After a colloquy with Senate Agriculture Committee Chair Debbie Stabenow (D-MI), Senator Mike Crapo (R-ID) withdrew an amendment (SA 814) to the Senate appropriations bill (S2112) that would have prohibited any funds from being used by the CFTC to promulgate any final regulations under the derivatives title of Dodd-Frank, Title VII, until the agency substantiates that those rules provide end users with a clear exemption from margin requirements and set clear bounds on the extraterritorial reach of the Dodd-Frank derivatives requirements. While there is not yet a bipartisan agreement to go forward with the amendment at this time, noted Senator Crapo, there is a bipartisan list of issues that regulators need to address. They need to protect end users from burdensome margin requirements. Margin requirements proposed by regulators currently ignore the clear intent of Congress not to impose them on end users. They need to limit the extraterritorial application of Title VII per congressional intent in sections 722 and 764. They need to encourage greater coordination and harmonization between the SEC, the CFTC, and international regulators to seek broad harmonization of cross-border issues, and they need to ensure that the new rules are subject to robust and quantitative assessment of the costs and benefits.
In reply to Senator Crapo, Chairman Stabenow said that they have a number of areas of shared concern and that she has committed to work with him on these issues. First and foremost, Senator Stabenow agreed that Congress needs to protect manufacturers and other companies that use financial products to manage their legitimate business risks. These end users did not cause the financial crisis, she noted.
The Chairman believes that the CFTC has created an open and transparent
process and has worked to improve that process over time. They have held roundtables, sought public comment, and are making changes based on those comments to ensure that the new rules work. But it is important that Congress continues to work with the agencies to get these rules right. And, Congress expects the SEC and CFTC to work with each other and with their international counterparts to ensure that the regulations are consistent across international borders and avoid a regulatory race to the bottom while using mutual recognition as a guidepost. Most importantly, she added that the agencies need to create these rules in a way that provides businesses with market certainty. To that end, the Chair said that the Agriculture Committee will be holding another oversight hearing in the next few weeks. Cong. Record, Nov. 1, 2011, pps, S1934-1935.