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Mr. GARRETT. I thank the gentleman from Texas for yielding. I also want to thank the gentleman from Delaware (Mr. Carney), the gentleman also from Texas (Mr. Conaway) and the gentleman from Georgia (Mr. Scott), who all, along with us, were able to work together in a bipartisan manner on this legislation.
I want to begin my comments today by clearing up what might be called a knee-jerk reaction that some commentators have made about our efforts on this legislation.
Today's legislation is not about deregulating the swap markets or creating loopholes for market participants. In fact, this bill is just the opposite of that. You see, there is broad bipartisan support for appropriately regulating the swap markets and for shining the proverbial light of day, if you will, on what was once an opaque marketplace. I agree that bringing greater additional transparency and clarity to this market is a positive thing for all--for American consumers and taxpayers as well.
Yet I have significant concerns about how the ongoing Dodd-Frank implementation of this appropriate regulation is being conducted. Only in Washington, D.C., would you have two, not one, regulatory bodies tasked to work together to implement rules required by Congress and then have them working down two separate, entirely different tracks on rules that will impact literally hundreds of American businesses and thousands of investors.
What you have is one agency over here. It's moving forward with a 100-page informal guidance, and the other, on the other hand, has just released a 1,000-page formal rule proposal. One proposal applies U.S. regulations to transactions taking place entirely outside the U.S. between the U.S. nonpersons, and the other creates a new, detailed substitute compliance framework. So it's hard to imagine a scenario in which these two proposals are more different. In effect, we have two very powerful U.S. regulators. Both of them have literally hundreds upon hundreds of millions of dollars in budget and thousands of staff, but at the end of the day, they cannot sit down together and work out a common proposal.
That's not what Dodd-Frank wanted them to do. They wanted them to come together, and that's what this legislation would effectuate. H.R. 1256, the Swap Jurisdiction Certainty Act, will restore that much-needed sanity to the rule-writing of this extraterritorial application of U.S. swaps regulation.
Again, given that there has been some confusion and a great deal of mischaracterization by some commentators on the impact of this legislation, let me take a moment to make certain everyone understands exactly what it does and the effects it will have. You see, the legislation before us allows the CFTC and the SEC to continue to enjoy significant discretion and also flexibility as to how they implement the rules. We are not removing any of their current authority. In fact, we are adding to it, and we are enhancing it.
First and foremost, the legislation specifically requires the SEC and the CFTC to have the same or identical cross-border rules. I think it's difficult--maybe it's impossible--for anyone to suggest that it is appropriate for two domestic U.S. regulatory bodies to have two different standards governing very similar parts of the market. So, by simply requiring the agencies to get together and have identical rules, the bill will limit the ability for potential arbitrage opportunities for the market participants, and it will ensure that we have standard identical regulatory regimes for both types of swaps. There is a great deal of ongoing discussion right now about how to limit this, about how to limit regulatory arbitrage opportunities for market participants. Under this new regime, the most glaring area of potential in this area is if the SEC and the CFTC have different rules;
Secondly, the legislation would require a formal rule, not a guidance, to be issued. Currently, the CFTC is moving down the path of instituting a more amorphous guidance, if you will, which really has questionable legal authority. So, without a formal rule in place that carries the force of law, there is a valid concern that some entities won't feel the need to even abide by this guidance from the CFTC or, if it's challenged by a court, will feel that it might carry considerably less weight. So, by requiring a formal rule, the bill will then ensure that the force of law will apply without question;
Finally, the legislation specifically authorizes the SEC and CFTC to regulate swap transactions between the U.S. and foreign entities. Now, this is important if the regulators are concerned about the importation of systemic risk. Why is this important? Because under current law, it is really questionable what authority these agencies actually have to regulate potential transactions between the U.S. and foreign participants. We add this to it and give them that explicit authority.
So if the regulators are concerned about any foreign country not living up to the Obama administration's G-20 commitments that was established back in 2009, then these regulators will be able to work together to specifically authorize under the act.
This expansion and enhancement, if you will, of the regulators' current authority--I would think it should be well received by the administration.
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Mr. GARRETT. Finally, in a formal Statement of Administration Policy, the administration argues that the bill will somehow slow down implementation of title VII. This can't be further from the truth. By requiring the agencies to work together and put the same rule, this will remove legal obstacles here in Washington and ensure that we have the appropriate regulatory framework sooner rather than later. It will remind the people saying that we will somehow slow down implementation of these rules that, no, that cannot be further from the truth. Dodd-Frank was passed almost 3 years ago, and we're no closer today than we were 3 years ago to getting this done.
Mr. Speaker, let us restore, then, some common sense and some clarity to the rulemaking process and actually bring it some additional transparency. Let us not play into the narrative that the rest of the country has of a dysfunctional Washington. Let us make sure that our financial regulators are actually working together and not trying to allow some to front-end each other.
Let us pass this legislation.
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Mr. GARRETT. I thank the gentleman from Texas, and the bipartisan manner from Mr. Carney and Mr. Scott as well, working together to get this bill passed.
And I am welcome to the debate that we are having here, but I do find it amazingly ironic that I have to come to the floor and stand here in the position of former Member Barney Frank and defend Dodd-Frank to the allegations from the other side of the aisle to the idea that there's some sort of escape hatch here, or a pole blown out, or that we're outsourcing regulation, when, in fact, if you read the legislation, you'll realize it does none of those things.
Now, I understand that Dodd-Frank was a piece of legislation that was well over 2,000 pages, and maybe some who voted in favor of it did not understand the complexity of it and what was involved; but the bill before us today is only 11 pages long, so everyone should be able to have read it and understand it.
So when the gentleman from Massachusetts refers to section 722(d) being affected by it and other portions of Dodd-Frank being changed by it, he should understand, by reading the 11 pages, none of Dodd-Frank or 722 or those other sections were altered in one way, shape, or form or other.
What was done was to install and enforce and carry out the will of Dodd-Frank in the area to make sure that the two regulatory agencies dealing with the respective areas here, the SEC and the CFTC, actually do what former Chairman Frank wanted Dodd-Frank to do, and that is to issue a rule and issue a rule that would be effective, in their judgement, for the betterment of the economy and for the regulated entities involved.
And with that, I see my time is up. I encourage a ``yes'' vote on this legislation.
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