Committee Statement

 

The Honorable Frank D. Lucas

Ranking Member, House Committee on Agriculture

RE: Agriculture Committee business meeting to consider the Over-the-Counter Derivatives Market Act of 2009

 

October 21, 2009

Mr. Chairman, thank you for holding this business meeting to consider H.R. 3795, the Over-the-Counter Derivatives Market Act of 2009.  Today’s action is the next, but not necessarily the final step, in bringing a regulatory structure to an unregulated market.

First, Mr. Chairman, I want to thank you and your staff for including us in your weeks of meetings and deliberations over the last few months.  Together, we have had the opportunity to learn the hopes, concerns, and requests of the OTC derivative markets’ participants.  The legislation you have drafted reflects much of what we have heard.

As I have said before, there are problems in the over-the-counter derivatives markets, but we need to make sure we do not legislatively force legitimate risk management activity out of business or overseas.  I recognize and commend the efforts of Chairman Peterson to create a regulatory structure that allows healthy, liquid and deep markets.  I am even more appreciative of the Chairman’s willingness to address the end users’ concerns.  Their primary concern was that the limit on participating with Tier 1 financial institutions in the clearing regime would prevent them from using cost effective risk management tools.

Mr. Chairman, you know I have other concerns with the bill.  And, I am sure you would do some things differently if you could.  This bill isn’t perfect, but no bill ever is.  However, this bill is a marked improvement from the bill passed by the House Financial Services Committee, which I voted against. 

The changes that you were willing to make concerning the Tier 1 exclusion and the changes to the definition of a major swap participant make this bill much more end user friendly and worthy of support.

 

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