Mr. FINCHER. Mr. Speaker, I rise today to discuss my bill, the Financial Competitive Act of 2013. My legislation simply requires the Financial Stability Oversight Committee to conduct a study of the impact of implementation of the Credit Valuation Adjustment (CVA) capital requirement on U.S. consumers, end users, and U.S. financial institutions.
European Basel III rules are being finalized and would provide a significant exemption from CVA market risk Risk-Weighted Assets (RWA) for EU banks.
EU banks would be exempt from CVA RWA requirements for transactions with sovereign pension funds and corporate counterparties, which are also exempt from clearing obligations. It is interesting to note that the EU did there due diligence and determined the risk factors merited an exemption.
My legislation is simply asking for due diligence in determining if U.S. financial institutions will be competitively disadvantaged. To me, this exemption will provide a significant advantage to European banks, European customers, and European end users.
Mr. Speaker, the U.S. economy is in a fragile state, any hurdle, fee, or foreign advantage, will cost the U.S. economy valuable jobs. This decision by the European regulators disregards the Basel III international agreement and will have lasting consequences for U.S. and international markets. U.S. financial institutions will be competitively disadvantaged that will affect how these institutions serve consumers in the derivative business as well as the commercial loan business.
Further, end-users will see a significant impact through limited competition which affects pricing and services.
My legislation will clarify the impact Basel III CVA RWA exemption for EU financial institutions will have on the U.S. economy. We can't afford to wait while Europe takes valuable market share away from U.S. companies.
Mr. Speaker, I urge my colleagues in the House (and Senate) to support me in passing the Financial Competitive Act of 2013 in order to ensure the law of unintended consequences doesn't place and U.S. consumers, end users, and financial institutions are not put at a disadvantage.