[Congressional Record (Bound Edition), Volume 161 (2015), Part 1]
[House]
[Pages 625-639]
[From the U.S. Government Publishing Office, www.gpo.gov]




     PROMOTING JOB CREATION AND REDUCING SMALL BUSINESS BURDENS ACT

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 27, I call 
up the bill (H.R. 37) to make technical corrections to the Dodd-Frank 
Wall Street Reform and Consumer Protection Act, to enhance the ability 
of small and emerging growth companies to access capital through public 
and private markets, to reduce regulatory burdens, and for other 
purposes, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 37

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Promoting Job Creation and 
     Reducing Small Business Burdens Act''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

     TITLE I--BUSINESS RISK MITIGATION AND PRICE STABILIZATION ACT

Sec. 101. Margin requirements.
Sec. 102. Implementation.

             TITLE II--TREATMENT OF AFFILIATE TRANSACTIONS

Sec. 201. Treatment of affiliate transactions.

   TITLE III--HOLDING COMPANY REGISTRATION THRESHOLD EQUALIZATION ACT

Sec. 301. Registration threshold for savings and loan holding 
              companies.

 TITLE IV--SMALL BUSINESS MERGERS, ACQUISITIONS, SALES, AND BROKERAGE 
                           SIMPLIFICATION ACT

Sec. 401. Registration exemption for merger and acquisition brokers.
Sec. 402. Effective date.

    TITLE V--SWAP DATA REPOSITORY AND CLEARINGHOUSE INDEMNIFICATION 
                              CORRECTIONS

Sec. 501. Repeal of indemnification requirements.

TITLE VI--IMPROVING ACCESS TO CAPITAL FOR EMERGING GROWTH COMPANIES ACT

Sec. 601. Filing requirement for public filing prior to public 
              offering.
Sec. 602. Grace period for change of status of emerging growth 
              companies.
Sec. 603. Simplified disclosure requirements for emerging growth 
              companies.

         TITLE VII--SMALL COMPANY DISCLOSURE SIMPLIFICATION ACT

Sec. 701. Exemption from XBRL requirements for emerging growth 
              companies and other smaller companies.
Sec. 702. Analysis by the SEC.
Sec. 703. Report to Congress.
Sec. 704. Definitions.

   TITLE VIII--RESTORING PROVEN FINANCING FOR AMERICAN EMPLOYERS ACT

Sec. 801. Rules of construction relating to collateralized loan 
              obligations.

                   TITLE IX--SBIC ADVISERS RELIEF ACT

Sec. 901. Advisers of SBICs and venture capital funds.
Sec. 902. Advisers of SBICs and private funds.
Sec. 903. Relationship to State law.

        TITLE X--DISCLOSURE MODERNIZATION AND SIMPLIFICATION ACT

Sec. 1001. Summary page for form 10-K.
Sec. 1002. Improvement of regulation S-K.
Sec. 1003. Study on modernization and simplification of regulation S-K.

              TITLE XI--ENCOURAGING EMPLOYEE OWNERSHIP ACT

Sec. 1101. Increased threshold for disclosures relating to compensatory 
              benefit plans.

     TITLE I--BUSINESS RISK MITIGATION AND PRICE STABILIZATION ACT

     SEC. 101. MARGIN REQUIREMENTS.

       (a) Commodity Exchange Act Amendment.--Section 4s(e) of the 
     Commodity Exchange Act (7 U.S.C. 6s(e)), as added by section 
     731 of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act, is amended by adding at the end the following 
     new paragraph:
       ``(4) Applicability with respect to counterparties.--The 
     requirements of paragraphs (2)(A)(ii) and (2)(B)(ii), 
     including the initial and variation margin requirements 
     imposed by rules adopted pursuant to paragraphs (2)(A)(ii) 
     and (2)(B)(ii), shall not apply to a swap in which a 
     counterparty qualifies for an exception under section 
     2(h)(7)(A), or an exemption issued under section 4(c)(1) from 
     the requirements of section 2(h)(1)(A) for cooperative 
     entities as defined in such exemption, or satisfies the 
     criteria in section 2(h)(7)(D).''.
       (b) Securities Exchange Act Amendment.--Section 15F(e) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78o-10(e)), as 
     added by section 764(a) of the Dodd-Frank Wall Street Reform 
     and Consumer Protection Act, is amended by adding at the end 
     the following new paragraph:
       ``(4) Applicability with respect to counterparties.--The 
     requirements of paragraphs (2)(A)(ii) and (2)(B)(ii) shall 
     not apply to a security-based swap in which a counterparty 
     qualifies for an exception under section 3C(g)(1) or 
     satisfies the criteria in section 3C(g)(4).''.

[[Page 626]]



     SEC. 102. IMPLEMENTATION.

       The amendments made by this title to the Commodity Exchange 
     Act shall be implemented--
       (1) without regard to--
       (A) chapter 35 of title 44, United States Code; and
       (B) the notice and comment provisions of section 553 of 
     title 5, United States Code;
       (2) through the promulgation of an interim final rule, 
     pursuant to which public comment will be sought before a 
     final rule is issued; and
       (3) such that paragraph (1) shall apply solely to changes 
     to rules and regulations, or proposed rules and regulations, 
     that are limited to and directly a consequence of such 
     amendments.

             TITLE II--TREATMENT OF AFFILIATE TRANSACTIONS

     SEC. 201. TREATMENT OF AFFILIATE TRANSACTIONS.

       (a) In General.--
       (1) Commodity exchange act amendment.--Section 
     2(h)(7)(D)(i) of the Commodity Exchange Act (7 U.S.C. 
     2(h)(7)(D)(i)) is amended to read as follows:
       ``(i) In general.--An affiliate of a person that qualifies 
     for an exception under subparagraph (A) (including affiliate 
     entities predominantly engaged in providing financing for the 
     purchase of the merchandise or manufactured goods of the 
     person) may qualify for the exception only if the affiliate 
     enters into the swap to hedge or mitigate the commercial risk 
     of the person or other affiliate of the person that is not a 
     financial entity, provided that if the hedge or mitigation of 
     such commercial risk is addressed by entering into a swap 
     with a swap dealer or major swap participant, an appropriate 
     credit support measure or other mechanism must be 
     utilized.''.
       (2) Securities exchange act of 1934 amendment.--Section 
     3C(g)(4)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c-3(g)(4)(A)) is amended to read as follows:
       ``(A) In general.--An affiliate of a person that qualifies 
     for an exception under paragraph (1) (including affiliate 
     entities predominantly engaged in providing financing for the 
     purchase of the merchandise or manufactured goods of the 
     person) may qualify for the exception only if the affiliate 
     enters into the security-based swap to hedge or mitigate the 
     commercial risk of the person or other affiliate of the 
     person that is not a financial entity, provided that if the 
     hedge or mitigation such commercial risk is addressed by 
     entering into a security-based swap with a security-based 
     swap dealer or major security-based swap participant, an 
     appropriate credit support measure or other mechanism must be 
     utilized.''.
       (b) Applicability of Credit Support Measure Requirement.--
     The requirements in section 2(h)(7)(D)(i) of the Commodity 
     Exchange Act and section 3C(g)(4)(A) of the Securities 
     Exchange Act of 1934, as amended by subsection (a), requiring 
     that a credit support measure or other mechanism be utilized 
     if the transfer of commercial risk referred to in such 
     sections is addressed by entering into a swap with a swap 
     dealer or major swap participant or a security-based swap 
     with a security-based swap dealer or major security-based 
     swap participant, as appropriate, shall not apply with 
     respect to swaps or security-based swaps, as appropriate, 
     entered into before the date of the enactment of this Act.

   TITLE III--HOLDING COMPANY REGISTRATION THRESHOLD EQUALIZATION ACT

     SEC. 301. REGISTRATION THRESHOLD FOR SAVINGS AND LOAN HOLDING 
                   COMPANIES.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     is amended--
       (1) in section 12(g)--
       (A) in paragraph (1)(B), by inserting after ``is a bank'' 
     the following: ``, a savings and loan holding company (as 
     defined in section 10 of the Home Owners' Loan Act),''; and
       (B) in paragraph (4), by inserting after ``case of a bank'' 
     the following: ``, a savings and loan holding company (as 
     defined in section 10 of the Home Owners' Loan Act),''; and
       (2) in section 15(d), by striking ``case of bank'' and 
     inserting the following: ``case of a bank, a savings and loan 
     holding company (as defined in section 10 of the Home Owners' 
     Loan Act),''.

 TITLE IV--SMALL BUSINESS MERGERS, ACQUISITIONS, SALES, AND BROKERAGE 
                           SIMPLIFICATION ACT

     SEC. 401. REGISTRATION EXEMPTION FOR MERGER AND ACQUISITION 
                   BROKERS.

       Section 15(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o(b)) is amended by adding at the end the following:
       ``(13) Registration exemption for merger and acquisition 
     brokers.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     an M&A broker shall be exempt from registration under this 
     section.
       ``(B) Excluded activities.--An M&A broker is not exempt 
     from registration under this paragraph if such broker does 
     any of the following:
       ``(i) Directly or indirectly, in connection with the 
     transfer of ownership of an eligible privately held company, 
     receives, holds, transmits, or has custody of the funds or 
     securities to be exchanged by the parties to the transaction.
       ``(ii) Engages on behalf of an issuer in a public offering 
     of any class of securities that is registered, or is required 
     to be registered, with the Commission under section 12 or 
     with respect to which the issuer files, or is required to 
     file, periodic information, documents, and reports under 
     subsection (d).
       ``(C) Rule of construction.--Nothing in this paragraph 
     shall be construed to limit any other authority of the 
     Commission to exempt any person, or any class of persons, 
     from any provision of this title, or from any provision of 
     any rule or regulation thereunder.
       ``(D) Definitions.--In this paragraph:
       ``(i) Control.--The term `control' means the power, 
     directly or indirectly, to direct the management or policies 
     of a company, whether through ownership of securities, by 
     contract, or otherwise. There is a presumption of control for 
     any person who--

       ``(I) is a director, general partner, member or manager of 
     a limited liability company, or officer exercising executive 
     responsibility (or has similar status or functions);
       ``(II) has the right to vote 20 percent or more of a class 
     of voting securities or the power to sell or direct the sale 
     of 20 percent or more of a class of voting securities; or
       ``(III) in the case of a partnership or limited liability 
     company, has the right to receive upon dissolution, or has 
     contributed, 20 percent or more of the capital.

       ``(ii) Eligible privately held company.--The term `eligible 
     privately held company' means a company that meets both of 
     the following conditions:

       ``(I) The company does not have any class of securities 
     registered, or required to be registered, with the Commission 
     under section 12 or with respect to which the company files, 
     or is required to file, periodic information, documents, and 
     reports under subsection (d).
       ``(II) In the fiscal year ending immediately before the 
     fiscal year in which the services of the M&A broker are 
     initially engaged with respect to the securities transaction, 
     the company meets either or both of the following conditions 
     (determined in accordance with the historical financial 
     accounting records of the company):

       ``(aa) The earnings of the company before interest, taxes, 
     depreciation, and amortization are less than $25,000,000.
       ``(bb) The gross revenues of the company are less than 
     $250,000,000.
       ``(iii) M&A broker.--The term `M&A broker' means a broker, 
     and any person associated with a broker, engaged in the 
     business of effecting securities transactions solely in 
     connection with the transfer of ownership of an eligible 
     privately held company, regardless of whether the broker acts 
     on behalf of a seller or buyer, through the purchase, sale, 
     exchange, issuance, repurchase, or redemption of, or a 
     business combination involving, securities or assets of the 
     eligible privately held company, if the broker reasonably 
     believes that--

       ``(I) upon consummation of the transaction, any person 
     acquiring securities or assets of the eligible privately held 
     company, acting alone or in concert, will control and, 
     directly or indirectly, will be active in the management of 
     the eligible privately held company or the business conducted 
     with the assets of the eligible privately held company; and
       ``(II) if any person is offered securities in exchange for 
     securities or assets of the eligible privately held company, 
     such person will, prior to becoming legally bound to 
     consummate the transaction, receive or have reasonable access 
     to the most recent year-end balance sheet, income statement, 
     statement of changes in financial position, and statement of 
     owner's equity of the issuer of the securities offered in 
     exchange, and, if the financial statements of the issuer are 
     audited, the related report of the independent auditor, a 
     balance sheet dated not more than 120 days before the date of 
     the offer, and information pertaining to the management, 
     business, results of operations for the period covered by the 
     foregoing financial statements, and material loss 
     contingencies of the issuer.

       ``(E) Inflation adjustment.--
       ``(i) In general.--On the date that is 5 years after the 
     date of the enactment of this paragraph, and every 5 years 
     thereafter, each dollar amount in subparagraph (D)(ii)(II) 
     shall be adjusted by--

       ``(I) dividing the annual value of the Employment Cost 
     Index For Wages and Salaries, Private Industry Workers (or 
     any successor index), as published by the Bureau of Labor 
     Statistics, for the calendar year preceding the calendar year 
     in which the adjustment is being made by the annual value of 
     such index (or successor) for the calendar year ending 
     December 31, 2014; and
       ``(II) multiplying such dollar amount by the quotient 
     obtained under subclause (I).

       ``(ii) Rounding.--Each dollar amount determined under 
     clause (i) shall be rounded to the nearest multiple of 
     $100,000.''.

     SEC. 402. EFFECTIVE DATE.

       This Act and any amendment made by this Act shall take 
     effect on the date that is 90 days after the date of the 
     enactment of this Act.

[[Page 627]]



    TITLE V--SWAP DATA REPOSITORY AND CLEARINGHOUSE INDEMNIFICATION 
                              CORRECTIONS

     SEC. 501. REPEAL OF INDEMNIFICATION REQUIREMENTS.

       (a) Derivatives Clearing Organizations.--Section 5b(k)(5) 
     of the Commodity Exchange Act (7 U.S.C. 7a-1(k)(5)) is 
     amended to read as follows:
       ``(5) Confidentiality agreement.--Before the Commission may 
     share information with any entity described in paragraph (4), 
     the Commission shall receive a written agreement from each 
     entity stating that the entity shall abide by the 
     confidentiality requirements described in section 8 relating 
     to the information on swap transactions that is provided.''.
       (b) Swap Data Repositories.--Section 21(d) of the Commodity 
     Exchange Act (7 U.S.C. 24a(d)) is amended to read as follows:
       ``(d) Confidentiality Agreement.--Before the swap data 
     repository may share information with any entity described in 
     subsection (c)(7), the swap data repository shall receive a 
     written agreement from each entity stating that the entity 
     shall abide by the confidentiality requirements described in 
     section 8 relating to the information on swap transactions 
     that is provided.''.
       (c) Security-Based Swap Data Repositories.--Section 
     13(n)(5)(H) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78m(n)(5)(H)) is amended to read as follows:
       ``(H) Confidentiality agreement.--Before the security-based 
     swap data repository may share information with any entity 
     described in subparagraph (G), the security-based swap data 
     repository shall receive a written agreement from each entity 
     stating that the entity shall abide by the confidentiality 
     requirements described in section 24 relating to the 
     information on security-based swap transactions that is 
     provided.''.
       (d) Effective Date.--The amendments made by this Act shall 
     take effect as if enacted as part of the Dodd-Frank Wall 
     Street Reform and Consumer Protection Act (Public Law 111-
     203) on July 21, 2010.

TITLE VI--IMPROVING ACCESS TO CAPITAL FOR EMERGING GROWTH COMPANIES ACT

     SEC. 601. FILING REQUIREMENT FOR PUBLIC FILING PRIOR TO 
                   PUBLIC OFFERING.

       Section 6(e)(1) of the Securities Act of 1933 (15 U.S.C. 
     77f(e)(1)) is amended by striking ``21 days'' and inserting 
     ``15 days''.

     SEC. 602. GRACE PERIOD FOR CHANGE OF STATUS OF EMERGING 
                   GROWTH COMPANIES.

       Section 6(e)(1) of the Securities Act of 1933 (15 U.S.C. 
     77f(e)(1)) is further amended by adding at the end the 
     following: ``An issuer that was an emerging growth company at 
     the time it submitted a confidential registration statement 
     or, in lieu thereof, a publicly filed registration statement 
     for review under this subsection but ceases to be an emerging 
     growth company thereafter shall continue to be treated as an 
     emerging market growth company for the purposes of this 
     subsection through the earlier of the date on which the 
     issuer consummates its initial public offering pursuant to 
     such registrations statement or the end of the 1-year period 
     beginning on the date the company ceases to be an emerging 
     growth company.''.

     SEC. 603. SIMPLIFIED DISCLOSURE REQUIREMENTS FOR EMERGING 
                   GROWTH COMPANIES.

       Section 102 of the Jumpstart Our Business Startups Act 
     (Public Law 112-106) is amended by adding at the end the 
     following:
       ``(d) Simplified Disclosure Requirements.--With respect to 
     an emerging growth company (as such term is defined under 
     section 2 of the Securities Act of 1933):
       ``(1) Requirement to include notice on form s-1.--Not later 
     than 30 days after the date of enactment of this subsection, 
     the Securities and Exchange Commission shall revise its 
     general instructions on Form S-1 to indicate that a 
     registration statement filed (or submitted for confidential 
     review) by an issuer prior to an initial public offering may 
     omit financial information for historical periods otherwise 
     required by regulation S-X (17 C.F.R. 210.1-01 et seq.) as of 
     the time of filing (or confidential submission) of such 
     registration statement, provided that--
       ``(A) the omitted financial information relates to a 
     historical period that the issuer reasonably believes will 
     not be required to be included in the Form S-1 at the time of 
     the contemplated offering; and
       ``(B) prior to the issuer distributing a preliminary 
     prospectus to investors, such registration statement is 
     amended to include all financial information required by such 
     regulation S-X at the date of such amendment.
       ``(2) Reliance by issuers.--Effective 30 days after the 
     date of enactment of this subsection, an issuer filing a 
     registration statement (or submitting the statement for 
     confidential review) on Form S-1 may omit financial 
     information for historical periods otherwise required by 
     regulation S-X (17 C.F.R. 210.1-01 et seq.) as of the time of 
     filing (or confidential submission) of such registration 
     statement, provided that--
       ``(A) the omitted financial information relates to a 
     historical period that the issuer reasonably believes will 
     not be required to be included in the Form S-1 at the time of 
     the contemplated offering; and
       ``(B) prior to the issuer distributing a preliminary 
     prospectus to investors, such registration statement is 
     amended to include all financial information required by such 
     regulation S-X at the date of such amendment.''.

         TITLE VII--SMALL COMPANY DISCLOSURE SIMPLIFICATION ACT

     SEC. 701. EXEMPTION FROM XBRL REQUIREMENTS FOR EMERGING 
                   GROWTH COMPANIES AND OTHER SMALLER COMPANIES.

       (a) Exemption for Emerging Growth Companies.--Emerging 
     growth companies are exempted from the requirements to use 
     Extensible Business Reporting Language (XBRL) for financial 
     statements and other periodic reporting required to be filed 
     with the Commission under the securities laws. Such companies 
     may elect to use XBRL for such reporting.
       (b) Exemption for Other Smaller Companies.--Issuers with 
     total annual gross revenues of less than $250,000,000 are 
     exempt from the requirements to use XBRL for financial 
     statements and other periodic reporting required to be filed 
     with the Commission under the securities laws. Such issuers 
     may elect to use XBRL for such reporting. An exemption under 
     this subsection shall continue in effect until--
       (1) the date that is five years after the date of enactment 
     of this Act; or
       (2) the date that is two years after a determination by the 
     Commission, by order after conducting the analysis required 
     by section 702, that the benefits of such requirements to 
     such issuers outweigh the costs, but no earlier than three 
     years after enactment of this Act.
       (c) Modifications to Regulations.--Not later than 60 days 
     after the date of enactment of this Act, the Commission shall 
     revise its regulations under parts 229, 230, 232, 239, 240, 
     and 249 of title 17, Code of Federal Regulations, to reflect 
     the exemptions set forth in subsections (a) and (b).

     SEC. 702. ANALYSIS BY THE SEC.

       The Commission shall conduct an analysis of the costs and 
     benefits to issuers described in section 701(b) of the 
     requirements to use XBRL for financial statements and other 
     periodic reporting required to be filed with the Commission 
     under the securities laws. Such analysis shall include an 
     assessment of--
       (1) how such costs and benefits may differ from the costs 
     and benefits identified by the Commission in the order 
     relating to interactive data to improve financial reporting 
     (dated January 30, 2009; 74 Fed. Reg. 6776) because of the 
     size of such issuers;
       (2) the effects on efficiency, competition, capital 
     formation, and financing and on analyst coverage of such 
     issuers (including any such effects resulting from use of 
     XBRL by investors);
       (3) the costs to such issuers of--
       (A) submitting data to the Commission in XBRL;
       (B) posting data on the website of the issuer in XBRL;
       (C) software necessary to prepare, submit, or post data in 
     XBRL; and
       (D) any additional consulting services or filing agent 
     services;
       (4) the benefits to the Commission in terms of improved 
     ability to monitor securities markets, assess the potential 
     outcomes of regulatory alternatives, and enhance investor 
     participation in corporate governance and promote capital 
     formation; and
       (5) the effectiveness of standards in the United States for 
     interactive filing data relative to the standards of 
     international counterparts.

     SEC. 703. REPORT TO CONGRESS.

       Not later than one year after the date of enactment of this 
     Act, the Commission shall provide the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate a report 
     regarding--
       (1) the progress in implementing XBRL reporting within the 
     Commission;
       (2) the use of XBRL data by Commission officials;
       (3) the use of XBRL data by investors;
       (4) the results of the analysis required by section 702; 
     and
       (5) any additional information the Commission considers 
     relevant for increasing transparency, decreasing costs, and 
     increasing efficiency of regulatory filings with the 
     Commission.

     SEC. 704. DEFINITIONS.

       As used in this title, the terms ``Commission'', ``emerging 
     growth company'', ``issuer'', and ``securities laws'' have 
     the meanings given such terms in section 3 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c).

   TITLE VIII--RESTORING PROVEN FINANCING FOR AMERICAN EMPLOYERS ACT

     SEC. 801. RULES OF CONSTRUCTION RELATING TO COLLATERALIZED 
                   LOAN OBLIGATIONS.

       Section 13(c)(2) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1851(c)(2)) is amended--
       (1) by striking ``A banking entity or nonbank financial 
     company supervised by the Board'' and inserting the 
     following:
       ``(A) General conformance period.--A banking entity or 
     nonbank financial company supervised by the Board''; and
       (2) by adding at the end the following:

[[Page 628]]

       ``(B) Conformance period for certain collateralized loan 
     obligations.--
       ``(i) In general.--Notwithstanding subparagraph (A), a 
     banking entity or nonbank financial company supervised by the 
     Board shall bring its activities related to or investments in 
     a debt security of a collateralized loan obligation issued 
     before January 31, 2014, into compliance with the 
     requirements of subsection (a)(1)(B) and any applicable rules 
     relating to subsection (a)(1)(B) not later than July 21, 
     2019.
       ``(ii) Collateralized loan obligation.--For purposes of 
     this subparagraph, the term `collateralized loan obligation' 
     means any issuing entity of an asset-backed security, as 
     defined in section 3(a)(77) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78c(a)(77)), that is comprised primarily of 
     commercial loans.''.

                   TITLE IX--SBIC ADVISERS RELIEF ACT

     SEC. 901. ADVISERS OF SBICS AND VENTURE CAPITAL FUNDS.

       Section 203(l) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3(l)) is amended--
       (1) by striking ``No investment adviser'' and inserting the 
     following:
       ``(1) In general.--No investment adviser''; and
       (2) by adding at the end the following:
       ``(2) Advisers of sbics.--For purposes of this subsection, 
     a venture capital fund includes an entity described in 
     subparagraph (A), (B), or (C) of subsection (b)(7) (other 
     than an entity that has elected to be regulated or is 
     regulated as a business development company pursuant to 
     section 54 of the Investment Company Act of 1940).''.

     SEC. 902. ADVISERS OF SBICS AND PRIVATE FUNDS.

       Section 203(m) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3(m)) is amended by adding at the end the 
     following:
       ``(3) Advisers of sbics.--For purposes of this subsection, 
     the assets under management of a private fund that is an 
     entity described in subparagraph (A), (B), or (C) of 
     subsection (b)(7) (other than an entity that has elected to 
     be regulated or is regulated as a business development 
     company pursuant to section 54 of the Investment Company Act 
     of 1940) shall be excluded from the limit set forth in 
     paragraph (1).''.

     SEC. 903. RELATIONSHIP TO STATE LAW.

       Section 203A(b)(1) of the Investment Advisers Act of 1940 
     (15 U.S.C. 80b-3a(b)(1)) is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(C) that is not registered under section 203 because that 
     person is exempt from registration as provided in subsection 
     (b)(7) of such section, or is a supervised person of such 
     person.''.

        TITLE X--DISCLOSURE MODERNIZATION AND SIMPLIFICATION ACT

     SEC. 1001. SUMMARY PAGE FOR FORM 10-K.

       Not later than the end of the 180-day period beginning on 
     the date of the enactment of this Act, the Securities and 
     Exchange Commission shall issue regulations to permit issuers 
     to submit a summary page on form 10-K (17 C.F.R. 249.310), 
     but only if each item on such summary page includes a cross-
     reference (by electronic link or otherwise) to the material 
     contained in form 10-K to which such item relates.

     SEC. 1002. IMPROVEMENT OF REGULATION S-K.

       Not later than the end of the 180-day period beginning on 
     the date of the enactment of this Act, the Securities and 
     Exchange Commission shall take all such actions to revise 
     regulation S-K (17 C.F.R. 229.10 et seq.)--
       (1) to further scale or eliminate requirements of 
     regulation S-K, in order to reduce the burden on emerging 
     growth companies, accelerated filers, smaller reporting 
     companies, and other smaller issuers, while still providing 
     all material information to investors;
       (2) to eliminate provisions of regulation S-K, required for 
     all issuers, that are duplicative, overlapping, outdated, or 
     unnecessary; and
       (3) for which the Commission determines that no further 
     study under section 1003 is necessary to determine the 
     efficacy of such revisions to regulation S-K.

     SEC. 1003. STUDY ON MODERNIZATION AND SIMPLIFICATION OF 
                   REGULATION S-K.

       (a) Study.--The Securities and Exchange Commission shall 
     carry out a study of the requirements contained in regulation 
     S-K (17 C.F.R. 229.10 et seq.). Such study shall--
       (1) determine how best to modernize and simplify such 
     requirements in a manner that reduces the costs and burdens 
     on issuers while still providing all material information;
       (2) emphasize a company by company approach that allows 
     relevant and material information to be disseminated to 
     investors without boilerplate language or static requirements 
     while preserving completeness and comparability of 
     information across registrants; and
       (3) evaluate methods of information delivery and 
     presentation and explore methods for discouraging repetition 
     and the disclosure of immaterial information.
       (b) Consultation.--In conducting the study required under 
     subsection (a), the Commission shall consult with the 
     Investor Advisory Committee and the Advisory Committee on 
     Small and Emerging Companies.
       (c) Report.--Not later than the end of the 360-day period 
     beginning on the date of enactment of this Act, the 
     Commission shall issue a report to the Congress containing--
       (1) all findings and determinations made in carrying out 
     the study required under subsection (a);
       (2) specific and detailed recommendations on modernizing 
     and simplifying the requirements in regulation S-K in a 
     manner that reduces the costs and burdens on companies while 
     still providing all material information; and
       (3) specific and detailed recommendations on ways to 
     improve the readability and navigability of disclosure 
     documents and to discourage repetition and the disclosure of 
     immaterial information.
       (d) Rulemaking.--Not later than the end of the 360-day 
     period beginning on the date that the report is issued to the 
     Congress under subsection (c), the Commission shall issue a 
     proposed rule to implement the recommendations of the report 
     issued under subsection (c).
       (e) Rule of Construction.--Revisions made to regulation S-K 
     by the Commission under section 1002 shall not be construed 
     as satisfying the rulemaking requirements under this section.

              TITLE XI--ENCOURAGING EMPLOYEE OWNERSHIP ACT

     SEC. 1101. INCREASED THRESHOLD FOR DISCLOSURES RELATING TO 
                   COMPENSATORY BENEFIT PLANS.

       Not later than 60 days after the date of the enactment of 
     this Act, the Securities and Exchange Commission shall revise 
     section 230.701(e) of title 17, Code of Federal Regulations, 
     so as to increase from $5,000,000 to $10,000,000 the 
     aggregate sales price or amount of securities sold during any 
     consecutive 12-month period in excess of which the issuer is 
     required under such section to deliver an additional 
     disclosure to investors. The Commission shall index for 
     inflation such aggregate sales price or amount every 5 years 
     to reflect the change in the Consumer Price Index for All 
     Urban Consumers published by the Bureau of Labor Statistics, 
     rounding to the nearest $1,000,000.

  The SPEAKER pro tempore (Mr. Smith of Nebraska). Pursuant to House 
Resolution 27, the gentleman from Texas (Mr. Hensarling) and the 
gentlewoman from California (Ms. Maxine Waters) each will control 30 
minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days within which to revise and extend their remarks 
and include extraneous materials on H.R. 37, currently under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, for the sake of the American people, for the sake of all 
of those who are underemployed, who are unemployed still today in this 
economy, let us hope that the third time is the charm.
  The bill that is before us today, substantially authored by the 
gentleman from Pennsylvania (Mr. Fitzpatrick), the Promoting Job 
Creation and Reducing Small Business Burdens Act, was on the floor in a 
substantially identical version in the 113th Congress.
  This bill, to ease the burdens on small businesses, on job creators 
to help foster capital creation, so that people can be put back to 
work, so that people can have good careers, so that people can pay 
their mortgages and pay their health care premiums, substantially in 
the same form passed in the last Congress 320-102; regrettably then, 
the United States Senate, under Democrat control, took up no portion of 
the bill.
  It was last week that a slightly different version of the bill was 
brought to this House floor under what we know as our suspension 
calendar, which is reserved for bills that typically enjoy broad 
bipartisan support; regrettably, it proved to be about a dozen votes 
short because a number of my friends from the other side of the aisle 
apparently decided that they were for the bill before they were against 
the bill. They changed their minds in approximately 7 days.
  Now, Mr. Speaker, this is a very simple bill. There were 11 different 
modest provisions, all of which enjoyed broad

[[Page 629]]

bipartisan support, again which were modest, modest attempts to ensure 
that small businesses could still survive in an otherwise onerous 
Washington regulatory climate.
  Mr. Speaker, we had a bill that, even combined--and it is quite 
common for us to roll up bills for the sake of efficiency, bills that 
are quite similar in nature--was 30 pages long. Not 300, not 3,000--it 
wasn't the 2,000 pages of ObamaCare, not the 2,000 pages of Dodd-
Frank--it was merely 30 pages.
  Now, what is included in this bill? Well, included in this bill is 
H.R. 634, which passed this body 411-12. It includes H.R. 5471, which 
passed the House by voice vote, not a dissenting vote that I recall. It 
includes H.R. 801 that passed the House 417-4. It includes H.R. 2274, 
the bill that passed the House 422-0.
  I could go on and on, but of the bills that are rolled up to ensure 
greater capital formation and regulatory relief for our smaller 
business enterprises, all of these passed either the committee or the 
House with overwhelming bipartisan support, and now--now--the minority 
is coming to this floor and somehow crying foul. Again, many were for 
it before they were against it.
  I don't know how we can look our constituents in the eyes and know 
that, even today, they continue to suffer in this economy and not do 
something to help them.
  What this is really all about, Mr. Speaker, is there is a division. 
There is a division within the Democrat Party. According to press 
reports, some Democrats have reportedly told their fellow Democrats 
that if they dare to vote for a bill that makes a clarification or 
modification to Dodd-Frank, they aren't real Democrats.
  It is interesting that yesterday, President Obama signed into law a 
modification of Dodd-Frank. I know the President is not a Republican, 
but according to some Democrats, apparently by signing a modification 
to Dodd-Frank, he is not apparently a Democrat, either, so I am not 
really sure what he is.
  It is fascinating that a former chairman, Barney Frank, of the House 
Financial Services Committee, one of my predecessors, in previous 
testimony before our committee, indicated a number of changes to Dodd-
Frank that he thought would be proper, so according to some Democrats, 
apparently Barney Frank is no longer a Democrat, either.
  What this is really getting at, Mr. Speaker, is of the 11 bills that 
are rolled up into this 30-page document, some of them either clarify 
or modify provisions of Dodd-Frank, and for some Members of the 
Democratic Party, apparently, Dodd-Frank has now been elevated beyond 
ideology to religion, and there can be no changes in a 2,000-page bill 
that we know is fraught with unintended consequences.
  Yet there are some on the other side of the aisle that say, ``no 
changes, no changes,'' yet President Obama signed a change into law. 
Former Chairman Frank has indicated a number of changes he would 
consider.
  It is time to get beyond the religion. It is time to get beyond the 
ideology. It is time to get America back to work. It is time to start 
growing this economy from Main Street up, not Washington down, because 
that is not working, Mr. Speaker.
  It is time to do what everybody claims they want to do, and that is 
work on a bipartisan basis. All of these bills passed with overwhelming 
bipartisan majorities, and now, because of this almost religious zeal 
for the Dodd-Frank brand, again, some of my Democratic colleagues have 
decided that they were for it before they were against it.
  It is time to put America back to work. It is time to enact H.R. 37, 
Promoting Job Creation and Reducing Small Business Burdens Act. Let's 
make sure the third time is the charm.
  I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker, if at first you don't succeed, try, try again. Usually, 
we tell that saying to children to encourage them to achieve greater 
things, but it seems that when it comes to Congress, it is what Wall 
Street keeps telling House Republicans.
  Mr. Speaker, Republicans thought they could sneak this bill by last 
week through a fast-track process on the House floor, a process with 
limited debate and no opportunity for amendments. They thought they 
could ram through this gift to a handful of the biggest Wall Street 
banks on just the 2nd day of this new Congress right after we had 
reconvened.
  Well, the American people were watching, and the Democrats here in 
the House told them ``no.'' The Republican bill failed. Now, here they 
are; they are at it again. Now, H.R. 37 is back on the floor again, 
without the opportunity to amend it and with limited debate.

                              {time}  2015

  The only difference is that Republicans have reduced how many votes 
are needed to guarantee passage. That's right. Rather than fix the bill 
to win broad support, Republicans just changed the rule to make sure 
the tainted bill passes.
  And what does this bill do? Well, for one, it takes a part of Wall 
Street reform's Volcker rule and delays it for yet another 2 years. 
Remember that the Volcker rule is the part of Dodd-Frank that stops 
government-supported banks from gambling with bank depositors' money. 
And this extra 2-year delay comes on top of a 3-year delay that our 
regulators carefully crafted to ease the megabanks' transition.
  This particular part of the law that Republicans want to see delayed 
applies to what are known as collateralized loan obligations, or CLOs. 
CLOs are bundles of leveraged loans, loans often issued by private 
equity firms to facilitate corporate buyouts that can harm American 
jobs. The loans are sliced and diced into packages and sold off to 
investors, including banks that hold customers' deposits. The packages 
often also contain credit default swaps or other derivatives that can 
make the position even riskier.
  Somehow, Wall Street bankers--the supposedly smartest people in the 
room--can't seem to comply with a law passed in 2010 by--that's right--
2017. Seven long years isn't enough. The Republicans and the banks want 
nearly a decade.
  In addition to that, the Republican bill wouldn't just let the banks 
hold on to these CLOs. The bill would let the banks accumulate new CLOs 
also. That's right. The banks could actively trade in and out of these 
investments, unlike the rules carefully crafted by the Federal Reserve.
  We saw the Republican playbook at the end of last year with the so-
called swaps push-out rule. They hope they can jam these bills through 
Congress by attaching them to must-pass legislation. And most of all, 
they hope these issues are way too complicated or too technical for the 
American people to understand or care about. But the American people 
really do understand. They remember how our economy was nearly brought 
to its knees in 2008, and they recognize that we can't let Wall Street 
slowly chip away at reforms designed to prevent that kind of large-
scale financial crisis from happening again.
  And President Obama gets it, too. That is why the White House said he 
would veto this legislation if it got to his desk. And so one cannot 
help but wonder why are we here on the floor after 8 o'clock in the 
evening with an attempt to push through something that was jammed into 
a package of bills? Many of those bills had been heard either in 
committee or on the floor, but one portion of this bill had not. And so 
is this simply an attempt to ram down one segment that they fear real 
debate on, ram it down the throats of the Members of this Legislature 
and the citizens of this country, hiding it in this package, hoping 
that we won't get it?
  What is worse is that this legislation has been brought to the floor 
without regard for any regular order. The nine new members on the 
Financial Services Committee will not get a chance to hear testimony on 
it at all. And in just the 2nd week of their term, 52 new Members of 
the House are expected to

[[Page 630]]

vote on it, having complicated deregulation shoved down their throats. 
Democrats offered 13 amendments, one of them bipartisan, but none of 
these amendments will be considered or debated. Why? Because my 
colleagues on the other side are not interested in legislation but, 
rather, in political theater.
  We cannot let this casual disregard for the legislative process 
stand. We want to see reforms sensibly implemented. We want to work 
with regulators to get the rules right, and we want our largest banks 
to stop gambling and go back to facilitating growth in the real 
economy. But that is difficult to do when my Republican counterparts 
continue pushing legislation that masquerades as technical fixes but 
really makes substantive changes to the Dodd-Frank reform law. And then 
they package completely reckless legislation with other provisions that 
are either necessary or sensible.
  Democrats know better, President Obama knows better, and the American 
people know better. So I would urge my colleagues to vote ``no'' on 
this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield myself 20 seconds to say that 
this highly controversial bill that the ranking member alludes to 
passed on the House floor by voice vote, and this particular financing 
helps companies like Dunkin' Donuts, American Airlines, Burger King, 
and Goodyear Tire put people to work in America--hardly Wall Street. 
The head of the Independent Community Bankers has said it is necessary 
to protect community banks, and that is why we are here today.
  Mr. Speaker, I am now happy to yield 3 minutes to the gentleman from 
Georgia (Mr. Austin Scott) on behalf of the Agriculture Committee, 
which shares jurisdiction on this bill.
  Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I rise in support of H.R. 
37, the Promoting Job Creation and Reducing Small Business Burdens Act. 
As chairman of the Agriculture Subcommittee on Commodity Exchanges, 
Energy and Credit, I specifically want to highlight and voice my 
support for the past work of the Agriculture Committee on the three 
titles of this bill that we worked on.
  First of all, title I of this bill, the Business Risk Mitigation and 
Price Stabilization Act, will provide much-needed relief to American 
farmers, businesses, and job creators who rely on derivatives to manage 
the risk inherent in the daily operation of their farms and businesses. 
It will do so by reinforcing congressional intent that those market 
participants who have been exempted from clearing their trades are also 
exempted from corresponding margin requirements.
  These exemptions make sure that end users do not have to divert 
working capital to margin requirements, thus keeping those dollars at 
work in the economy. I am pleased that this provision was included in 
this package, as well as in the TRIA authorization that was recently 
approved by both the House and the Senate.
  Also under the Ag Committee's jurisdiction is title II of H.R. 37, 
pertaining to the treatment of interaffiliate transactions. This well-
reasoned provision was passed by the Congress multiple times in the 
113th Congress and also will prevent the tie-up of working capital. It 
will do so by ensuring that transactions between affiliates within a 
single corporate group are not regulated as swaps.
  If such transactions are subject to the same regulations as swaps, 
companies could be subject to double margin requirements. Since 
interaffiliate swaps pose no systemic risk to the economy or the 
marketplace, such redundant regulation would provide no additional risk 
reduction while substantially raising costs that would ultimately be 
passed on to the consumers. Title II of H.R. 37 will prevent that 
misguided regulatory scheme and allow American businesses to continue 
utilizing their established and efficient centralized trading models.
  Finally, the corrections made by title V of H.R. 37 will ensure that 
regulators and market participants have access to a global set of swap 
market data.
  Dodd-Frank currently requires indemnification agreements from foreign 
regulators requesting information from U.S. swap data repositories or 
derivatives clearing organizations. These agreements state that the 
foreign regulator will abide by certain confidentiality requirements 
and indemnify the U.S. Commission for any expenses arising from 
litigation relating to the request for information.
  Unfortunately, the concept of indemnification does not exist in many 
foreign jurisdictions. As such, some foreign regulators cannot agree to 
these indemnification requirements. This may hinder our ability to make 
a workable data-sharing arrangement with those regulators and 
ultimately fragment the marketplace by encouraging them to establish 
their own data repositories. H.R. 37 narrowly addresses this potential 
data-sharing problem by simply removing the indemnification 
requirements from current law. Existing provisions requiring certain 
confidentiality obligations will remain in place.
  Mr. Speaker, I would like to thank Mr. Fitzpatrick for working to 
include these provisions in today's bill. I strongly encourage my 
colleagues to support this legislative package aimed at reducing 
regulatory burdens and promoting economic growth.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield 5 minutes to 
the distinguished gentleman from Massachusetts (Mr. Lynch).
  Mr. LYNCH. Mr. Speaker, I want to thank the gentlewoman for yielding 
and for her great work on this issue.
  Mr. Speaker, I rise in strong opposition to H.R. 37, the so-called 
Promoting Job Creation and Reducing Small Business Burdens Act.
  I served on the Financial Services Committee during the 2008 
financial crisis, and I had an opportunity to witness the harmful 
impact that lack of regulation had on hardworking families around our 
Nation at a total cost of more than $22 trillion, according to the 
Government Accountability Office. My constituents--and many of yours--
lost their homes, their jobs, and their retirement savings during that 
period. Many pension funds today continue to suffer and are on the 
brink of collapse because of the reckless policies that were observed 
during that time by many of our major banks.
  While I voted against the bailout of the Wall Street banks who were 
rewarded with bonuses as a result of the bailout, I did have the honor 
of helping to assist in reforming our financial system through the 
enactment of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act. I regret the bill under consideration today rolls back many of 
those reforms that my colleagues and I fought so hard to adopt.
  I would note that after being defeated last week under a suspension 
process that offered no opportunity for amendments, this bill now has 
inexplicably been brought to the House floor under a closed rule that 
again does not include any of the 14 amendments that were filed with 
the Rules Committee. At a minimum, a bill that does so much harm to our 
financial system necessitates the normal committee process and 
additional time for debate.
  H.R. 37 contains 11 separate bills, a few of them which I support, 
others I strongly oppose. Portions of H.R. 37 have entirely new 
provisions that the members of the committee and of this Congress have 
not had the opportunity to thoroughly analyze.
  By the way, if you desire a good review of this legislation, in this 
past Sunday's New York Times there is an article written by Gretchen 
Morgenson that I think is extremely well-written and goes into great 
detail beyond the time that I am allocated here tonight.
  Title II of this bill would allow banks with commercial business to 
trade derivatives privately rather than on clearinghouses. This would 
increase risk and reduce transparency for these transactions. My 
amendment, which was not accepted, would have improved

[[Page 631]]

the provisions by prohibiting systematically important financial 
institutions, whose collapse would pose a serious risk to our financial 
system, from claiming the exemption under this title.
  Title VIII of this bill includes new language that has not been 
considered by the Financial Services Committee under regular order. If 
passed, title VIII would give banks an additional 2 years to comply 
with the provisions of the Volcker rule that mandates that banks divest 
collateralized loan obligations--packages of risky debt.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. MAXINE WATERS of California. I yield the gentleman an additional 
2 minutes.
  Mr. LYNCH. I thank the gentlewoman.
  This 2-year extension is in addition to the extension we already 
provided by the regulation last year. That further delay adds 
unnecessary risk to our financial system. And that is why I sponsored 
another amendment to remove this additional 2-year delay, so banks will 
be required to comply with this provision of the Volcker rule no later 
than July 21, 2017.
  Again, title XI of this bill modifies the SEC rule 701 by allowing 
private companies to compensate their employees up to $10 million in 
company securities without having to provide those employees with 
certain basic financial disclosures about the company stock.
  I strongly support employees receiving equity benefits from their 
firms in which they work, but those benefits should be tangible and 
real. We all remember Enron and WorldCom where employees were pressured 
to buy stock as part of their compensation, and at the end of the day, 
that stock was completely worthless.
  Why can't we enable employees to receive some equity in the company 
in which they work and ensure that those workers get accurate financial 
disclosure as part of that deal? This is why I offered three amendments 
to reform title XI in order to make certain workers get accurate 
information about the equities shares that they are receiving from the 
companies they work for. Unfortunately, the Rules Committee chose to 
deny all the amendments to this bill.
  In closing, this harmful bill uses the veneer of job creation to 
provide special treatment for well-connected corporations and financial 
institutions while doing very little for the workers that it professes 
to help.
  Mr. Speaker, I urge my colleagues to vote ``no'' on this bill, and, 
again, I thank the gentlewoman for yielding.

                   [From NYTimes.com, Jan. 10, 2015]

                    Kicking Dodd-Frank in the Teeth

                        (By Gretchen Morgenson)

       The 114th Congress has been at work for less than a week, 
     but a goal for many of its members is already evident: a 
     further rollback of regulations put in place to keep markets 
     and Main Street safe from reckless Wall Street practices.
       The attack began with a bill that narrowly failed in a 
     fast-track vote on Wednesday in the House of Representatives. 
     It is scheduled to come up again in the House this week.
       The bill, introduced by Representative Michael Fitzpatrick, 
     a Pennsylvania Republican who is a member of the House 
     Financial Services Committee, has three troublesome elements. 
     First, it would let large banks hold on to certain risky 
     securities until 2019, two years longer than currently 
     allowed. It would also prevent the Securities and Exchange 
     Commission from regulating private equity firms that conduct 
     some securities transactions. And, finally, the bill would 
     make derivatives trading less transparent, allowing unseen 
     risks to build up in the system.
       Of course, you wouldn't know any of this from the name of 
     the bill: the Promoting Job Creation and Reducing Small 
     Business Burdens Act. Or from the mild claim that the bill 
     was intended only ``to make technical corrections'' to the 
     Dodd-Frank legislation of 2010.
       Here's the game plan for lawmakers eager to relax the 
     nation's already accommodating financial regulations: First, 
     seize on complex and esoteric financial activities that few 
     understand. Then, make supposedly minor tweaks to their 
     governing regulations that actually wind up gutting them.
       ``We're going to see repeated attempts to go in with 
     seemingly technical changes that intimidate regulators and 
     keep them from putting teeth in regulations,'' predicted 
     Marcus Stanley, policy director at Americans for Financial 
     Reform, a nonpartisan, nonprofit coalition of more than 200 
     consumer and civic groups across the country. ``If we return 
     to the precrisis business as usual, where it's routine for 
     people to accommodate Wall Street on these technical changes, 
     they're just going to unravel the postcrisis regulation piece 
     by piece. Then, we'll be right back where we started.''
       The bill was put forward on the second day of the new 
     Congress, in an expedited process, which didn't allow for 
     debate among members. This process is supposed to be reserved 
     for noncontroversial bills and requires support from a two-
     thirds majority to prevail. It fell just short of achieving 
     that level, with a vote of 276 to 146, overwhelmingly backed 
     by Republicans and opposed by most Democrats.
       A central element of the bill chipped away at part of the 
     Volcker Rule, the regulation intended to reduce speculative 
     trading activities among federally insured banks. The bill 
     would give the institutions holding collateralized loan 
     obligations--bundles of debt--two additional years to sell 
     those stakes.
       The sales were required under the Volcker Rule, which bars 
     banks from ownership in or relationships with hedge funds or 
     private equity firms, many of which issue and oversee these 
     instruments. Like the mortgage pools that wreaked such havoc 
     with United States banks in the most recent crisis, C.L.O.s 
     can pose high risks for banks.
       The creation of such securities has been torrid recently; 
     $124.1 billion was issued last year, compared with $82.61 
     billion in 2013, according to S&P Capital IQ. Among the banks 
     with the largest C.L.O. exposures are JPMorgan Chase and 
     Wells Fargo; according to SNL Financial, a research firm, 
     JPMorgan Chase held $30 billion and Wells Fargo $22.5 billion 
     in the third quarter of 2014, the most recent figures 
     available. The next-largest stake--$4.7 billion--was held by 
     the State Street Corporation.
       Given the size of these positions, it's not surprising the 
     institutions want more time to jettison them. But the new 
     legislation represents Wall Street's second reprieve on these 
     instruments. After banks objected to the sale of their 
     holdings last spring, the Federal Reserve gave them two years 
     beyond the initial 2015 deadline to get rid of them.
       Now they want another two years.
       Although the top three banks had unrealized gains in their 
     C.L.O. holdings in the third quarter, SNL said some banks 
     were facing losses. And that was before the collapse in the 
     price of oil, which has undoubtedly pummeled some of these 
     securities.
       A second deregulatory aspect in the Fitzpatrick bill 
     relates to the lucrative private equity industry, which 
     remains loosely regulated. The bill would exempt some private 
     equity firms from registering as brokerage firms with the 
     S.E.C. Under securities law, such registration is required of 
     firms that receive fees for investment banking activities, 
     like providing merger advice or selling debt securities.
       Private equity firms are typically registered only as 
     investment advisers, so submitting to broker-dealer 
     regulation would result in more frequent examinations and 
     more rules.
       These firms don't like that. But their investors could 
     benefit from closer regulatory scrutiny of costly conflicts 
     of interest in these operations. For example, a private 
     equity firm providing merger advice to a company its 
     investors own in a fund portfolio--not an arm's-length 
     transaction--could easily charge more for those services than 
     an unaffiliated firm would.
       Finally, the bill's changes in derivatives would reduce 
     transparency and increase risks in this arena by allowing 
     Wall Street firms with commercial businesses like oil and gas 
     or other commodities operations--to trade derivatives 
     privately and not on clearinghouses.
       Trading on clearinghouses generates accurate price data 
     that help both banks and regulators value these instruments. 
     Because these clearinghouses perform risk management, 
     problematic positions are easier to spot.
       If this change goes through, it will be the second recent 
     victory on derivatives for big banks. Last month, Congress 
     reversed a part of the Dodd-Frank law barring derivatives 
     from being traded in federally insured units of banks. 
     Taxpayers may be on the hook for bailouts, therefore, if 
     losses occur in the banks' derivatives books.
       The Dodd-Frank law, as written back in 2010, was by no 
     means a comprehensive fix for a risky banking system. And it 
     is more vulnerable to attack, in part, because of its 
     complexity and design. Dodd-Frank delegated so much rule-
     making to regulators that it essentially invited the 
     institutions they oversee to fight them every inch of the 
     way.
       And when Congress backs the industry in these battles, it's 
     no contest.
       Still, it is remarkable to watch the same financial 
     institutions that almost wrecked our nation's economy work to 
     heighten risks in the system.
       ``The truth about Dodd-Frank is it's pretty moderate and 
     pretty compromised already,'' Mr. Stanley of Americans for 
     Financial Reform said. ``Any further compromise and it tends 
     to collapse into nothingness.''

[[Page 632]]

       Which is exactly what Wall Street seems to be hoping for.

                              {time}  2030

  Mr. HENSARLING. Mr. Speaker, I yield myself 10 seconds.
  I continue to be fascinated by my Democratic colleagues whose 
rhetoric is against Wall Street, yet they vote in Dodd-Frank to codify 
a taxpayer bailout fund for Wall Street into that legislation. They 
designate firms too big to fail so their rhetoric is aimed at Wall 
Street but they hurt Main Street, who we are trying to help now.
  I yield 5 minutes to the gentleman from Kentucky (Mr. Barr), who is 
the author of the title that helps so many of our small businesses 
grow.
  Mr. BARR. Mr. Speaker, I thank the chairman for his leadership on 
this
important package, and I thank the
gentleman from Pennsylvania (Mr. Fitzpatrick) for his leadership, and I 
rise in strong support of his legislation, H.R. 37, the Promoting Job 
Creation and Reducing Small Business Burdens Act.
  Indeed, this bill is about jobs and it is about economic growth. And 
it is about jobs on Main Street. Make no mistake about it: essentially 
the same legislative package passed the House last fall by a bipartisan 
vote of 320-102. If I may, I want to talk a little bit about title VIII 
of this legislation, which passed the House last April by voice vote, 
and it contains language from a bill I introduced in the last Congress, 
H.R. 4167, the Restoring Proven Financing for American Employers Act.
  I worked closely with my colleague across the aisle, Congresswoman 
Maloney of New York, to craft sound, commonsense, bipartisan language 
to clarify the Volcker rule while maintaining its original legislative 
intent regarding the treatment of collateralized loan obligations.
  Now let's just talk a little bit about the Volcker rule and what it 
does. As currently structured, this rule will substantially disrupt the 
market for CLOs, a vital source of capital for mid-sized and emerging 
growth American companies that cannot cost-effectively access the 
corporate bond market. There are two negative impacts of this rule.
  First of all, it will have a serious negative impact on banks, many 
small- and medium-sized community banks, and it is estimated that banks 
will have to divest or restructure up to $70 billion of CLO notes under 
this rule if unchanged.
  Second, it will compromise credit availability for American companies 
that are beneficiaries of this innovative source of credit.
  Today, CLOs hold approximately $350 billion of senior secured 
commercial and industrial loans to some of the most dynamic, job-
producing companies in America. One of these companies, Tempur Sealy 
International, the world's largest manufacturer of mattresses, 
foundations, pillows, and other bedding products, is headquartered in 
my district.
  So it seems to me that the medicine being prescribed by the Volcker 
rule, forcing banks to sell billions of dollars of CLO paper in a fire-
sale scenario, and the loss of credit availability for a wide range of 
Main Street businesses, growing companies, job-producing employers 
would be a far more damaging result to jobs and the economy than the 
perceived disease, banks ever suffering losses from holding AAA CLO 
paper, which is fundamentally different and distinguishable from the 
mortgage-backed securities that led to the run-up to the financial 
crisis.
  It is important to note what this bill does and what this title does, 
and what it does not do. It doesn't do away with the Volcker rule. If 
you listened to my colleagues on the other side of the aisle, you would 
think that we are totally doing away with the Volcker rule. That is not 
what this does. What it does is it grandfathers legacy CLOs and 
prevents a fire sale of these CLOs.
  So without the adoption of this grandfather provision, the Volcker 
rule would effectively operate to make illegal certain investments that 
were perfectly legal and safe when they were made. In other words, the 
Volcker rule as currently written applies retroactively to CLOs, 
attaching legal consequences to investment decisions made by private 
parties who did not anticipate these consequences at the time the 
decision was made. Such retroactivity will profoundly and negatively 
disrupt the plans and settled expectations of CLO investors, and this 
will create turmoil in the commercial credit market and force banks to 
sell billions of existing CLO debt. As a result, the cost of financing 
will increase and access to credit will dry up, and this will reduce 
liquidity in America's capital markets.
  Let me make a point here. Much has been said about Wall Street versus 
Main Street. This is about Main Street jobs. The U.S. Chamber of 
Commerce, the Independent Community Bankers Association, and the 
American Bankers Association all talk about how this will help. Our 
bill, our fix, will help community banks grow capital and support local 
economic development and job creation on Main Street.
  The Bipartisan Policy Center says that forcing a select group of 
banks to sell these assets over a short time is not the optimal 
solution. Such an action would create an environment of institutions 
forced to sell, and buyers who can purchase CLOs at extraordinarily 
cheap prices, and this would create unnecessary losses at banks and 
produce windfall profits for those who can demand to buy them at below 
market rates.
  The CLO provision represents a small and commonsense solution, not a 
rollback of Dodd-Frank by any means. It keeps the Volcker rule 
completely intact and simply provides phased-in compliance to banks of 
all sizes that made sound investment decisions, allowing for a finite 
universe of well-performing legacy CLOs to be sold or paid off.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield an additional 1 minute to the gentleman.
  Mr. BARR. Mr. Speaker, I thank the chairman.
  It will keep the Volcker rule completely intact, and simply provide 
phased-in compliance to banks of all sizes that made sound investment 
decisions, allowing the finite universe of well-performing legacy CLOs 
to be sold or paid off over an added 2 years rather than forcing these 
legacy CLOs into a fire sale.
  The proprietary trading ban is retained entirely for all new CLO 
issuances.
  So in conclusion, there has been a lot of talk about deregulation. As 
for the canard that deregulation was to blame for the financial crisis, 
that story line has been thoroughly debunked. The crisis was caused by 
the government's own housing policies, which fostered the creation of 
25 million subprime and other low-quality mortgages, almost 50 percent 
of all the mortgages in the United States that defaulted at 
unprecedented rates.
  In contrast, CLOs were not the root cause of the crisis. CLOs 
performed very well during the crisis. Regulators have many tools to 
ensure bank CLOs do not pose financial risks. CLO AAA or AA notes, in 
fact, have never defaulted. I urge my colleagues to support this 
commonsense Main Street jobs bill.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  There are so many inaccuracies in some of the testimony that I am 
hearing from the opposite side of the aisle that I don't know where to 
start to try to clear up some of the points that they are attempting to 
make.
  First of all, let me start with this business about how community 
banks are going to be hurt. This is simply an attempt to hide behind 
community banks and scare the Members of this body into believing that 
if they don't support this bill, that somehow their community banks are 
going to suffer.
  The FDIC said that 95 percent of CLOs owned by banks are owned by 
those with more than $50 billion in assets, with the preponderance 
owned by Citi, JPMorgan Chase, and Wells Fargo.
  Specifically, JPMorgan Chase has $33.5 billion worth of CLOs; Wells 
Fargo has $24.1 billion worth of CLOs; and Citi has $4.7 billion worth 
of CLOs.
  So what are we talking about when we use this kind of messaging to 
claim

[[Page 633]]

that somehow we are going to hurt these small banks? That is absolutely 
not true. And I want to tell you, the community banks have not been in 
the background putting out tremendous sums of money on this lobbying 
effort. According to The New York Times:

       The current efforts to undermine Dodd-Frank have been 
     textbook lobbying. In the first three quarters of last year, 
     the securities and investment industry spent nearly $74 
     million on lobbying on 704 registered lobbyists.

  So get this picture. We keep seeing attempts by any means necessary 
from the opposite side of the aisle to push controversial legislation 
into packaged bills, some of those bills having been supported either 
in committee or on the floor. It is not enough that they lost when they 
put this on the suspension calendar. They have come back with a rule 
that does not allow for any debate, and they are determined to win this 
by majority vote, even in the face of a veto. Who are they trying to 
protect?
  If it is true that 95 percent of the CLOs owned by banks are owned by 
those with more than $50 billion in assets, and I told you who has a 
preponderance, then that is who is being protected. It is the biggest 
banks in America--Citi, JPMorgan Chase, and Wells Fargo. That is who is 
being protected. This money I am talking about, $74 million on lobbying 
704 lobbyists, these are the big banks spending the money lobbying on 
this legislation.
  And so this business about protecting Main Street, about protecting 
the small businesses, simply attempts to misguide and mislead, knowing 
that most folks really don't understand the CLO market, that this 
legislation, along with many other pieces of legislation, are 
complicated. Dodd-Frank is an attempt to reform what had gone terribly 
wrong in this country. We have seen attempt after attempt, probably 
more than 100 attempts in the Financial Services Committee, to try and 
undermine Dodd-Frank, to get rid of Dodd-Frank, to break it up piece by 
piece, and again by any means necessary.
  And so if you can answer why all these attempts, why all of this 
money is being spent, why we're protecting just these three big banks 
in America, then you can see that this is not about Main Street, this 
is not about small businesses. This is now about relationships between 
too many Members of this House and of this Congress with the biggest 
banks in America, who are determined to destroy Dodd-Frank. And they 
have tried all of these tactics and they have tried somehow to make 
people believe that we don't care about this fire sale that we are 
going to cause the big banks.
  Well, let me just say this. No, I don't worry about causing a fire 
sale of the big banks. I am not here to protect the big banks. I am 
truly here to protect Main Street and small business entrepreneurs and 
business people in this country.
  Mr. Speaker, I would like to talk further about title VIII and how it 
does not benefit small businesses. CLOs comprised only of actual loans 
are exempt from the Volcker rule entirely. We are only talking about 
CLOs that contain other instruments like credit default swaps, interest 
rate swaps, commercial paper-backed securities, et cetera.
  The Volcker rule will have a minimum impact on the CLO market. 
Nothing in the rule says that other buyers of CLOs need to stop their 
purchases. Nonbanks like hedge funds or insurance companies can 
continue to purchase or trade CLOs. The restriction only affects banks, 
big banks, which have tremendous access to taxpayer subsidies through 
the FDIC and the Federal Reserve borrowing window.
  Various Wall Street research analysts have said that the market 
``shrugged off'' the Volcker rule and that the industry can do just 
fine moving forward. In fact, 2014 saw record issuances for new, 
Volcker-compliant CLOs.
  Banks will have 5 years, including 3 years worth of extensions, to 
comply with this provision. The Republicans now want to give them 7 
years. Our position is this: enough is enough. Eventually the Volcker 
rule has to become operational or else Dodd-Frank becomes meaningless.

                              {time}  2045

  These CLOs are typically leverage loans. It should buy private equity 
firms to facilitate corporate buyouts of large companies. This is more 
about facilitating private equity than helping Main Street businesses.
  For example, leverage buyouts are when a private equity firm pays for 
a controlling interest in a company by taking out a loan against that 
company, saddling the company with debt. The aim is to reduce costs, 
often by firing workers and slashing employee pay and benefits in order 
to quickly resell the leaner company for a profit. So this isn't about 
job creation; this is about job destruction.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, at this time, I am very happy to yield 4 
minutes to the gentleman from Pennsylvania (Mr. Fitzpatrick), who is 
the sponsor of this job-creating legislation.
  Mr. FITZPATRICK. Mr. Speaker, I thank the chairman.
  It is really hard to believe that a package of bills that comes to 
the floor which individually passed the House 422-0, another bill 
passes by voice vote, another bill passes 414-3, have become so 
controversial--become so controversial why? Because they are about to 
become law and they should become law. These are smart, technical 
reforms to an overly burdensome law, Dodd-Frank, that are bipartisan.
  All of these bills have Democrat and Republican cosponsors, all of 
them have gained Democrat and Republican support in the committee and 
on the floor of the House, and these bills should pass.
  I want to thank Chairman Hensarling for his longstanding leadership 
in reining in out-of-control Washington regulators that are hurting 
small business and Main Street lenders.
  Mr. Speaker, smart regulations allow the private sector to innovate 
and create jobs while protecting taxpayers and consumers; however, one-
size-fits-all regulations hurt the economy by treating small- and 
medium-sized companies as if they are large multinational corporations.
  No Main Street small business, manufacturer, farmer, or rancher 
caused the financial crisis; yet they are subject to thousands of new 
pages of regulations that were supposedly designed for big Wall Street 
firms. Mr. Speaker, that is not fair.
  That is why I have introduced this bill. It is a bipartisan package 
of commonsense jobs bills that provides regulatory relief to help grow 
the economy from Main Street up, not from Washington down.
  This bill is made up of individual measures that previously passed 
either the House or the Financial Services Committee with overwhelming 
bipartisan support during the 113th Congress. It is a recognition of 
the fact that regulations, no matter how well-intentioned, can be made 
more targeted and can be made more effective.
  More than 400 new regulations imposed on our Nation's small- and 
medium-sized companies impedes their ability to access the capital 
needed to grow, innovate, and create jobs. These regulations may have 
been targeting Wall Street, but their burden falls heavily on Main 
Street.
  That is what this bill seeks to fix. These legislative prescriptions 
represent serious bipartisan commitments to make our regulatory system 
more responsive to the needs of the workers and the local businesses 
that we all represent.
  The American people want Republicans and Democrats to work together 
to strengthen our economy and help the private sector create jobs like 
only it can. Good-paying jobs and greater opportunities are the 
foundations of real economic growth, growth that is strong and growth 
that is sustainable, growth that lifts people up from poverty.
  That kind of growth can't come from Washington, and it won't happen 
unless small business owners, entrepreneurs, and workers have the 
freedom and the opportunity to use their God-given talents and 
creativity to earn their success.

[[Page 634]]

  Mr. Speaker, there is a lot of talk in this town about bipartisanship 
and finding middle ground here in our Nation's Capitol; yet, at this 
very moment, groups on both the far left and the far right stand in the 
way of even incremental progress by pulling Members of both parties to 
the extremes.
  I know that if things are going to get done in this body, it will be 
from strong bipartisan support from principled, yet pragmatic, 
lawmakers willing to put politics to the side and work together for the 
common good. As someone who seeks out that course, I would like to 
recognize those Members willing to look past the demagoguery and 
misinformation in order to support this bill.
  I have high hopes that this Congress can restore the faith of our 
constituents in the legislative process and the role of Congress in 
strengthening our Main Street economy, and we can start with this bill.
  I urge my colleagues to join me in voting ``yes'' on the bill and, in 
doing so, putting aside bill posturing in favor of bipartisan reforms 
to get people back to work.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Despite what my colleagues on the opposite side of the aisle have 
said, this package of bills does not simply constitute a technical set 
of changes to Dodd-Frank or to our securities laws. In fact, these 
changes are substantive and the package is widely opposed.
  My friends on the opposite side of the aisle keep talking about they 
are protecting Main Street, but let me recite for you what Main Street 
is saying about this bill. Let me read for you some highlights of the 
opposition letters we have received in addition to opposition from 
President Obama, Secretary Lew, and former Federal Reserve Chair Paul 
Volcker himself.
  Main Street is represented by, number one, Americans for Financial 
Reform. Americans for Financial Reform says that H.R. 37 ``includes 
numerous changes that could have significant negative impacts on 
regulators' ability to police the financial markets, so that they 
function safely and transparently.''
  They go on to oppose title VII of this bill, citing a Wall Street 
Journal article outlining how regulators are increasingly warning banks 
about the looser underwriting standard for leverage loans.
  Further, representing Main Street, the AFL-CIO says of H.R. 37, that 
they oppose the bill because it ``would loosen key Dodd-Frank 
protections wisely put in place after the 2008 financial collapse.''
  The Leadership Conference on Civil and Human Rights notes about H.R. 
37: ``One lesson of the financial crisis is that deregulation in areas 
that appear technical and arcane can have significant impacts on the 
financial system and, thus, on the well-being of ordinary families, 
particularly in the communities we represent.''
  Finally, Public Citizen noted about H.R. 37 that we should not 
provide more CLO relief because ``the largest banks dominate 
ownership,'' as I demonstrated a moment ago, ``of CLOs.''
  Mr. Speaker, I think we should heed the warning of Main Street, the 
warning of these groups who truly represent Main Street.
  With that, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I am very happy now to yield 1 minute to 
the gentleman from North Carolina (Mr. Pittenger), a member of the 
committee.
  Mr. PITTENGER. Mr. Speaker, I thank the leadership and Mr. 
Fitzpatrick.
  Today, I rise in support of H.R. 37, the Promoting Job Creation and 
Reducing Small Business Burdens Act. We are here, once again, debating 
simple measures aimed at growing the economy and relieving some of the 
unnecessary burdens imposed by the Dodd-Frank legislation.
  Even Tim Geithner, the former Secretary of the Treasury, stated that 
the Volcker rule and implications of it being regulated were not 
material in the demise and harm due to major institutions, rather as a 
result of extended credit.
  This legislation included in this bill is bipartisan, which is why so 
many of my colleagues already voted in support of it in the 113th 
Congress and again last week.
  This is a jobs bill. The relief we can give to small business today 
directly impacts their ability to create jobs. For instance, although 
small companies are at the forefront of technological innovation and 
job creation, they often face significant obstacles in obtaining 
capital in the financial markets.
  These obstacles are often due to the largest burden that securities 
regulations, which are typically written for large public companies, 
place on small companies when they seek to go public.
  We need competitive markets that encourage innovation, and we need to 
a develop regulatory environment that acknowledges the differences 
between small, private, and start-up companies and well-established 
public companies.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  There has been a lot of talk about bipartisan support or lack of. 
There have been a lot of talks about how the Republicans have been able 
to get Democratic votes and that, somehow, we should be happy, we 
should be satisfied, and that they really don't understand why it is 
that we are opposing not only the bill, but the tactics that have been 
used in several attempts to pass legislation with controversial bills 
tucked into the big package.
  Let me give you a summary of amendments that Republicans refuse to 
consider as we have attempted to work with them.
  Mr. Ellison and Mr. Issa offered a bipartisan amendment to strike 
title VII of the bill, so that all public companies will have to report 
their financial statements in a computer-readable format. Mr. Sherman 
and Ms. Kuster both offered amendments striking the CLO title.
  In a similar vein, because Republicans refuse to hold debate on the 
CLO title, Mr. Kildee and Mr. Capuano offered an amendment to require 
the regulators to first determine that such a delay was, indeed, in the 
public interest.
  Mr. Lynch also proposed to revise the delay from 2019 to a date we 
previously considered and approved in the House, 2017. This revised 
date is one that we had thoroughly considered in the House. We never 
considered in the House an extension for 2 more years to 2019.
  In an effort to prevent the spread of systemic threats, Mr. Lynch 
proposed that an affiliate of a financial institution, whose failure 
could pose a systemic risk to our economy, should be required to clear 
its derivatives.
  Mr. Lynch raised a concern that companies, like GE Capital, might be 
able to take large bets in one part of their company, but receive 
relief from rules intended to mitigate those risks in another. Mr. 
Lynch also offered three amendments on title XI, all intended to ensure 
that employees understand their compensation.
  Elsewhere in the bill, Mr. Capuano offered an amendment to title X, 
requiring companies to disclose political campaign contributions. In 
the same title, Mr. Ellison required the SEC to finalize its Dodd-Frank 
rules related to executive compensation data within 60 days.
  Mr. Grijalva proposed an amendment to restore the swaps push-out 
provision that Republicans eliminated by attaching it to the CR/Omnibus 
last month. Mr. Ellison and Mr. Grijalva also proposed a substitute 
amendment to focus this Congress on something that would help our 
economy, ending budget sequestration.
  Finally, I propose that we find a way to pay for part of the budget 
of the cash-strapped SEC by imposing a user fee on investment advisers. 
This is a commonsense proposal that has been supported by investment 
advisers, investment advocates, former Republican Chairman Spencer 
Bachus, SEC Chair White, and the State securities regulators.
  Despite the fact that the SEC can only examine an adviser on average

[[Page 635]]

once a decade, our committee didn't even consider this issue last 
Congress.
  That is an effort, Mr. Speaker and Members, to show that we have 
attempted to work with the opposite side of the aisle. We have 
attempted to offer commonsense amendments that have been absolutely 
rejected without any consideration being given to them.
  We find ourselves here on the floor at 9 this evening, attempting to 
debate a bill that is going nowhere, that has been issued by the 
President, a veto message. We are here debating again about whether or 
not we are putting our taxpayers and Main Street and our small 
businesses at risk, going back to some of the same tactics, some of the 
same ways that were used by the banks that brought us to the point of a 
recession, almost a depression.
  Somehow in this short period of time, we have forgotten what happened 
in 2008, we have forgotten about how many businesses were destroyed, 
small businesses were destroyed, we have forgotten how many elderly 
folks lost money in their 401(k)'s, we have forgotten how many homes 
were foreclosed on, we have forgotten about how we brought this country 
to the brink of a disaster.

                              {time}  2100

  And so let me just say that Dodd-Frank is an attempt for reform. And 
it is not even a tough reform. As a matter of fact, many of us consider 
it rather mild. But we have on this side of the aisle been fighting day 
in and day out in our committee to try and just see the implementation 
of Dodd-Frank rather than the destruction of an attempt to reform an 
industry that caused great harm to this society.
  And so with that, Mr. Speaker, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I now yield 2\1/2\ minutes to the 
gentleman from Wisconsin (Mr. Duffy), the chairman of our Oversight and 
Investigations Subcommittee.
  Mr. DUFFY. Mr. Speaker, I listened to the ranking member talk about 
this bill tonight and you would think the sky is falling if this CLO 
portion of our package is passed. The problem with that argument is 
that 53 of the Democrats on the Financial Services Committee, with 
Republicans, voted to pass this package last year. Only three Democrats 
dissented--only three. Then it passed this House floor by a voice vote.
  If this bill was so disastrous for the American economy, I would ask 
my good friend across the aisle: At 9 o'clock on a Tuesday night where 
Members of Congress have nothing going on, where are the Democrats? 
Where is the outrage with this package?
  There is only one. There is only one, because many Democrats in the 
last Congress voted for this bill because they agreed with it. It 
didn't get anywhere because it fell into Harry Reid's trash bin.
  The Volcker rule directed under Dodd-Frank was supposed to stop big 
banks from using insured customer funds to engage in risky investments. 
CLOs had a default rate of less than one-half of 1 percent. These are 
safe. This wasn't the cause of the financial crisis. The cause was 
Fannie and Freddie securitizing loans that had no documentation, no 
verification of income, and subprime mortgages. In Dodd-Frank, the root 
cause of the financial crisis wasn't addressed because Fannie and 
Freddie weren't even brought up.
  When we talk about Dodd-Frank, the ranking member is so concerned 
about Dodd-Frank being chipped away, but the CLO issue wasn't even in 
Dodd-Frank. Section 619 of Dodd-Frank states:

       Nothing in this section shall be construed to limit or 
     restrict the ability of a banking entity or nonbank financial 
     company supervised by the Federal Reserve Board to sell or 
     securitize loans in a manner otherwise permitted by law.

  CLOs were excluded in Dodd-Frank, which the ranking member voted for. 
But not only that, in the first proposal of the Volcker rule, CLOs 
weren't even included.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield the gentleman an additional 10 seconds.
  Mr. DUFFY. They were not included. It was only in the final rule that 
we realized that CLOs were so dangerous.
  This is a political ploy. Join the American people, join common 
sense, and join some of your fellow Democrats. Let's support this 
reform package.
  Mr. HENSARLING. Mr. Speaker, I am now happy to yield 2\1/2\ minutes 
to the gentleman from Michigan (Mr. Huizenga), chairman of the Monetary 
Policy Trade Subcommittee.
  Mr. HUIZENGA of Michigan. Mr. Speaker, I, too, share my friend from 
Wisconsin's frustration at this. This is sort of like saying we are 
going to have a cookie that is getting baked here on the House floor 
and our friends across the aisle approve of the eggs, they approve of 
the butter, they approve of the sugar, and they approve of the 
chocolate clips, but they don't want the final product. I am confused 
as to why we cannot put all these ingredients together and get this 
done finally. The American people are begging us to get this work done. 
That is why I rise today, Mr. Speaker: to support H.R. 37.
  Part of that bill has my bill from the last Congress, H.R. 2274. 
Excessive and unnecessary regulations have been hurting our economy, 
increasing costs to consumers and investors, reducing wage growth, and 
restricting access to private sector capital that our Nation's job 
creators need in order to grow the economy and create jobs.
  This unanimously passed bipartisan legislation is a compilation of 
commonsense regulatory relief bills that have been carefully crafted to 
help grow the economy for Main Street and not from Washington, D.C. My 
bill actually is part of that.
  Eleven of these bills have previously been passed by this very body 
or at the Financial Services Committee with overwhelming bipartisan 
support. In fact, my bill idea came not from anybody on Wall Street, 
not from anybody in Washington, D.C., but from a mergers and 
acquisitions lawyer back in my district in Grand Rapids, Michigan, who 
said: We've been struggling with this problem and we need some help 
because we cannot get the SEC to move on this.
  So that is why I put together the Small Business Mergers, 
Acquisitions, Sales, and Brokerage Simplification Act, and this has 
been kindly rolled into this larger package.
  It has been estimated that approximately $10 trillion of privately 
owned, small family-owned-type businesses will be sold or, worse yet, 
closed in the coming years as baby boomers retire. I don't think any of 
us would think that that is a good thing. Mergers and acquisitions 
brokers play a critical role in facilitating the transfer of these 
smaller privately held companies. Who benefits? Small communities and 
the workers that they employ and that live in those areas. This 
bipartisan provision would create a simplified system for brokers 
performing services in connection with the transfer of ownership of 
these smaller privately held companies.
  In today's highly charged political environment, however, it is hard 
because it would be nice to show the American people that we have 
positive, effective initiatives that should be passed.
  Mr. HENSARLING. Mr. Speaker, I am now very happy to yield 1\1/2\ 
minutes to the gentleman from the ``Live Free or Die'' State of New 
Hampshire (Mr. Guinta), a member of the committee.
  Mr. GUINTA. Thank you, Mr. Chairman, for yielding.
  Mr. Speaker, I am happy to rise today in support of, and as a 
cosponsor of, H.R. 37.
  Mr. Speaker, back in April 2012, President Obama signed into law the 
JOBS Act, a bipartisan piece of legislation which makes it easier for 
small companies, small businesses, to access capital markets by easing 
the burden of certain securities regulations.
  Despite its sweeping scope, the Dodd-Frank Act does little to spur 
the type of capital formation that is essential for any real and 
lasting economic recovery to take hold in our Nation. Without access to 
capital, business slows, and without regulatory certainty, capital 
disappears.

[[Page 636]]

  A small company should not be subject to the same regulatory demands 
and requirements that a Fortune 500 company is required to meet. That 
is why H.R. 37 follows on the success of the bipartisan JOBS Act and 
continues the Financial Services Committee's extensive examination of 
finding bipartisan solutions.
  This package includes 10 pieces of legislation that my friend from 
California, the ranking member, supported and endorsed and voted for in 
the past. We need to make it easier for small companies to access 
public and private markets so that they can grow, hire, and provide 
greater economic opportunities for our citizens.
  Contrary to this rhetoric we hear this evening, H.R. 37 is not a 
massive repeal of Dodd-Frank. It is a bill that recognizes Dodd-Frank 
is not perfect. It is a bill that recognizes market disruptions are not 
a smart result.
  Mr. HENSARLING. Mr. Speaker, I am now happy to yield 1\1/2\ minutes 
to the gentleman from Arizona (Mr. Schweikert), a member of the 
committee.
  Mr. SCHWEIKERT. Mr. Speaker, I will try to speak fast. I have missed 
all of you in my couple years' absence.
  Have you ever had a moment where you are heading towards the 
microphone and you are starting to wonder if some of the debate you 
have been just listening to is a little bit tongue-in-cheek?
  Can we do a quick explanation of CLOs, these collateralized loans? It 
is commercial paper. That is what the vast majority of it is. It has 
been around for a very long time.
  Now, here is the absurdity that is coming in. If I have commercial 
paper that is made up of marginal loans, 2 years from now the bank 
continues to get to own that. But if that paper, that collateralized 
managed debt actually has a covenant in it that, if something goes 
wrong, I get to reach in and grab some of the equity of the company, 
all of a sudden they can't hold that. So the more secure CLOs you don't 
get to own in 2 years; the more marginal you do get to keep on the 
banks' books.
  This is, first, absurd. But it is perfectly rational to say: Look, 
why don't we take this part that expires in 2 years and push it out 2 
more years so there can be an orderly unwinding of a fairly absurd 
rule? But the rule is the rule.
  So a lot of this debate around the CLOs, I am sorry, it is great 
hyperbole, but it has almost nothing to do with what the actual product 
does. And understand, over the last 20 years, CLOs that were AA or 
higher, not a single instrument went bad.
  Mr. HENSARLING. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from Texas has three-quarters 
of a minute remaining.
  Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, what we have really witnessed here is a debate between 
the left and the far left, and the far left doesn't want the left to 
work on a bipartisan basis. That is sad. I think that is what the 
American people want us to do. The American people, by and large, don't 
want to occupy Wall Street. They just want to quit bailing it out, and 
bailing it out is exactly what the Dodd-Frank Act does. It is time to 
grow this economy from Main Street up, not Washington down, and that is 
what the big debate is.
  Almost every bill here, Mr. Speaker, is a modest bill to help small 
businesses, to help capital formation to put America back to work. They 
passed on an overwhelmingly bipartisan basis.
  Let's show the American people that we can do it. Don't let the far 
left torpedo America's hopes and dreams. I encourage all the House 
Members to support this legislation.
  Mr. Speaker, I yield back the balance of my time.
  Mr. CONAWAY. Mr. Speaker, I rise again today in support of H.R. 37, 
the Promoting Job Creation and Reducing Small Business Burdens Act. I 
am especially proud of, and would like to highlight, the work of the 
Agriculture Committee on the titles of this bill under its 
jurisdiction--the Business Risk Mitigation and Price Stabilization Act, 
a provision on the Treatment of Affiliate Transactions, and a provision 
regarding Swap Data Repository and Clearinghouse Indemnification 
Corrections.


                          Margin Requirements

  I am pleased that the Business Risk Mitigation and Price 
Stabilization Act was included as Title I of this bill, and even more 
so, that this provision was already approved by both chambers as a part 
of TRIA reauthorization. This Title puts in statute important 
protections for American businesses. To grow our economy, businesses 
should use their scarce capital to buy new equipment, hire more 
workers, build new facilities, and invest in the future. They cannot do 
that if they are required to hold money in margin accounts to fulfill a 
misguided regulation.


                      Inter-affiliate Transactions

  Title II of H.R. 37, regarding the Treatment of Inter-Affiliate 
Transactions, was passed by the House multiple times in the 113th 
Congress and will also provide additional certainty to American 
business. It will do so by preventing the redundant regulation of 
harmless inter-affiliate transactions that would unnecessarily tie up 
the working capital of companies with no added protections for the 
market, or benefits to consumers.
  Today, businesses across the nation rely on the ability to centralize 
their hedging activities. This consolidation of a hedging portfolio 
across a corporate group allows businesses to reduce costs, simplify 
their financial dealings, and to reduce their counterparty credit risk.
  Title II of H.R. 37 will allow American businesses to continue 
utilizing this efficient, time-tested business model.


                      Indemnification Requirements

  Finally, Title V of H.R. 37 makes much needed corrections to the swap 
data repository and clearinghouse indemnification requirements in Dodd-
Frank.
  Currently, Dodd-Frank requires a foreign regulator requesting 
information from a U.S. swap data repository or derivatives clearing 
organization to provide a written agreement stating that it will abide 
by certain confidentiality requirements, and will indemnify the U.S. 
Commissions for any expenses arising from litigation relating to the 
request for information.
  However, while the concept of indemnification is well-established 
within U.S. tort law, it does not exist in many foreign jurisdictions, 
making it impossible for some foreign regulators to agree to these 
indemnification requirements. This threatens to make data sharing 
arrangements with foreign regulators unworkable.
  H.R. 37 mitigates the problem by simply removing the indemnification 
provisions in Dodd-Frank. However, the required written agreement 
mandating certain confidentiality obligations is left in place. So 
rather than stripping down Dodd-Frank, as we are so often accused, this 
change will actually serve to enhance market transparency and risk 
mitigation, by ensuring that that regulators and market participants 
have access to a global set of swap market data.
  As Chairman of the House Committee on Agriculture, and as a cosponsor 
of each of these bills in the 113th Congress, I appreciate Mr. 
Fitzpatrick's work to bring these provisions together in a package that 
reduces regulatory burdens and promotes economic growth. I strongly 
urge my colleagues to support the legislation.

                                         House of Representatives,


                                     Committee on Agriculture,

                                 Washington, DC, January 13, 2014.
       Mr. Speaker: I am pleased to see three bills that the House 
     Committee on Agriculture passed in the 113th Congress 
     included as Titles I, II, and V of H.R. 37, ``Promoting Job 
     Creation and Reducing Small Business Burdens Act.''
       H.R. 634, H.R. 5471, and H.R. 742, which were also included 
     as Subtitles A, B, and C of Title III of H.R. 4413, 
     ``Customer Protection and End-User Relief Act,'' from the 
     113th Congress provide an important protections to end-users 
     from costly margining requirements and needless regulatory 
     burdens; as well as correct an unworkable provision in Dodd-
     Frank which required foreign regulators to break their local 
     laws in order to access the market data they needed to 
     enforce their laws.
       In support of these titles, I would like to request that 
     the pertinent portions of the Committee on Agriculture report 
     to accompany H.R. 4413 in the 113th Congress be included in 
     the appropriate place in the Congressional Record.
           Sincerely,
                                               K. Michael Conaway,
                                                         Chairman.
                                  ____
                                  

                        Title 3--End-User Relief


        SUBTITLE A--END-USER EXEMPTION FROM MARGIN REQUIREMENTS

     Section 311--End-user margin requirements
       Section 311 amends Section 4s(e) of the Commodity Exchange 
     Act (CEA) as added by Section 731 of the Dodd-Frank Act to 
     provide an explicit exemption from margin requirements for 
     swap transactions involving end-users that qualify for the 
     clearing exception under 2(h)(7)(A).

[[Page 637]]

       ``End-users'' are thousands of companies across the United 
     States who utilize derivatives to hedge risks associated with 
     their day-to-day operations, such as fluctuations in the 
     prices of raw materials. Because these businesses do not pose 
     systemic risk, Congress intended that the Dodd-Frank Act 
     provide certain exemptions for end-users to ensure they were 
     not unduly burdened by new margin and capital requirements 
     associated with their derivatives trades that would hamper 
     their ability to expand and create jobs.
       Indeed, Title VII of the Dodd-Frank Act includes an 
     exemption for non-financial end-users from centrally clearing 
     their derivatives trades. This exemption permits end-users to 
     continue trading directly with a counterparty, (also known as 
     trading ``bilaterally,'' or over-the-counter (OTC)) which 
     means their swaps are negotiated privately between two 
     parties and they are not executed and cleared using an 
     exchange or clearinghouse. Generally, it is common for non-
     financial end-users, such as manufacturers, to avoid posting 
     cash margin for their OTC derivative trades. End-users 
     generally will not post margin because they are able to 
     negotiate such terms with their counterparties due to the 
     strength of their own balance sheet or by posting non-cash 
     collateral, such as physical property. End-users typically 
     seek to preserve their cash and liquid assets for 
     reinvestment in their businesses. In recognition of this 
     common practice, the Dodd-Frank Act included an exemption 
     from margin requirements for end-users for OTC trades.
       Section 731 of the Dodd-Frank Act (and Section 764 with 
     respect to security-based swaps) requires margin requirements 
     be applied to swap dealers and major swap participants for 
     swaps that are not centrally cleared. For swap dealers and 
     major swap participants that are banks, the prudential 
     banking regulators (such as the Federal Reserve or Federal 
     Deposit Insurance Corporation) are required to set the margin 
     requirements. For swap dealers and major swap participants 
     that are not banks, the CFTC is required to set the margin 
     requirements. Both the CFTC and the banking regulators have 
     issued their own rule proposals establishing margin 
     requirements pursuant to Section 731.
       Following the enactment of the Dodd-Frank Act in July of 
     2010, uncertainty arose regarding whether this provision 
     permitted the regulators to impose margin requirements on 
     swap dealers when they trade with end-users, which could then 
     result in either a direct or indirect margin requirement on 
     end-users. Subsequently, Senators Blanche Lincoln and Chris 
     Dodd sent a letter to then-Chairmen Barney Frank and Collin 
     Peterson on June 30, 2010, to set forth and clarify 
     congressional intent, stating:
       The legislation does not authorize the regulators to impose 
     margin on end-users, those exempt entities that use swaps to 
     hedge or mitigate commercial risk. If regulators raise the 
     costs of end-user transactions, they may create more risk. It 
     is imperative that the regulators do not unnecessarily divert 
     working capital from our economy into margin accounts, in a 
     way that would discourage hedging by end-users or impair 
     economic growth.
       In addition, statements in the legislative history of 
     section 731 (and Section 764) suggests that Congress did not 
     intend, in enacting this section, to impose margin 
     requirements on nonfinancial end-users engaged in hedging 
     activities, even in cases where they entered into swaps with 
     swap entities.
       In the CFTC's proposed rule on margin, it does not require 
     margin for un-cleared swaps when non-bank swap dealers 
     transact with non-financial end-users. However, the 
     prudential banking regulators proposed rules would require 
     margin be posted by non-financial end-users above certain 
     established thresholds when they trade with swap dealers that 
     are banks. Many of end-users' transactions occur with swap 
     dealers that are banks, so the banking regulators' proposed 
     rule is most relevant, and therefore of most concern, to end-
     users.
       By the prudential banking regulators' own terms, their 
     proposal to require margin stems directly from what they view 
     to be a legal obligation under Title VII. The plain language 
     of section 731 provides that the Agencies adopt rules for 
     covered swap entities imposing margin requirements on all 
     non-cleared swaps. Despite clear congressional intent, those 
     sections do not, by their terms, exclude a swap with a 
     counterparty that is a commercial end-user. By providing an 
     explicit exemption under Title VII through enactment of this 
     provision, the prudential regulators will no longer have a 
     perceived legal obligation, and the congressional intent they 
     acknowledge in their proposed rule will be implemented.
       The Committee notes that in September of 2013, the 
     International Organization of Securities Commissions (IOSCO) 
     and the Bank of International Settlements published their 
     final recommendations for margin requirements for uncleared 
     derivatives. Representatives from a number of U.S. 
     regulators, including the CFTC and the Board of Governors of 
     the Federal Reserve participated in the development of those 
     margin requirements, which are intended to set baseline 
     international standards for margin requirements. It is the 
     intent of the Committee that any margin requirements 
     promulgated under the authority provided in Section 4s of the 
     Commodity Exchange Act should be generally consistent with 
     the international margin standards established by IOSCO.
       On March 14, 2013, at a hearing entitled ``Examining 
     Legislative Improvements to Title VII of the Dodd-Frank 
     Act,'' the following testimony was provided to the Committee 
     with respect to provisions included in Section 311:
       In approving the Dodd-Frank Act, Congress made clear that 
     end-users were not to be subject to margin requirements. 
     Nonetheless, regulations proposed by the Prudential Banking 
     Regulators could require end-users to post margin. This stems 
     directly from what they view to be a legal obligation under 
     Title VII. While the regulations proposed by the CFTC are 
     preferable, they do not provide end-users with the certainty 
     that legislation offers. According to a Coalition for 
     Derivatives End-Users survey, a 3% initial margin requirement 
     could reduce capital spending by as much as $5.1 to $6.7 
     billion among S&P 500 companies alone and cost 100,000 to 
     130,000 jobs. To shed some light on Honeywell's potential 
     exposure to margin requirements, we had approximately $2 
     billion of hedging contracts outstanding at year-end that 
     would be defined as a swap under Dodd-Frank. Applying 3% 
     initial margin and 10% variation margin implies a potential 
     margin requirement of $260 million. Cash deposited in a 
     margin account cannot be productively deployed in our 
     businesses and therefore detracts from Honeywell's financial 
     performance and ability to promote economic growth and 
     protect American jobs.--Mr. James E. Colby, Assistant 
     Treasurer, Honeywell International Inc.
       On May 21, 2013, at a hearing entitled ``The Future of the 
     CFTC: Market Perspectives,'' Mr. Stephen O'Connor, Chairman, 
     ISDA, provided the following testimony with respect to 
     provisions included in Section 311:
       Perhaps most importantly, we do not believe that initial 
     margin will contribute to the shared goal of reducing 
     systemic risk and increasing systemic resilience. When robust 
     variation margin practices are employed, the additional step 
     of imposing initial margin imposes an extremely high cost on 
     both market participants and on systemic resilience with very 
     little countervailing benefit. The Lehman and AIG situations 
     highlight the importance of variation margin. AIG did not 
     follow sound variation margin practices, which resulted in 
     dangerous levels of credit risk building up, ultimately 
     leading to its bailout. Lehman, on the other hand, posted 
     daily variation margin, and while its failure caused shocks 
     in many markets, the variation margin prevented outsized 
     losses in the OTC derivatives markets. While industry and 
     regulators agree on a robust variation margin regime 
     including all appropriate products and counterparties, the 
     further step of moving to mandatory IM [initial margin] does 
     not stand up to any rigorous cost-benefit analysis.
       Based on the extensive background that accompanies the 
     statutory change provided explicitly in Section 311, the 
     Committee intends that initial and variation margin 
     requirements cannot be imposed on uncleared swaps entered 
     into by cooperative entities if they similarly qualify for 
     the CFTC's cooperative exemption with respect to cleared 
     swaps. Cooperative entities did not cause the financial 
     crisis and should not be required to incur substantial new 
     costs associated with posting initial and variation margin to 
     counterparties. In the end, these costs will be borne by 
     their members in the form of higher prices and more limited 
     access to credit, especially in underserved markets, such as 
     in rural America, Therefore, the Committee's clear intent 
     when drafting Section 311 was to prohibit the CFTC and 
     prudential regulators, including the Farm Credit 
     Administration, from imposing margin requirements on 
     cooperative entities.


                   SUBTITLE B--INTER-AFFILIATE SWAPS

     Sec. 321--Treatment of affiliate transactions
       ``Inter-affiliate'' swaps are contracts executed between 
     entities under common corporate ownership. Section 321 would 
     amend the Commodity Exchange Act to provide an exemption for 
     inter-affiliate swaps from the clearing and execution 
     requirements of the Dodd-Frank Act so long as the swap 
     transaction hedges or mitigates the commercial risk of an 
     entity that is not a financial entity. The section also 
     requires that an ``appropriate credit support measure or 
     other mechanism'' be utilized between the entity seeking to 
     hedge against commercial risk if it transacts with a swap 
     dealer or major swap participant, but this credit support 
     measure requirement is effective prospectively from the date 
     H.R. 4413 is enacted into law.
       Importantly, with respect to Section 321's use of the 
     phrase ``credit support measure or other mechanism,'' the 
     Committee unequivocally does not intend for the CFTC to 
     interpret this statutory language as a mandate to require 
     initial or variation margin for swap transactions. The 
     Committee intends for the CFTC to recognize that credit 
     support measures and other mechanisms have been in use 
     between counterparties and affiliates engaged in swap 
     transactions for many years in different formats, and 
     therefore, there is no need to engage in a rulemaking to 
     define such broad terminology.

[[Page 638]]

       Section 321 originated from the need to provide relief for 
     a parent company that has multiple affiliates within a single 
     corporate group. Individually, these affiliates may seek to 
     offset their business risks through swaps. However, rather 
     than having each affiliate separately go to the market to 
     engage in a swap with a dealer counterparty, many companies 
     will employ a business model in which only a single or 
     limited number of entities, such as a treasury hedging 
     center, face swap dealers. These designated external facing 
     entities will then allocate the transaction and its risk 
     mitigating benefits to the affiliate seeking to mitigate its 
     underlying risk.
       Companies that use this business model argue that it 
     reduces the overall credit risk a corporate group poses to 
     the market be- cause they can net their positions across 
     affiliates, reducing the number of external facing 
     transactions overall. In addition, it permits a company to 
     enhance its efficiency by centralizing its risk management 
     expertise in a single or limited number of affiliates.
       Should these inter-affiliate transactions be treated as all 
     other swaps, they could be subject to clearing, execution and 
     margin requirements. Companies that use inter-affiliate swaps 
     are concerned that this could substantially increase their 
     costs, without any real reduction in risk in light of the 
     fact that these swaps are purely for internal use. For 
     example, these swaps could be ``double-margined''--when the 
     centralized entity faces an external swap dealer, and then 
     again when the same transaction is allocated internally to 
     the affiliate that sought to hedge the risk.
       The uncertainty that exists regarding the treatment of 
     inter-affiliate swaps spans multiple rulemakings that have 
     been proposed or that will be proposed pursuant to the Dodd-
     Frank Act. Section 321 provides certainty and clarity as to 
     what inter-affiliate transactions are and how they are not to 
     be regulated as swaps when the parties to the transaction are 
     under common control.
       On March, 14, 2013, at a hearing entitled ``Examining 
     Legislative Improvements to Title VII of the Dodd-Frank 
     Act,'' the following testimony was provided with respect to 
     efforts to address the problem with inter-affiliate swaps:
       [I]nter-affiliate swaps provide important benefits to 
     corporate groups by enabling centralized management of 
     market, liquidity, capital and other risks inherent in their 
     businesses and allowing these groups to realize hedging 
     efficiencies. Since the swaps are between affiliates, rather 
     than with external counterparties, they pose no systemic risk 
     and therefore there are no significant gains to be achieved 
     by requiring them to be cleared or subjecting them to margin 
     posting requirements. In addition, these swaps are not market 
     transactions and, as a result, requiring market participants 
     to report them or trade them on an exchange or swap execution 
     facility provides no transparency benefits to the market--if 
     anything, it would introduce useless noise that would make 
     Dodd-Frank's transparency rules less helpful.--Hon. Kenneth 
     E. Bentsen, Acting President and CEO, SIFMA
       This legislation would ensure that inter-affiliate 
     derivatives trades, which take place between affiliated 
     entities within a corporate group, do not face the same 
     demanding regulatory requirements as market-facing swaps. The 
     legislation would also ensure that end-users are not 
     penalized for using central hedging centers to manage their 
     commercial risk. There are two serious problems facing end-
     users that need addressing. First, under the CFTC's proposed 
     inter-affiliate swap rule, financial end-users would have to 
     clear purely internal trades between affiliates unless they 
     posted variation margin between the affiliates or met 
     specific requirements for an exception [i]f these end-users 
     have to post variation margin, there is little point to 
     exempting inter-affiliate trades from clearing requirements, 
     as the costs could be similar. And let's not forget the 
     larger point--internal end-user trades do not create systemic 
     risk and, hence, should not be regulated the same as those 
     trades that do. Second, many end-users--approximately one-
     quarter of those we surveyed--execute swaps through an 
     affiliate. This of course makes sense, as many companies find 
     it more efficient to manage their risk centrally, to have one 
     affiliate trading in the open market, instead of dozens or 
     hundreds of affiliates making trades in an uncoordinated 
     fashion. Using this type of hedging unit centralizes 
     expertise, allows companies to reduce the number of trades 
     with the street and improves pricing. These advantages led me 
     to centralize the treasury function at Westinghouse while I 
     was there. However, the regulators' interpretation of the 
     Dodd-Frank Act confronts nonfinancial end-users with a 
     choice: either dismantle their central hedging centers and 
     find a new way to manage risk, or clear all of their trades. 
     Stated another way, this problem threatens to deny the end-
     user clearing exception to those end-users who have chosen to 
     hedge their risk in an efficient, highly-effective and risk-
     reducing way. It is difficult to believe that this is the 
     result Congress hoped to achieve.--Ms. Marie N. Hollein, 
     C.T.P., President and CEO, Financial Executives 
     International, on behalf of the Coalition for Derivatives 
     End-Users.


     SUBTITLE C--INDEMNIFICATION REQUIREMENTS RELATED TO SWAP DATA 
                              REPOSITORIES

     Section 331--Indemnification requirements
       Section 331 strikes the indemnification requirements found 
     in Sections 725 and 728 of the Dodd-Frank Act related to swap 
     data gathered by swap data repositories (SDRs) and 
     derivatives clearing organizations (DCOs). The section does 
     maintain, however, that before an SDR, DCO, or the CFTC 
     shares information with domestic or international regulators, 
     they have to receive a written agreement stating that the 
     regulator will abide by certain confidentiality agreements.
       Swap data repositories serve as electronic warehouses for 
     data and information regarding swap transactions. 
     Historically, SDRs have regularly shared information with 
     foreign regulators as a means to cooperate, exchange views 
     and share information related to OTC derivatives CCPs and 
     trade repositories. Prior to Dodd-Frank, international 
     guidelines required regulators to maintain the 
     confidentiality of information obtained from SDRs, which 
     facilitated global information sharing that is critical to 
     international regulators' ability to monitor for systemic 
     risk.
       Under Sections 725 and 728 of the Dodd-Frank Act, when a 
     foreign regulator requests information from a U.S. registered 
     SDR or DCO, the SDR or DCO is required to receive a written 
     agreement from the foreign regulator stating that it will 
     abide by certain confidentiality requirements and will 
     ``indemnify'' the Commissions for any expenses arising from 
     litigation relating to the request for information. In short, 
     the concept of ``indemnification''--requiring a party to 
     contractually agree to pay for another party's possible 
     litigation expenses--is only well established in U.S. tort 
     law, and does not exist in practice or in legal concept in 
     foreign jurisdictions.
       These indemnification provisions--which were not included 
     in the financial reform bill passed by the House of 
     Representatives in December 2009--threaten to make data 
     sharing arrangements with foreign regulators unworkable. 
     Foreign regulators will most likely refuse to indemnify U.S. 
     regulators for litigation expenses in exchange for access to 
     data. As a result, foreign regulators may establish their own 
     data repositories and clearing organizations to ensure they 
     have access to data they need to perform their supervisory 
     duties. This would lead to the creation of multiple 
     databases, needlessly duplicative data collection efforts, 
     and the possibility of inconsistent or incomplete data being 
     collected and maintained across multiple jurisdictions.
       In testimony before the House Committee on Financial 
     Services in March of 2012, the then-Director of International 
     Affairs for the SEC, Mr. Ethiopis Tafara endorsed a 
     legislative solution to the problem, stating that:
       The SEC recommends that Congress consider removing the 
     indemnification requirement added by the Dodd-Frank Act . . . 
     the indemnification requirement interferes with access to 
     essential information, including information about the cross-
     border OTC derivatives markets. In removing the 
     indemnification requirement, Congress would assist the SEC, 
     as well as other U.S. regulators, in securing the access it 
     needs to data held in global trade repositories. Removing the 
     indemnification requirement would address a significant issue 
     of contention with our foreign counterparts . . .
       At the same hearing, the then-General Counsel for the CFTC, 
     Mr. Dan Berkovitz, acknowledged that they too have received 
     growing concerns from foreign regulators, but that they 
     intend to issue interpretive guidance, stating that ``access 
     to swap data reported to a trade repository that is 
     registered with the CFTC will not be subject to the 
     indemnification provisions of the Commodity Exchange Act if 
     such trade repository is regulated pursuant to foreign law 
     and the applicable requested data is reported to the trade 
     repository pursuant to foreign law.''
       To provide clarity to the marketplace and remove any legal 
     barriers to swap data being easily shared with various 
     domestic and foreign regulatory agencies, this section would 
     remove the indemnification requirements found in Sections 725 
     and 728 of the Dodd-Frank Act related to swap data gathered 
     by SDRs and DCOs.
       On March, 14, 2013, at a hearing entitled ``Examining 
     Legislative Improvements to Title VII of the Dodd-Frank 
     Act,'' Mr. Larry Thompson, Managing Director and General 
     Counsel, the Depository Trust and Clearing Corporation, 
     provided the following testimony with respect to provisions 
     of H.R. 742, which were included in Section 331:
       The Swap Data Repository and Clearinghouse Indemnification 
     Correction Act of 2013 would make U.S. law consistent with 
     existing international standards by removing the 
     indemnification provisions from sections 728 and 763 of Dodd-
     Frank. DTCC strongly supports this legislation, which we 
     believe represents the only viable solution to the unintended 
     consequences of indemnification. H.R. 742 is necessary 
     because the statutory language in Dodd-Frank leaves little 
     room for regulators to act without U.S. Congressional 
     intervention. This point was reinforced in the CFTC/SEC 
     January 2012 Joint

[[Page 639]]

     Report on International Swap Regulation, which noted that the 
     Commissions ``are working to develop solutions that provide 
     access to foreign regulators in a manner consistent with the 
     DFA and to ensure access to foreign-based information.'' It 
     indicates legislation is needed, saying that ``Congress may 
     determine that a legislative amendment to the indemnification 
     provision is appropriate.'' H.R. 742 would send a clear 
     message to the international community that the United States 
     is strongly committed to global data sharing and determined 
     to avoid fragmenting the current global data set for over-
     the-counter (OTC) derivatives. By amending and passing this 
     legislation to ensure that technical corrections to 
     indemnification are addressed, Congress will help create the 
     proper environment for the development of a global trade 
     repository system to support systemic risk management and 
     oversight.

  Mr. VAN HOLLEN. Mr. Speaker, the legislation we are being asked to 
vote on today is identical to legislation that failed on the suspension 
calendar last week--and so is now being brought back to the floor under 
a closed rule, without possibility of amendment. I opposed this bill on 
both policy and procedural grounds last week, and because nothing has 
fundamentally changed on either score, I will do so again today.
  Mr. Speaker, this unwieldy legislation is comprised of eleven, mostly 
unrelated titles--a few of which I have supported in the past, some of 
which I probably could support on a freestanding basis in the future 
and several of which either need a lot more work or simply should not 
be supported. In particular, as an advocate of the Dodd-Frank Wall 
Street Reform Act, I think we should tread very carefully before 
modifying or weakening something as central to financial reform as the 
Volcker Rule, which Title VIII of this legislation would do with 
respect to collateralized debt obligations. Additionally, while I am 
strongly in favor of giving employees more ownership opportunities in 
the companies they work for, I also believe those employees deserve to 
know the value of the stock they are being offered, and that is 
something Title XI of this bill fails to do.
  For these reasons, I urge a no vote.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 27, the previous question is ordered on 
the bill.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. Pursuant to clause 1(c) of rule XIX, further 
consideration of H.R. 37 is postponed.

                          ____________________