Commodity End-User Relief Act

Floor Speech

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Ms. MAXINE WATERS of California. Mr. Chair, I rise today in strong opposition to H.R. 2289. The bill would obstruct our cop on the Wall Street beat, the Commodity Futures Trading Commission, from doing its job. The CFTC is charged with fostering open, transparent, competitive, and financially sound markets, mitigates systemic risk, and protects market participants, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives. In sum, the CFTC protects farmers, manufacturers, municipalities, pension funds and retirees but would be thwarted from doing so if H.R. 2289 is enacted.

In the wake of the worst financial crisis since the Great Depression, Congress passed Wall Street Reform--and gave our derivatives regulator the authority necessary to oversee previously unregulated transactions in which parties agree to exchange--or ``swap''--the risks of one financial instrument with another. The most notorious of these are credit-default swaps, made famous by AIG and which fueled the 2008 crisis, bankrupted millions of homeowners and cost taxpayers trillions of dollars.

Nevertheless, under the guise of reauthorizing the CFTC, Republicans are proposing a bill that undermines its regulatory authority, imposes new procedural requirements on an overburdened and underfunded agency, and ultimately hamstrings the Commission's ability to protect the American people.

This bill imposes heavy administrative hurdles and new litigation risks on the CFTC by requiring the agency to conduct a cost-benefit analysis slanted towards industry--a tactic that has been pushed in the past by opponents of financial reform to prevent, delay or weaken any rules implementing the Dodd-Frank Act.

The bill also makes it much more difficult for the CFTC to regulate and oversee derivatives transactions involving the foreign operations of megabanks like Citigroup, JP Morgan, and Bank of America. Earlier this Congress, Republicans overreached when they tried to pass a provision weakening the Volcker Rule's ban on banks taking bets with taxpayer dollars. H.R. 2289 is cut from the same cloth--instead allowing these same institutions to avoid U.S. law by setting up shop in a foreign jurisdiction, even though the risk may still be borne by U.S. taxpayers. There is even a provision in this bill that absurdly directs the CFTC to ignore the physical location of a bank's swap trader when determining whether the derivative was conducted inside the United States for purposes of applying U.S. law.

And all of this is done without providing one red cent to pay for these new burdens. CBO estimates that this bill costs at least $45 million, but the Republicans wouldn't even let the House consider an amendment to pay for it, offered by Representative DELAURO. The result is that H.R. 2289 will deplete the CFTC's modest resources currently spent enforcing against fraud.

But don't take my word for it. The Commission's own Chairman says the bill makes it harder for the CFTC to fulfill its mission and creates ``unintended loopholes and uncertainties.'' The White House says the bill ``[threatens] the financial security of the middle class.'' And public interest groups, such as the Consumer Federation of America, and some industry groups, have weighed in as well, voicing their strong opposition to the bill.

While not necessarily surprising, Republicans on the Agricultural Committee refused to work with Ranking Member PETERSON to improve this bill--despite his deep commitment to making the Commission work better for farmers, ranchers and manufacturers. Even though several of the megabanks that directly benefit from H.R. 2289 pled guilty to manipulating our foreign exchange markets, Republicans also rejected my amendment, which sought to ensure that these banks' admissions of violating our laws have real collateral consequences and are not merely symbolic.

Ultimately, this legislation is part of an ongoing, multifaceted Republican effort to undercut financial reform laws and regulations that protect consumers, investors and the economy. That's why it should come as no surprise that Koch Industries, for instance, spent $2.8 million lobbying to ensure the passage of this bill alone. The playbook is well-known: create huge loopholes and carve-outs for special interests, while simultaneously underfunding the cop with the authority to ensure compliance with the law.

I urge my colleagues to join me in voting ``No'' on this bill.

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