House Agriculture Committee considers revisions of Dodd-Frank rules
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WASHINGTON, Oct. 12- In the House Agriculture Committee's seventh hearing regarding Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act today, the members considered seven legislative proposals to further reform Dodd-Frank's current rules.
The bills discussed today suggested that the Commodity Futures Trading Commission (CFTC) improve consideration of the costs and benefits of its regulations orders, refine the definitions of swap execution facility and swap dealer and provide further end-user exemptions.
“None of these bills propose dramatic changes to Dodd-Frank,” said House Agriculture Committee Chairman Frank Lucas (R-Okla.). “They are aimed at ensuring that the regulators don't implement rules that conflict with, or are contrary to, what Congress intended.”
Ranking Member Collin Peterson (D-Minn.) said the legislation discussed today is not taking the right approach and that the proposed “bills aren't going anywhere in the Senate.” Peterson added that big bank prudential regulators and the Securities Exchange Commission should also be held accountable, not just the CFTC. He acknowledged that some areas in Dodd-Frank went too far, but they were areas on the Financial Services side and not where the Agriculture Committee has jurisdiction.
“Gary Gensler (CFTC Chairman) is not the problem with the end user situation,” he said. “It's the prudential regulators acquiring the banks that have cash margins.”
Peterson cosponsors a separate and broader bill, H.R. 3010, requiring all federal agencies to reform the process of analyzing and formulating new regulations. It is similar to one of the seven bills discussed today, sponsored by Rep. Mike Conaway (R-Texas), which would require CFTC to conduct a cost-benefit analysis of its regulations.
“H.R. 3010 requires a cost-benefit analysis across the government,” Peterson said. “It goes much further than Conaway's bill in requiring economic analysis. We'd be better off to pass that across the entire government.”
Peterson cautioned that today's proposed bills could create loopholes and open opportunities for market manipulation. Witnesses at the hearing represented agricultural cooperatives, banks, brokers and investors dealing with agricultural commodities. They emphasized that their goal is not to repeal the Dodd-Frank regulations, but to require clarification.
Country Hedging president Scott Cordes served as a witness representing the National Council of Farmer Cooperatives (NCFC) and said some of the regulations in Dodd-Frank could jeopardize farmers' access to commodity price risk management tools.
“Even though it has been more than a year since the Dodd-Frank Act was signed into law, we are still uncertain as to how farmer cooperatives will be classified and what regulations they will be subject to,” he said.
Cordes outlined four major points that farmer cooperatives need from the CFTC rulemaking. They include treating agricultural cooperatives as end users because they aggregate commercial risk of individual farmer-members; excluding agricultural cooperatives from the definition of swap dealer; considering aggregate costs associated with the new regulations and the impact on the agriculture sector; and maintaining bona fide hedge definition that includes commercial hedging practices.
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