Hearing of the House Financial Services Committee - "Assessing the Regulatory, Economic and Market Implications of the Dodd-Frank Derivatives Title"

Statement

"Today the Committee will begin to assess the economic and market impacts of Title VII of the Dodd-Frank Act, which governs the regulation of over-the-counter derivatives. As in many other areas of Dodd-Frank, Congress has broadly delegated authority to Federal regulatory agencies to write the rules, so it is incumbent upon this Committee to exercise rigorous oversight of that process.

"Let's be clear up front right at the beginning of this hearing: End users of derivatives did not cause the financial crisis. They were among its victims. Although the 2,300-page Dodd-Frank Act was promoted as being directed at Wall Street, as we are coming to understand more clearly, it is the end users of derivatives who will bear so much of the regulatory brunt of this law. As a result, hundreds of American companies could take their capital and jobs elsewhere. One study, released just yesterday, concludes that upwards of 130,000 jobs could be lost if U.S. regulators impose new restrictions on derivatives transactions too broadly.

"Others may not see a loss of jobs, but will see increased costs because of these regulations -- costs that will be passed along to consumers.

"The implementation of new derivatives rules should not occur in a vacuum, without regard for their impact on all market participants and ultimately the economy. Although most of the rules mandated by Dodd-Frank must be adopted within 360 days of enactment, the Act declined to require such rules to become effective by any given date. The regulators have not only the authority, but the obligation, to ensure that changes are carried out in an orderly manner that does not disrupt market functioning, and are phased in over a reasonable timeframe that takes adequate account of differences in derivatives asset classes.

"If we are not careful, the result will be a patchwork of disparate rules that are both complicated to administer and needlessly increase costs on exactly those Main Street businesses that we are counting on to bring our economy back."

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