a bailout of banks because of 
derivatives.
  Even though we have spent a lot of time on this today, it makes sense 
to spend a second on the history of this bill:
  Section 716 requires the full push-out of derivatives. Regulators 
recognize that this is dangerous, and they are very vocal about it. 
Then-Ranking Member Barney Frank takes a suggestion from then-
Representative Nan Hayworth to repeal section 716. The then-ranking 
member says, Let's not repeal it. Let's allow for the plain vanilla, 
common derivatives to remain in the banks and push out the dangerous 
ones. The Democratic staff helps draft this amendment, and I am 
personally asked to offer this amendment to Nan Hayworth's bill. She 
accepts it. A voice vote is passed, and the bill is passed in the last 
Congress. The minority views supported it. We all supported it. This 
year, exactly the same bill comes before us, and we have ginned up the 
press, and we have ginned up the bloggers. This has become a gift to 
Wall Street.
  What is different? What is different from what passed happily and in 
a bipartisan fashion in the last Congress relative to this Congress--
the London Whale? JPMorgan claims that they were hedging. Hedging is 
permitted whether we pass this or not. The London Whale has nothing to 
do with this.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. DAVID SCOTT of Georgia. I yield the gentleman an additional 30 
seconds.
  Mr. HIMES. Mr. Speaker, what has changed is that we no longer do the 
hard work of finding finely balanced regulation like we do in water or 
in air. In financial services--in Dodd-Frank today--we have a morality 
play: either you repeal Dodd-Frank in its entirety because it is awful 
or you may not touch a word in the law.
  Folks, we are about finding that balance. In as much as we go in 
front of each other and say that this is a giveaway to Wall Street, 
that doesn't help explain whether we should allow commodity swaps or 
not. What that does is impugn our motives as individuals, and it does 
not inform the debate. This is well-balanced regulation that passed 
overwhelming bipartisanly. Let's get away from this morality play and 
do our jobs by finding finely balanced regulation.
  Mr. CONAWAY. Mr. Speaker, I now yield 2 minutes to the gentleman from 
Illinois (Mr. Rodney Davis), a member of the committee.
  Mr. RODNEY DAVIS of Illinois. Thank you to my colleagues for standing 
here on this floor today to talk about this very important piece of 
legislation.
  Mr. Speaker, I rise in support of H.R. 992. It has been introduced by 
my friends Richard Hudson from North Carolina and Randy Hultgren from 
the great State of Illinois.
  I cannot respond to my colleagues who ask about what happened here in 
the last term, because I wasn't here; but I can tell you from my seat 
here in the U.S. House that this bill is a good bill and needs to be 
passed. It seeks to fix yet another unintended consequence of Dodd-
Frank while still protecting against risky derivatives activities. This 
bill amends section 716, also known as the Dodd-Frank push-out 
provision.
  If implemented, section 716 would actually force banks to push out 
certain derivatives like ag-based swaps and equity swaps, which are 
very important to my agricultural-based district, and it would 
effectively drive up transaction costs. According to Ben Bernanke, this 
would actually make the U.S. financial system riskier.
  This bipartisan legislation passed the Ag Committee 31-14 and the 
Financial Services Committee 53-6. Let me repeat that. This bipartisan 
legislation passed 31-14 out of the House Ag Committee, and it passed 
53-6 out of Financial Services. This is commonsense legislation that 
will help all Americans.
  Mr. DAVID SCOTT of Georgia. Mr. Speaker, I now yield 2 minutes to the 
gentleman from Illinois, Representative Brad Schneider. He is a member 
of the Small Business Committee, and he certainly understands the value 
of this legislation to Main Street businesses.
  Mr. SCHNEIDER. Thank you for yielding.
  Mr. Speaker, H.R. 992 resolves a widely recognized, unintended 
consequence in section 716 of Dodd-Frank. I join in asking my 
colleagues to support this bill in an effort to strengthen Dodd-Frank 
and to actually improve transparency and oversight in our financial 
system.
  The overall goal of Dodd-Frank is to provide a sound, robust 
financial system following the upheaval of our financial markets in 
2008. I support Dodd-Frank, and I am fully committed to realizing its 
goals, but no piece of legislation is perfect. This body has recognized 
that and has passed measures to correct adverse, unintended 
consequences that were identified after Dodd-Frank was signed into law, 
and that is what we are doing again here today.
  This bill does not undermine the intent or overall implementation of 
Dodd-Frank. However, section 716, as it is currently written, could 
impede those very efforts. By indiscriminantly pushing out routine swap 
trades from heavily regulated banks to separate, less regulated firms, 
section 716 actually inserts more risk into our system. It could also 
make the use of certain risk-mitigating derivatives so expensive that 
businesses will stop using them to hedge uncertainty, resulting in 
higher costs for consumers and more financial instability.
  Former FDIC Chairwoman Sheila Bair, former Federal Reserve Chairman 
Paul Volcker, and, most recently, Federal Reserve Chairman Ben Bernanke 
have all stated that this provision, as written, is problematic. If our 
foremost experts have concerns with it, why must we maintain this 
unduly risky provision?
  This bill provides the soundness Dodd-Frank intended for our banking 
system while still prudently limiting the risks and costs. It also 
ensures manufacturers and our farmers still have the ability to hedge 
against price fluctuations--a practice that is integral to their 
operations and also benefits consumers.

[[Page 16516]]

  I thank the gentlemen for their work on this issue, and I urge my 
colleagues to support the passage of this legislation.
  Mr. CONAWAY. Mr. Speaker, may I inquire as to how much time is left 
on both sides.
  The SPEAKER pro tempore. The gentleman from Texas has 4\1/2\ minutes 
remaining, and the gentleman from Georgia has 4\3/4\ minutes remaining.
  Mr. CONAWAY. I now yield 2\1/2\ minutes to the gentleman from 
Arkansas (Mr. Crawford).
  Mr. CRAWFORD. I thank the chairman for yielding.
  Mr. Speaker, contrary to the intent of section 716 to reduce risk in 
the financial system, it does exactly the opposite. It creates more 
risk, and it places an undue burden on financial institutions for 
conducting legitimate hedging activities. This legislation would take 
an important step to ensure that Dodd-Frank is living up to its goal to 
reduce systemic risk, a goal on which both parties agree.
  Even former Financial Services Committee Chairman Barney Frank--the 
namesake of the bill in question--endorsed this bill last Congress, 
saying that it will not in any way, shape, or form reduce sensible 
regulation in derivatives. I rarely agreed with Congressman Frank, but 
I certainly share the goal of regulating the financial system in a 
sensible way, and I think that is the key.
  H.R. 992 would prevent financial institutions from forcing their 
derivatives business outside the banking structure to an entity that is 
far less regulated than the bank. So, while some may believe that 
section 716 provides more regulation, they are mistaken. Again, it is 
the other way around. All we are asking is to allow financial 
institutions to mitigate their risks so we can have a stronger banking 
system.
  A stronger financial system makes America more competitive 
economically; it creates jobs; and it provides stability for the 
consumer. I urge my colleagues to support this commonsense legislation.
  Mr. DAVID SCOTT of Georgia. I am ready to close, and I ask my 
colleague, Mr. Conaway, if he has any more speakers.
  Mr. CONAWAY. I have no further requests for time. I will be the final 
speaker.
  Mr. DAVID SCOTT of Georgia. Mr. Speaker, in closing, we have before 
us perhaps the most single important bill facing the viability, the 
financial security, and the stability of the financial system within 
the United States and throughout the world. We are dealing here with a 
$712 trillion piece of the world economy.
  Now, my friends who are in opposition to this certainly have some 
legitimate points. There is no question about that. We had a meltdown. 
Banks and members on Wall Street did wrongdoing, but this isn't the 
bill with which to punish them for doing that wrongdoing. We punish 
them for wrongdoing by working with the regulators and by putting, in 
fact, in motion not just civil penalties and not just financial 
penalties but criminal action, but we do that in another place, at 
another time. We have already approached that with the CFTC--to use 
criminal actions if any of these kinds of shenanigans happen again.
  We are here to make sure that our banking system and that our 
economy, which have to work on the world stage, have not a 
disadvantage. If you push out these commodity swaps or the security 
swaps, we are doing a great disservice not just to the banks but to our 
end users.
  Take commodities. When you look at them, Mr. Speaker, commodities are 
things like aluminum. They are agribusiness products. In 40 out of our 
50 States, the largest part of their economies is agribusiness. Let us 
take something like Coca-Cola. The Coca-Cola Company has to deal with 
aluminum for cans--or Pepsi Cola or any of those in our beverage 
industry. They have to mitigate their risks. If you push them out of 
where they have to do their business in the same banks with interest 
rate swaps--by the way, the interest rate swaps are the critical pivot 
swap to mitigate that risk.

                              {time}  1345

  You are going to push commodities out. You are going to push the 
farmers out. You are going to push all the manufacturers, the 
automobile industry. All of these people that use commodities will not 
be able to do business in that same bank where the interest rates are, 
where the currency fluctuation rates are.
  When you have that, you are putting us at a great disadvantage. This 
is why Chairman Bernanke said that this is a problem. This adds to the 
systemic risk when you push out these individual commodities into 
another area. It creates uncertainty.
  The other thing that it does: it puts our banking system at a huge 
disadvantage competitively because these foreign banks, they are not 
pushing their swaps out, and that means that the United States banking 
system could see a migration of swap activities out in the world. We 
are the leader of the world. We have got to act like that.
  That is what H.R. 992 will do. It will be that force that will help 
our banking system be the true leader in this world and not at a 
disadvantage.
  With great respect to those in opposition to this, it is written into 
law in section 716 that no taxpayer money can be used for bailouts.
  You talk about the FDIC. You cannot use that because that is the 
bank's money that they put up to ensure deposits. None of that goes 
into swaps. Certainly we can't use proprietary trading. The Volcker 
Rule settles that where they cannot make any kind of money or make 
profit on the deposits of ordinary citizens. Nowhere is there any 
taxpayer liability.
  This is a good bill. I urge everybody in this House of 
Representatives to realize our economic security is at stake and let's 
pass H.R. 992.
  I yield back the balance of my time.
  Mr. CONAWAY. Mr. Speaker, I yield myself such time as I may consume.
  I want to thank my good friend, David Scott, who is ranking member on 
the committee that he and I lead, for the good work on this bill, 
supporting it today, as well as the other work that we have done with 
respect to our committee. I also want to thank Richard Hudson and Sean 
Maloney for their work on bringing this together.
  A couple of points, and then I will close.
  One, the ``London Whale'' has been mentioned more than one time as a 
reason why we should not go forward with H.R. 992. That shows a 
fundamental misunderstanding of the trades associated with the ``London 
Whale.'' Those trades are on cleared exchanges and occur within the 
bank and would have been unaffected by section 716 had it, in fact, 
been implemented.
  One of the telling points is the prudential regulators on this 
particular section of the law have put off the actual implementation of 
this law until at least July of 2015. So if time is of the essence, if 
the disaster is around the corner, then I think the prudential 
regulators would have recognized that and would have moved a little 
more hastily than to put it off for 2 years.
  There is no bogeyman here, Mr. Speaker. This is good sense, 
bipartisan--we hope it will be bicameral--legislation that corrects a 
really unintended consequence--poorly drafting a bill in 2010, when 
Dodd-Frank was passed. It didn't intend to have these kind of 
consequences, and this simply addresses that.
  With that, Mr. Speaker, I urge my colleagues to vote ``yes'' on the 
bill. Let's pass this on and get it done over in the Senate.
  I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, another day, another attempt to weaken 
the Dodd-Frank Act. Just 5 years ago, the financial industry required a 
$700 billion taxpayer bailout and nearly destroyed our economy. We 
learned in the aftermath that risky derivative products, like swaps, 
were a major factor contributing to the crisis. As a result, Congress 
passed common sense reforms to prevent American taxpayers from once 
again being on the hook for trading losses by the country's largest 
banks. One of these new reforms was embodied in section 716, known as 
the ``swaps push out rule.'' Banks can no longer

[[Page 16517]]

use federally-insured deposits to recklessly gamble in the most exotic 
types of derivatives.
  Unfortunately, H.R. 992 would roll back these reforms and simply 
restore the status quo for Wall Street. This is ill advised and wrong 
for American taxpayers. If we need proof that swaps push out is 
necessary, look no further than last year's ``London Whale'' incident 
which cost JP Morgan $6 billion and could have been much worse.
  I ask my colleagues to oppose H.R. 992.
  Mr. DINGELL. Mr. Speaker, I rise in opposition to H.R. 992, the Swaps 
Regulatory Improvement Act.
  Part of the problem that led to the 2008 financial meltdown was that 
banks were taking huge risks by exposing themselves to risky swaps and 
derivatives. We passed the Dodd-Frank Act in part to address this 
problem by forcing depository institutions to spin off their swaps and 
derivatives activities to separately capitalized affiliates. H.R. 992, 
if passed, would nullify that part of Dodd-Frank and again allow banks 
to engage in the type of reckless behavior that caused the gravest 
economic calamity since the Great Depression.
  Voting in favor of H.R. 992 is tantamount to unlearning the lessons 
of the recent past. I find it absolutely appalling that five years on, 
we're considering legislation to permit the very type of bad behavior 
that necessitated the Dodd-Frank Act in the first place. I urge my 
colleagues to vote down H.R. 992, if only out of good common sense.
  Mr. VAN HOLLEN. Mr. Speaker, while I recognize the many legitimate 
uses of derivatives in today's financial marketplace, I also believe it 
is critically important that derivatives be properly regulated so that 
end-users and consumers can reap their benefits without putting the 
larger economy at risk. For that reason, I think we need to tread 
carefully before making material modifications to the regulatory regime 
for derivatives established in the Dodd-Frank Wall Street Reform Act--
and this note of caution is equally applicable to what might be 
described as piecemeal changes to Title VII of Dodd-Frank, given the 
inherently complex and interrelated nature of these sophisticated 
financial instruments.
  In that regard, the Swaps Regulatory Improvement Act would 
substantially revise Section 716 of the Dodd-Frank Act to permit a 
broader array of derivatives transactions--including those involving 
commodity swaps, equity swaps and certain credit default swaps--to 
occur inside federally backed financial institutions, rather than in 
separately capitalized subsidiaries as required under current law. 
Impacted institutions argue that this existing ``push out'' requirement 
for these categories of derivatives places them at a disadvantage 
relative to their foreign competition by increasing the cost of those 
transactions and by effectively preventing the netting of positions 
between themselves and their customers. Additionally, proponents of 
H.R. 992 argue that Section 716 confers no meaningful additional 
protection to taxpayers in light of the stronger capital, margin and 
clearing requirements created by Dodd-Frank, and that it might even 
work at cross purposes with the Orderly Liquidation Authority created 
in Title II of the legislation.
  I am not opposed to making commonsense adjustments to improve the 
real world workability of the Dodd-Frank law. I want our financial 
institutions to be able to compete effectively for customers everywhere 
they operate. And I am not in favor of regulation that is either 
unnecessary or not accomplishing its intended objective in a cost-
effective way.
  It is possible that Section 716 will prove to be that kind of 
regulation, but right now it is too soon to tell. Of particular 
importance when evaluating the ultimate value of Section 716 is the 
final scope of the forthcoming Volcker rule. If the final Volcker rule 
provides a strict definition of what activities constitute bona fide 
``hedging'' and ``market making'', then proponents' arguments for this 
legislation will be strengthened. If, on the other hand, the final 
Volcker rule includes an overly broad definition of these activities, 
then the protections intended by Section 716 could become more 
important.
  Accordingly, I will be voting ``no'' on today's legislation, but 
remain open to revisiting this issue once the Volcker rule and other 
relevant rulemakings are finalized and in place.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 391, 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.


                           Motion to Recommit

  Ms. BROWNLEY of California. Mr. Speaker, I have a motion to recommit 
at the desk.
  The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
  Ms. BROWNLEY of California. I am opposed.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Ms. Brownley of California moves to recommit the bill, H.R. 
     992, to the Committee on Financial Services with instructions 
     to report the same to the House forthwith with the following 
     amendment:
       Page 4, after line 15, insert the following:

     SEC. 3. PREVENTING OIL AND BIOFUEL PRICE MANIPULATION.

       Nothing in this Act or the amendments made by this Act 
     shall limit the authority of the bank regulatory agencies and 
     other regulators to examine a covered depository 
     institution's compliance with laws prohibiting the 
     manipulation of commodity markets, particularly the excessive 
     speculation and manipulation of oil and biofuel prices, and 
     to limit the activities of covered depository institutions in 
     such markets.

  Ms. BROWNLEY of California (during the reading). Mr. Speaker, I ask 
unanimous consent to dispense with the reading.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from California?
  Mr. CONAWAY. I object.
  The SPEAKER pro tempore. Objection is heard.
  The Clerk will read.
  The Clerk continued to read.
  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
California is recognized for 5 minutes in support of her motion.
  Ms. BROWNLEY of California. Mr. Speaker, this is the final amendment 
to H.R. 992, which will not kill the bill or send it back to committee. 
If adopted, the bill will immediately proceed to final passage, as 
amended.
  My amendment is a simple, straightforward improvement that I believe 
both sides can agree is absolutely necessary and that I believe is also 
supported by the majority of the American people.
  If my amendment passes, it will ensure that the American people, 
consumers, families, and businesses are protected from reckless 
speculation that is driving up the price of gas at the pump.
  Specifically, my amendment ensures that nothing in this act would 
limit the ability of regulators to go after excessive speculation and 
manipulation of oil and biofuels. It simply clarifies that bank 
regulators have the authority to stop manipulation in the commodity 
markets.
  This amendment also protects the wallets and pocketbooks of all 
Americans by ensuring that banks will not be given a free pass to 
destabilize commodity markets and drive up energy prices for all 
Americans at the pump.
  Mr. Speaker, as you know, speculation in the energy sector is a very 
real, a very present, and a very serious problem. Volatility in oil 
markets since 2008, and more recently in biofuels, leads to dramatic 
price swings, causing pain for every American who depends on gasoline 
at the pump.
  In September, The New York Times reported that prices for biofuel 
credits had recently surged 20-fold in just 6 months.
  Because of these problems, many Members of Congress on both sides of 
the aisle have called for investigations in both oil and biofuel price 
manipulation.
  In fact, just last week, on October 22, 15 of our colleagues, 
Democrats and Republicans, asked the U.S. Commodity Futures Trading 
Commission to look into whether fraud and manipulation was playing a 
role in the biofuel credit price swings.
  The concerns of many Americans extend far beyond biofuels.
  Earlier this year, both the E.U. and U.S. authorities began looking 
at oil price manipulation, which not only affects the price at the pump 
but also artificially increases prices on everything from food to 
manufactured goods.
  According to the Energy Information Agency, 71 percent of the price 
of a gallon of gas and 63 percent of the price of diesel is directly 
related to the price of crude oil. Thus, there is no doubt that 
speculators who drive up the price of

[[Page 16518]]

crude oil are impacting the price at the pump.
  Every time there is a gas hike, it hurts working families struggling 
to make ends meet. It hurts commuters driving to work and to school, 
including most of my constituents in Ventura County. It hurts small, 
mid-size, and large businesses, driving up the price of doing business 
and impacting their ability to invest in new equipment and hire new 
workers. It hurts our military, including those at Naval Base Ventura 
County, costing more to move troops and supplies. It hurts seniors, 
many of whom live on fixed incomes and cannot afford an increase in 
retail grocery prices. It hurts the specialty crop growers in my 
district, including the strawberry, avocado, citrus, and lettuce 
growers, whose bottom line is so closely tied to the price of energy. 
It also hurts our overall national economy and threatens to slow job 
creation.
  That is why it is so important that regulators retain the authority 
to prevent bad actors from taking excessive, or even manipulative 
positions, using swaps.
  I believe that many Members of Congress on both sides of the aisle 
are honestly concerned about speculation in our energy markets. Let's 
do something today to stop it.
  I urge my colleagues to vote ``yes'' on the motion to recommit.
  I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore. The gentleman from Texas is recognized for 5 
minutes.
  Mr. HENSARLING. Mr. Speaker, I don't really understand the motion to 
recommit because regulators already have the power that is described 
here. Therefore, Mr. Speaker, I find the matter to be irrelevant and 
not a particularly good use of the House's time. For those reasons 
alone, it ought to be opposed.
  It is getting in the way of one of the strongest, most bipartisan 
pieces of legislation that has come to the House. It passed the 
Financial Services Committee by an overwhelming vote of 53-6. It will 
help grow the economy. It will put people back to work. It will reduce 
systemic risk.
  I want to thank all of the sponsors, especially the gentleman from 
Illinois, Mr. Hultgren, for his leadership on this very valuable piece 
of legislation.
  It is time to oppose the motion to recommit and it is time to pass 
the Swaps Regulatory Improvement Act.
  I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Ms. BROWNLEY of California. Mr. Speaker, on that I demand the yeas 
and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule 
XX, this 15-minute vote on the motion to recommit will be followed by 
5-minute votes on passage of the bill, if ordered, and passage of House 
Joint Resolution 99.
  The vote was taken by electronic device, and there were--yeas 190, 
nays 223, not voting 17, as follows:

                             [Roll No. 568]

                               YEAS--190

     Andrews
     Barber
     Barrow (GA)
     Bass
     Beatty
     Becerra
     Bera (CA)
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Bonamici
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Brownley (CA)
     Bustos
     Butterfield
     Capps
     Capuano
     Carney
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly
     Conyers
     Costa
     Courtney
     Crowley
     Cuellar
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     Delaney
     DeLauro
     DelBene
     Deutch
     Dingell
     Doggett
     Doyle
     Duckworth
     Edwards
     Ellison
     Engel
     Enyart
     Eshoo
     Esty
     Farr
     Fattah
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Garcia
     Grayson
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hanabusa
     Hastings (FL)
     Heck (WA)
     Higgins
     Himes
     Hinojosa
     Holt
     Honda
     Horsford
     Hoyer
     Huffman
     Jackson Lee
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Kelly (IL)
     Kennedy
     Kildee
     Kilmer
     Kind
     Kirkpatrick
     Kuster
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan, Ben Ray (NM)
     Lynch
     Maffei
     Maloney, Carolyn
     Maloney, Sean
     Matheson
     Matsui
     McCollum
     McDermott
     McGovern
     McIntyre
     McNerney
     Meeks
     Meng
     Michaud
     Miller, George
     Moore
     Moran
     Murphy (FL)
     Nadler
     Napolitano
     Neal
     Negrete McLeod
     Nolan
     O'Rourke
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Perlmutter
     Peters (CA)
     Peters (MI)
     Peterson
     Pingree (ME)
     Pocan
     Polis
     Price (NC)
     Quigley
     Rahall
     Rangel
     Richmond
     Roybal-Allard
     Ruiz
     Ruppersberger
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schneider
     Schrader
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Sewell (AL)
     Shea-Porter
     Sherman
     Sinema
     Sires
     Slaughter
     Smith (WA)
     Speier
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Titus
     Tonko
     Tsongas
     Van Hollen
     Vargas
     Veasey
     Vela
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters
     Watt
     Welch
     Wilson (FL)
     Yarmuth

                               NAYS--223

     Amash
     Amodei
     Bachmann
     Bachus
     Barletta
     Barr
     Barton
     Benishek
     Bentivolio
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Boustany
     Brady (TX)
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Broun (GA)
     Buchanan
     Bucshon
     Burgess
     Calvert
     Camp
     Cantor
     Capito
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coble
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Conaway
     Cook
     Cotton
     Cramer
     Crawford
     Crenshaw
     Culberson
     Daines
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gibson
     Gingrey (GA)
     Gohmert
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (MO)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guthrie
     Hall
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Heck (NV)
     Hensarling
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jenkins
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce
     Kelly (PA)
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kline
     Labrador
     LaMalfa
     Lamborn
     Lance
     Lankford
     Latham
     Latta
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Lummis
     Marchant
     Marino
     Massie
     McCarthy (CA)
     McCaul
     McClintock
     McHenry
     McKeon
     McKinley
     McMorris Rodgers
     Meadows
     Meehan
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mullin
     Mulvaney
     Murphy (PA)
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Palazzo
     Paulsen
     Pearce
     Perry
     Petri
     Pittenger
     Pitts
     Poe (TX)
     Pompeo
     Posey
     Price (GA)
     Radel
     Reed
     Reichert
     Renacci
     Ribble
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Royce
     Runyan
     Ryan (WI)
     Salmon
     Sanford
     Scalise
     Schock
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stewart
     Stivers
     Stockman
     Stutzman
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner
     Upton
     Valadao
     Wagner
     Walberg
     Walden
     Walorski
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westmoreland
     Whitfield
     Williams
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IN)

                             NOT VOTING--17

     Aderholt
     Campbell
     Cardenas
     Cicilline
     Cooper
     Davis, Rodney
     Goodlatte
     Hanna
     Herrera Beutler
     Israel
     Keating
     Lujan Grisham (NM)
     McCarthy (NY)
     Pelosi
     Rush
     Tierney
     Waxman

                              {time}  1419

  Messrs. RENACCI, BILIRAKIS, COFFMAN, and SMITH of Texas changed their 
vote from ``yea'' to ``nay.''
  Mrs. KIRKPATRICK, Mr. BEN RAY LUJAN of New Mexico, Ms. McCOLLUM, and 
Mrs. CAPPS changed their vote from ``nay'' to ``yea.''
  So the motion to recommit was rejected.

[[Page 16519]]

  The result of the vote was announced as above recorded.
  Stated for:
  Ms. MICHELLE LUJAN GRISHAM of New Mexico. Mr. Speaker, on rollcall 
No. 568 I was unavoidably detained.
  Had I been present, I would have voted ``yes.''
  Stated against:
  Mr. RODNEY DAVIS of Illinois. Mr. Speaker, on rollcall No. 568 I was 
unavoidably detained and would have voted ``no'' on Motion to Recommit.
  Had I been present, I would have voted ``no.''
  Mr. GOODLATTE. Mr. Speaker, on rollcall No. 568 I was unavoidably 
detained.
  Had I been present, I would have voted ``no.''
  The SPEAKER pro tempore (Mr. Holding). The question is on the passage 
of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Ms. WATERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 292, 
noes 122, not voting 16, as follows:

                             [Roll No. 569]

                               YEAS--292

     Amash
     Amodei
     Bachmann
     Bachus
     Barber
     Barletta
     Barr
     Barrow (GA)
     Barton
     Beatty
     Benishek
     Bentivolio
     Bera (CA)
     Bilirakis
     Bishop (GA)
     Bishop (UT)
     Black
     Blackburn
     Blumenauer
     Boustany
     Brady (TX)
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Broun (GA)
     Brown (FL)
     Buchanan
     Bucshon
     Burgess
     Butterfield
     Calvert
     Camp
     Cantor
     Capito
     Carney
     Carter
     Cassidy
     Chabot
     Chaffetz
     Clarke
     Clyburn
     Coble
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Conaway
     Connolly
     Cook
     Cotton
     Cramer
     Crawford
     Crenshaw
     Crowley
     Cuellar
     Culberson
     Daines
     Davis, Rodney
     Delaney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Duckworth
     Duffy
     Duncan (SC)
     Ellmers
     Engel
     Esty
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foster
     Foxx
     Franks (AZ)
     Frelinghuysen
     Fudge
     Gallego
     Garcia
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gibson
     Gingrey (GA)
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (MO)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guthrie
     Hall
     Hanabusa
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Heck (NV)
     Heck (WA)
     Hensarling
     Himes
     Hinojosa
     Holding
     Horsford
     Hoyer
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jeffries
     Jenkins
     Johnson (GA)
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce
     Kelly (IL)
     Kelly (PA)
     Kilmer
     Kind
     King (NY)
     Kingston
     Kinzinger (IL)
     Kirkpatrick
     Kline
     Kuster
     Labrador
     LaMalfa
     Lamborn
     Lance
     Lankford
     Larsen (WA)
     Larson (CT)
     Latham
     Latta
     Lipinski
     LoBiondo
     Long
     Lowey
     Lucas
     Luetkemeyer
     Lummis
     Maffei
     Maloney, Carolyn
     Maloney, Sean
     Marchant
     Marino
     Matheson
     McCarthy (CA)
     McCaul
     McClintock
     McHenry
     McIntyre
     McKeon
     McKinley
     McMorris Rodgers
     Meadows
     Meehan
     Meeks
     Meng
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moore
     Moran
     Mullin
     Mulvaney
     Murphy (FL)
     Murphy (PA)
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Owens
     Palazzo
     Paulsen
     Pearce
     Perlmutter
     Perry
     Peters (CA)
     Peters (MI)
     Petri
     Pittenger
     Pitts
     Poe (TX)
     Polis
     Pompeo
     Posey
     Price (GA)
     Quigley
     Radel
     Rahall
     Rangel
     Reed
     Reichert
     Renacci
     Ribble
     Rice (SC)
     Richmond
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Royce
     Runyan
     Ruppersberger
     Ryan (WI)
     Salmon
     Sanchez, Loretta
     Sanford
     Scalise
     Schneider
     Schock
     Schweikert
     Scott, Austin
     Scott, David
     Sensenbrenner
     Sessions
     Sewell (AL)
     Sherman
     Shimkus
     Shuster
     Simpson
     Sinema
     Sires
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stewart
     Stivers
     Stockman
     Stutzman
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner
     Upton
     Valadao
     Vargas
     Veasey
     Wagner
     Walberg
     Walden
     Walorski
     Wasserman Schultz
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westmoreland
     Whitfield
     Williams
     Wilson (FL)
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IN)

                               NOES--122

     Andrews
     Bass
     Becerra
     Bishop (NY)
     Bonamici
     Brady (PA)
     Braley (IA)
     Brownley (CA)
     Bustos
     Capps
     Capuano
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu
     Clay
     Cleaver
     Cohen
     Conyers
     Costa
     Courtney
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     DeLauro
     DelBene
     Deutch
     Dingell
     Doggett
     Doyle
     Duncan (TN)
     Edwards
     Ellison
     Enyart
     Eshoo
     Farr
     Fattah
     Frankel (FL)
     Gabbard
     Garamendi
     Grayson
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hastings (FL)
     Higgins
     Holt
     Honda
     Huffman
     Jackson Lee
     Johnson, E. B.
     Jones
     Kaptur
     Kennedy
     Kildee
     Langevin
     Lee (CA)
     Levin
     Lewis
     Loebsack
     Lofgren
     Lowenthal
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Lynch
     Massie
     Matsui
     McCollum
     McDermott
     McGovern
     McNerney
     Michaud
     Miller, George
     Nadler
     Napolitano
     Neal
     Negrete McLeod
     Nolan
     O'Rourke
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Peterson
     Pingree (ME)
     Pocan
     Price (NC)
     Roybal-Allard
     Ruiz
     Ryan (OH)
     Sarbanes
     Schakowsky
     Schiff
     Schrader
     Schwartz
     Scott (VA)
     Serrano
     Shea-Porter
     Slaughter
     Smith (WA)
     Speier
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Titus
     Tonko
     Tsongas
     Van Hollen
     Vela
     Velazquez
     Visclosky
     Walz
     Waters
     Waxman
     Welch
     Yarmuth

                             NOT VOTING--16

     Aderholt
     Campbell
     Cardenas
     Cicilline
     Cooper
     Hanna
     Herrera Beutler
     Israel
     Keating
     King (IA)
     McCarthy (NY)
     Pelosi
     Rush
     Sanchez, Linda T.
     Tierney
     Watt

                              {time}  1427

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated for:
  Mr. KING of Iowa. Mr. Speaker, on rollcall No. 569, I was unavoidably 
detained. Had I been present, I would have voted ``yea.''

                          ____________________