Business Risk Mitigation and Price Stabilization Act of 2013

Floor Speech

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Mr. GRIMM. Madam Speaker, I proudly rise in support of this legislation, H.R. 634, the Business Risk Mitigation and Price Stabilization Act of 2013. H.R. 634, as has already been noted by the chairman and my colleague, is truly a bipartisan piece of legislation that has passed this House previously in the 112th Congress with overwhelming support.

I would like to thank my colleague, Mr. Peters, for working on this with me--this is an extremely important issue, and it is a pleasure to work across the aisle--as well as my colleagues on the Agriculture Committee, Mr. Austin Scott and Mr. McIntyre. Of course, I want to thank Chairman Hensarling for his leadership on this issue, as well as for his leadership as chairman of the full committee, and also thank Ranking Member Waters.

H.R. 634, as has been noted, will clarify the intent of Congress under the Dodd-Frank Act by providing an explicit exemption for the true commercial, nonfinancial end users of over-the-counter derivatives from having to post margin on uncleared derivatives transactions. This exemption is extremely important for job creation and economic growth, as well as price stabilization for average consumers.

Despite clear legislative history to the contrary, regulators continue to misinterpret the Dodd-Frank Act as giving them authority to impose margin requirements on true end users. H.R. 634 will ensure that nonfinancial end users remain exempt from margin requirements and that the regulators do not--I emphasize, they do not--exercise authorities that were not specifically given to them by the Congress.

If margin requirements were imposed on these nonfinancial end users, it would harm our economy by very simply diverting working capital from productive uses such as reinvestment into the business or job creation. And this legislation prevents this, and that's also extremely important to protecting American jobs and our economy.

True end users are firms and companies that use derivatives to manage their various financial risks. For example, firms use these products to protect against changes in interest rates if they've sold floating rate debt as well as to protect their profits earned in other currencies from variations in foreign exchange markets.

The benefits of this legislation are not limited to American businesses but extend into the heart of our communities. This bill will help keep consumption prices stable for hardworking families and for individuals. If true nonfinancial end users were required to post margin, their hedging costs could become so high that they could abandon the practice. This would lead to larger variations in consumer prices for a whole host of products, which has been said, things like groceries and airline tickets, and would create economic instability.

There's a study that has shown that imposing a 3 percent margin requirement on over-the-counter derivatives held by the S&P 500 companies could cut capital spending by $5.1 to $6.7 billion and cost 100,000 to 130,000 U.S. jobs. With the unemployment rate at 7.6 percent, this is a consequence that simply cannot be overlooked.

So, in closing, I ask that my colleagues once again support this commonsense, bipartisan pro-jobs legislation.

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