US Rep. Timothy V. Johnson and the House Agriculture Committee sought clarity today on the impact of burdensome regulations contained within portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Specifically in the hearing of the House Agriculture Committee, Rep. Johnson questioned the reach of the Commodities Future Trading Commission (CFTC) in its implementation of the Dodd-Frank bill. The CFTC is an independent agency that regulates futures and option markets and the Dodd-Frank Act completely overhauled the financial industry, and left many of the final rules, definitions and interpretations to the CFTC. Many rules proposed by the CFTC have been criticized on both sides of the aisle for imposing unnecessary regulations on businesses that the Dodd-Frank proposals were not intended to affect. The manner in which the rules and definitions are adopted is creating uncertainty for small businesses, energy providers, and the entire agriculture community.
"The intent of Dodd-Frank was to reduce systemic risk in financial markets. But the CFTC must keep in mind that their rules and regulations increase costs on small banks and institutions that pose no risk to the marketplace," said Congressman Johnson. "The derivatives used to hedge in the agricultural community could devastate the risk mitigation strategies. Farmers from California to Decatur, Illinois must have proper risk management tools."
Without clarity on proposed CFTC rules, the legislation will increase costs to banks and farmers and limit agriculture quality and product availability. These costs will be passed down to consumers.
"American agriculture is under attack. Small businesses and farmers are getting killed by red tape and regulatory costs that have nothing to do with the fundamentals of supply and demand in the market place. We need clarity, consistency and caution in enacting rules that could harm job creation and American industry."