U.S. Senator Pat Roberts (R-Kan.), ranking member of the Senate Agriculture, Nutrition and Forestry Committee today delivered the following opening remarks at a hearing examining the Dodd-Frank Wall Street Reform and Consumer Protection act after its second year as law.
Witnesses testifying before the Agriculture Committee today include: Chairman of the Commodities and Futures Trading Commission (CFTC), Gary Gensler, and Mr. Robert Cook, Director of the Division of Trading at the Securities and Exchange Commission (SEC).
The following are Senator Roberts' prepared remarks:
"Madam Chairwoman I thank you for calling this hearing this morning to discuss Dodd-Frank two years after it has become law.
"But first, in light of the LIBOR situation, which we have now learned that the CFTC knew about back in 2008, I have serious concerns why has it taken until the end of Chairman Gensler's term for the CFTC to act? This is now 2012, four years after the Commission was first made aware of potential under-reporting. This committee and the American taxpayer deserve an explanation.
"Typically, two years after a major piece of legislation -- like Dodd-Frank -- is passed, we would hear an update from stakeholders about how the law is affecting the real world.
"We would hear from the agencies in charge of implementing the law about the things that Congress did well, and for sure some of the things that we might need to consider changing.
"But when it comes to Dodd-Frank stakeholders are still confused, frustrated and begging to be told what is expected of them.
"The courts have already thrown out a major rule for inadequate cost-benefit analysis, and other rules are being challenged on the same basis.
"The agencies are here today to explain why they apparently cannot cooperate, and why it is taking them over two years to figure out a way to cooperate with the rest of the world.
"Here we are two years later and we still have no plan. The CFTC has told no one how it plans to coordinate the implementation of the over 30 rules and thousands upon thousands of pages of new regulations it has created.
"No one knows how all these rules will fit together, or how much, if any, coordination there has been between the agencies in charge of implementing Dodd-Frank domestically or internationally.
"I want to be clear on this point: stakeholders are certainly not opposed to the certainty that goes along with Dodd-Frank's mandate that swaps be cleared. In fact, many firms have already spent millions of dollars in an effort to be ready to implement Dodd-Frank rules.
"What these folks want -- what they have been asking for these past two years -- is certainty and direction from the CFTC as to what they need to do toward implementing what Commissioner Jill Sommers properly labeled Chairman Gensler's Inter-galactic Commerce Clause of regulation. The problem is that no one knows what Chairman Gensler's Plan is!
"Chairman Gensler's Plan, two years later, is disjointed, incomplete, and now we find out is just "interpretative' and therefore, not enforceable by law.
"Regardless, the CFTC is about to initiate its 60-day countdown to implementation, and in doing so potentially sets in motion a series of events that will send further shockwaves of uncertainty through derivative users and industry.
"What happens, at the end of these 60 days, which should be on or about October 1, when our domestic users of derivatives, international regulators or international users of derivatives aren't ready?
"Will the commission offer waivers or will participants simply face massive fines and enforcement actions by the CFTC?
"Is the CFTC about to create its own system of systemic risk?
"And as if this weren't enough, the CFTC isn't doing a good job of what it was created to do and that is police the financial streets.
"It appears as though Chairman Gensler's CFTC is too busy working on his Inter-Galactic Plan to have a conversation with anyone, including fellow commissioners, or the Securities and Exchange Commission, about implementing recommendations in the aftermath of the MF Global bankruptcy.
"The chairman set a unique precedent by taking a "non-participating" role and wanted to step aside from his relationship with Jon Corzine in the investigation of MF Global, but he made clear to other CFTC commissioners, staff, and outside parties that he wanted to keep control of the recommendations that came out of that investigation.
"My question to Chairman Gensler, especially in light of the failure of PFGBest last week, the second major failure of this nature on his watch is-----
"Where are your recommendations?
"Investors, stakeholders and others need confidence in the system.
"Commissioner Scott O'Malia said it well when he called for "using the best, most innovative and least burdensome tools to meet the regulatory ends laid out' in the Commodity Exchange Act.
"Chairman Gensler's CFTC should be focused on doing exactly that and overseeing the rules on the books -- rather than requesting new multitudes of staff and looking for justification to regulate the world -- any entity doing business with a U.S. person -- therefore the world -- again with regulations we have seen, labeled "interpretive' and not enforceable by law.
"Madam Chairwoman, I look forward to hearing from Chairman Gensler on how we land this spaceship and how he plans to work with the SEC and the real world of frustrated and worried stakeholders to implement what Dodd-Frank intended."