Providing for consideration of the conference report to accompany the bill (H.R. 4173) to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes.

Mr. Speaker, pursuant to House Resolution 1490, I call up the conference report on the bill (H.R. 4173) to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes, and ask for its immediate consideration.

Mr. Speaker, at the outset I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks on this matter.

Mr. Speaker, to begin, I want to yield for a colloquy 3 minutes to one of the leaders in the House and certainly in our committee in forging this particular legislation and in fighting to make sure that fairness is done throughout all of our efforts, the gentlewoman from California (Ms. Waters).

If the gentlewoman would yield.

The answer is a resounding yes. And I certainly have been following her leadership in trying to make sure that these programs do more than many of them have done.

So the answer to her question is yes. Nothing new can be started after June 25, but it does not reach back and strangle in the cradle those programs that were under way. I confirm that the conference report would not prevent adjusting resources between already initiated programs based on their effectiveness.

Mr. Speaker, I yield myself such time as I may consume to correct a very incomplete picture that was just given.

The gentleman keeps quoting that one section. I'm astonished-- astonished--that he quotes it so blatantly out of context. Yes, there are powers that are given. Clearly, in the bill, it is only once the entity has been put into receivership on its way to liquidation.

The gentleman from Alabama has several times today talked about the powers as if they were just randomly given. I will be distributing the entirety of this, and it is the most distorted picture of a bill I have seen. The title, by the way, is headed: Orderly Liquidation of Current Financial Companies. The purpose of this title is to provide the necessary authority to liquidate failing financial companies. Again, I am astonished that he would not give the Members the full picture that comes as part of a subtitle that reads: Funding for Orderly Liquidation.

Yes.

Reclaiming my time, Mr. Speaker, please, let's get this started on the right point. Instruct the gentleman as to the rules. I thought he was going to ask me about what I said.

He has consistently read a part of this section, leaving out the part that would help Members understand it. He didn't say what he just said. He said he read these as if they were there in general. The powers he talked about come in the subsets of the section: Funding for Orderly Liquidation.

Those powers are just upon the appointment of a receiver. So this is not to keep an institution going. This is not AIG. Yes, he can be critical about the Bush administration on its own, without Congress, with regard to AIG. We repeal in this bill the power under which they acted and with the Federal Reserve's concurrence. By the way, it also says in here that those powers are subject to section 206.

Again, I don't know why the gentleman--I guess I do know why they would want to read this, but let me read it because it corrects entirely the wholly inaccurate picture he gave people. The actions that he read can be taken if the corporation determines mandatory terms and conditions for all orderly liquidation actions.

AIG was kept alive. This cannot be kept alive. This happens only as the death of the institution comes. He may think the Bush administration picked its friends. I think he is being unfair to Mr. Bernanke. I think he is being unfair to Mr. Paulson and Mr. Geithner. Anyway, here are the rules they would have to follow:

First, they would have to determine that such action is necessary for purposes of the financial stability and not for the purpose of preserving the covered company.

Two, they would have to ensure that the shareholders do not receive payment until the claims are paid.

They would have to ensure that unsecured creditors bear losses in accordance with the priority of claims in section 210. That is the

Mr. Speaker, producing this legislation has been one of the most impressive team efforts in which I have ever participated, and an indispensable member of the team going back to the early part of this century and his concern for mortgage lending and fairness in the rules is the gentleman from North Carolina (Mr. Watt) to whom I yield 3 minutes.

Mr. Speaker, I yield the gentleman 1 additional minute.

Mr. Speaker, I yield myself 15 seconds to correct the gentleman.

We have not created a consumer bureau under the Federal Reserve. It will be housed in the Federal Reserve. The Federal Reserve will have no ability to interfere. Some on the other side wish it would. But it will be a fully independent consumer bureau. It will get its mail at the Federal Reserve, but nobody there will be able to open it.

I now yield 4 minutes to the gentleman from Pennsylvania (Mr. Kanjorski), one of the leaders in putting together this bill in the area specifically of investor protection.

(Mr. KANJORSKI asked and was given permission to revise and extend his remarks.)

I now yield 3 minutes to one of the leaders in fashioning protection for consumers, the gentlewoman from New York (Mrs. Maloney).

I yield 1 minute to the gentleman from Georgia (Mr. Barrow).

I yield 2 minutes to the gentleman from New York (Mr. Meeks), a very important member of the committee who was helpful in forging some of the pieces of this.

I yield the gentleman an additional 15 seconds.

Mr. Speaker, I yield 2 minutes to my colleague from Massachusetts (Mr. Capuano), another member of the committee who has played a major role in this.

Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr. Fattah), who gave us an inspiration for trying to help unemployed people with their mortgages.

Mr. Speaker, I yield 4 minutes to the gentlewoman from California (Ms. Waters), one of the leaders in housing and matters of fairness in our committee, the chairman of the Housing Subcommittee.

I yield the gentlewoman 1 additional minute.

I yield 2 minutes to the gentleman from Florida (Mr. Hastings).

If the gentleman would yield, first, let me say that anybody who asks has my permission to skip any statement. That is an example I am going to try to follow myself sometimes.

Beyond that, I completely agree with the gentleman.

I yield an additional 15 seconds to the gentleman.

We do want to make sure it's an informed choice, and we're going to work on financial literacy. But, no, it is not our intention to deny anybody that choice.

I yield 3\1/2\ minutes to the gentleman from Illinois (Mr. Gutierrez), who's the chairman of the Financial Institution Subcommittee and has done a great deal of work to improve our financial situation through this bill.

I yield 1\1/2\ minutes to a very diligent member of our committee who has fought hard for the manufacturing interests of this country, the gentleman from Michigan (Mr. Peters).

If the gentleman would yield, the answer is absolutely. He has crafted this very well with our cooperation, and he has stated this completely accurately.

Mr. Speaker, I yield 13 minutes of my time to the gentleman from Minnesota (Mr. Peterson), the chairman of the Agriculture Committee, our co-conferee, and ask unanimous consent that he control that time.

I yield 1 minute to my colleague, the gentleman from Minnesota (Mr. Peterson), the chairman of the Agriculture Committee.

I yield the gentleman 15 additional seconds.

And the gentleman is absolutely right. We do differentiate between end users and others. The marginal requirements are not on end users. They are only on the financial and major swap participants. And they are permissive. They are not mandatory, and they are going to be done, I think, with an appropriate touch.

U.S. Senate,

Washington, DC, June 30, 2010.

Hon. Chairman Barney Frank,

Financial Services Committee, House of Representatives,

Rayburn House Office Building, Washington, DC.

Hon. Chairman Collin Peterson,

Committee on Agriculture, House of Representatives, Longworth

House Office Building, Washington, DC.

Dear Chairmen Frank and Peterson: Whether swaps are used by

an airline hedging its fuel costs or a global manufacturing

company hedging interest rate risk, derivatives are an

important tool businesses use to manage costs and market

volatility. This legislation will preserve that tool.

Regulators, namely the Commodity Futures Trading Commission

(CFTC), the Securities and Exchange Commission (SEC), and the

prudential regulators, must not make hedging so costly it

becomes prohibitively expensive for end users to manage their

risk. This letter seeks to provide some additional background

on legislative intent on some, but not all, of the various

sections of Title VII of H.R. 4173, the Dodd-Frank Act.

The legislation does not authorize the regulators to impose

margin on end users, those exempt entities that use swaps to

hedge or mitigate commercial risk. If regulators raise the

costs of end user transactions, they may create more risk. It

is imperative that the regulators do not unnecessarily divert

working capital from our economy into margin accounts, in a

way that would discourage hedging by end users or impair

economic growth.

Again, Congress clearly stated in this bill that the margin

and capital requirements are not to be imposed on end users,

nor can the regulators require clearing for end user trades.

Regulators are charged with establishing rules for the

capital requirements, as well as the margin requirements for

all uncleared trades, but rules may not be set in a way that

requires the imposition of margin requirements on the end

user side of a lawful transaction. In cases where a Swap

Dealer enters into an uncleared swap with an end user, margin

on the dealer side of the transaction should reflect the

counterparty risk of the transaction. Congress strongly

encourages regulators to establish margin requirements for

such swaps or security-based swaps in a manner that is

consistent with the Congressional intent to protect end users

from burdensome costs.

In harmonizing the different approaches taken by the House

and Senate in their respective derivatives titles, a number

of provisions were deleted by the Conference Committee to

avoid redundancy and to streamline the regulatory framework.

However, a consistent Congressional directive throughout all

drafts of this legislation, and in Congressional debate, has

been to protect end users from burdensome costs associated

with margin requirements and mandatory clearing. Accordingly,

changes made in Conference to the section of the bill

regulating capital and margin requirements for Swap Dealers

and Major Swap Participants should not be construed as

changing this important Congressional interest in protecting

end users. In fact, the House offer amending the capital and

margin provisions of Sections 731 and 764 expressly stated

that the strike to the base text was made ``to eliminate

redundancy.'' Capital and margin standards should be set to

mitigate risk in our financial system, not punish those who

are trying to hedge their own commercial risk.

Congress recognized that the individualized credit

arrangements worked out between counterparties in a bilateral

transaction can be important components of business risk

management. That is why Congress specifically mandates that

regulators permit the use of non-cash collateral for

counterparty arrangements with Swap Dealers and Major Swap

Participants to permit flexibility. Mitigating risk is one of

the most important reasons for passing this legislation.

Congress determined that clearing is at the heart of

reform--bringing transactions and counterparties into a

robust, conservative and transparent risk management

framework. Congress also acknowledged that clearing may not

be suitable for every transaction or every counterparty. End

users who hedge their risks may find it challenging to use a

standard derivative contracts to exactly match up their risks

with counterparties willing to purchase their specific

exposures. Standardized derivative contracts may not be

suitable for every transaction. Congress recognized that

imposing the clearing and exchange trading requirement on

commercial end-users could raise transaction costs where

there is a substantial public interest in keeping such costs

low (i.e., to provide consumers with stable, low prices,

promote investment, and create jobs.)

Congress recognized this concern and created a robust end

user clearing exemption for those entities that are using the

swaps market to hedge or mitigate commercial risk. These

entities could be anything ranging from car companies to

airlines or energy companies who produce and distribute power

to farm machinery manufacturers. They also include captive

finance affiliates, finance arms that are hedging in support

of manufacturing or other commercial companies. The end user

exemption also may apply to our smaller financial entities--

credit unions, community banks, and farm credit institutions.

These entities did not get us into this crisis and should not

be punished for Wall Street's excesses. They help to finance

jobs and provide lending for communities all across this

nation. That is why Congress provided regulators the

authority to exempt these institutions.

This is also why we narrowed the scope of the Swap Dealer

and Major Swap Participant definitions. We should not

inadvertently pull in entities that are appropriately

managing their risk. In implementing the Swap Dealer and

Major Swap Participant provisions, Congress expects the

regulators to maintain through rulemaking that the definition

of Major Swap Participant does not capture companies simply

because they use swaps to hedge risk in their ordinary course

of business. Congress does not intend to regulate end-users

as Major Swap Participants or Swap Dealers just because they

use swaps to hedge or manage the commercial risks associated

with their business. For example, the Major Swap Participant

and Swap Dealer definitions are not intended to include an

electric or gas utility that purchases commodities that are

used either as a source of fuel to produce electricity or to

supply gas to retail customers and that uses swaps to hedge

or manage the commercial risks associated with its business.

Congress incorporated a de minimis exception to the Swap

Dealer definition to ensure that smaller institutions that

are responsibly managing their commercial risk are not

inadvertently pulled into additional regulation.

Just as Congress has heard the end user community,

regulators must carefully take into consideration the impact

of regulation and capital and margin on these entities.

It is also imperative that regulators do not assume that

all over-the-counter transactions share the same risk

profile. While uncleared swaps should be looked at closely,

regulators must carefully analyze the risk associated with

cleared and uncleared swaps and apply that analysis when

setting capital standards for Swap Dealers and Major Swap

Participants. As regulators set capital and margin standards

on Swap Dealers or Major Swap Participants, they must set the

appropriate standards relative to the risks associated with

trading. Regulators must carefully consider the potential

burdens that Swap Dealers and Major Swap Participants may

impose on end user counterparties--especially if those

requirements will discourage the use of swaps by end users or

harm economic growth. Regulators should seek to impose

margins to the extent they are necessary to ensure the safety

and soundness of the Swap Dealers and Major Swap

Participants.

Congress determined that end users must be empowered in

their counterparty relationships, especially relationships

with swap dealers. This is why Congress explicitly gave to

end users the option to clear swaps contracts, the option to

choose their clearinghouse or clearing agency, and the option

to segregate margin with an independent 3rd party custodian.

In implementing the derivatives title, Congress encourages

the CFTC to clarify through rulemaking that the exclusion

from the definition of swap for ``any sale of a nonfinancial

commodity or security for deferred shipment or delivery, so

long as the transaction is intended to be physically

settled'' is intended to be consistent with the forward

contract exclusion that is currently in the Commodity

Exchange Act and the CFTC's established policy and orders on

this subject, including situations where commercial parties

agree to ``book-out'' their physical delivery obligations

under a forward contract.

Congress recognized that the capital and margin

requirements in this bill could have an impact on swaps

contracts currently in existence. For this reason, we

provided legal certainty to those contracts currently in

existence, providing that no contract could be terminated,

renegotiated, modified, amended, or supplemented (unless

otherwise specified in the contract) based on the

implementation of any requirement in this Act, including

requirements on Swap Dealers and Major Swap Participants. It

is imperative that we provide certainty to these existing

contracts for the sake of our economy and financial system.

Regulators must carefully follow Congressional intent in

implementing this bill. While Congress may not have the

expertise to set specific standards, we have laid out our

criteria and guidelines for implementing reform. It is

imperative that these standards are not punitive to the end

users, that we encourage the management of commercial risk,

and that we build a strong but responsive framework for

regulating the derivatives market.

Sincerely,

Chairman Christopher Dodd,

Senate Committee on Banking, Housing, and Urban Affairs,

U.S. Senate.

Chairman Blanche Lincoln,

Senate Committee on Agriculture, Nutrition, and Forestry,

U.S. Senate.

Mr. Speaker, I yield 1 minute to the gentleman from Maryland (Mr. Hoyer), the majority leader.

I would just say to the gentleman from New Jersey, I can only judge by what I see. When the House voted on this bill last December, the minority had certain amendments made in order by the rules, not as many as they would have liked or as I would have liked, but in the end they had the motion to recommit, over which they had complete editorial control. The motion to recommit on this version of this bill that passed the House last December from the minority said no regulation, no reform of regulation.

It had one provision. It said kill everything in the bill. It didn't say do it differently. It didn't amend it. It didn't change it. It said do not change anything. Do not reform anything except end the TARP, which thanks to the Senate we are now doing in this bill.

So I can only judge by what I see. When the gentleman says that, when the minority had a chance to offer their own version of this, they offered a version that said no, no reform, no change, no regulation, leave the status quo.

I yield 1 minute to the Speaker of the House.

I yield myself the balance of my time.

Mr. Speaker, to begin, I want to address the Members who are concerned that the interchange amendments will unduly affect smaller financial institutions. The interchange amendment wasn't part of the bill here. It was put in by a very heavy vote in the Senate, and the conference process means you compromise.

There is in that amendment, as Senator Durbin put it in, an exemption for any fee setting by the Federal Reserve for smaller institutions. They then feared that they would be discriminated against, so we amended the amendment with the participation of the Senate, obviously. There are three provisions that protect the smaller institutions, community banks and credit unions.

There is an antidiscrimination provision that says that merchants and retailers cannot refuse to accept a debit card. There can be no discrimination against small banks for their credit cards. The Federal Reserve, the instructions to the Federal Reserve, include making that antidiscrimination work, and we can guarantee people we will do it.

So, yes, as the amendment passed the Senate, it said that these smaller institutions were exempt but that they might have suffered discrimination. They are protected in this bill. That's why, for instance, the small banks in Illinois have endorsed this bill.

I also want to talk briefly about what has happened with the TARP. We had the two last Republican speakers. One hailed the CBO as an unassailable authority. Then the final speaker said it was hocus-pocus. It is apparently unassailable hocus-pocus, which I don't want to get into. It's too late at this time.

This is how the TARP thing works. There are two parts to the TARP. The bill does say that repayments go to debt relief. There have been substantial repayments from the banks, and those go to debt relief. They are unaffected by the amendment. What the amendment says is there are still tens of billions of dollars of TARP money that could be committed. The amendment we adopted in conference says no more, that they cannot do that. That's where the savings comes. So the savings comes from not allowing additional TARP spending.

You know about the Republicans with regard to cutting off TARP? They were for it before they were against it. They used to be all for cutting out the TARP until it came up here. Now, let me say I don't like that way to do it. I prefer what we had in our provision, which was to assess the Goldman Sachs, JPMorgan Chase, Mr. Paulson's hedge fund. That's the way we wanted to do it, but we couldn't get it through the Republicans in the Senate. So, first, Republicans in the Senate tell us, Don't do it. Then other Republicans in the Senate say, Why didn't you do it?

So I'll make Members a pledge right now: The committee I chair will, I hope, bring out a bill that revives that assessment on the financial institutions above $50 billion and the hedge funds. So Members who missed it will get a chance to show us they really care. We will bring them there, and we will have that come forward.

Now, I do want to talk a little bit about subprime lending and about the partial history we get.

The fact is that the Republican Party controlled the House and the Senate from 1995 to 2006. During that period, they showed remarkable restraint. As eager as they were to restrain subprime lending and as passionate as they were to reform Fannie Mae and Freddie Mac, they didn't do it. That's a degree of abstinence unparalleled in political history. They were in charge.

Whose fault was it? Apparently, it was our fault. It was my fault. As I said before, people have accused me of being this secret manipulator of Tom DeLay. Well, if that were the case, you wouldn't have cut taxes for very rich people. You wouldn't have gone to war in Iraq. As I said, if he were listening to me, he wouldn't have gotten on the dance show. So I don't take responsibility for Mr. DeLay. The Republican Party didn't do it.

Now, the gentleman from California (Mr. Royce) said he tried in 2005. He had an amendment to the bill of Mr. Oxley. Mr. Oxley, the Republican chairman of the committee, brought out a bill. Mr. Royce didn't like it. He brought up his amendments. If no Democrat had voted either in committee or on the floor of the House on that bill, it would have looked exactly as it looked. The majority was Republican. So, apparently, the gentleman from California (Mr. Royce) wasn't able to persuade even a third of his fellow Republicans to vote with him.

I'm sorry he wasn't able to do better. I'm not an expert in how to get Republicans to vote with you, so I can't offer him any help. Maybe he can find somebody who can teach him how to get better votes among Republicans, but it's not our fault that the Republican Party didn't do it.

By the way, in 2003, I did say I didn't see a problem with Fannie Mae and Freddie Mac. Then, in 2004, President Bush said to Fannie Mae and Freddie Mac, I order you. He had the power and he used it. He used it to order them to increase their subprime lending purchases. By the way, he wasn't alone in that. A June 22 article from the Wall Street Journal quotes a Member of Congress, in 2005, at a hearing, saying, ``With the advent of subprime lending, countless families have now had their first opportunity to buy a home or perhaps be given a second chance.'' Fail once. Get it again.

The American Dream should never be limited to the well-offs or to those consumers fortunate enough to have access to prime rate loans. That is from the gentleman from Texas (Mr. Hensarling). So George Bush wasn't alone in that.

Then 2007 came, and the Democrats took power. We passed a bill, for the first time in this House, to regulate Fannie Mae and Freddie Mac. Secretary Paulson liked the bill. He said it didn't go as far as he would have liked, but it was a good bill. In 2008, it finally passed, and Fannie Mae and Freddie Mac were put in a conservatorship. They were the first major institutions to be reformed.

By the way, in 2007, in this House, we also passed a bill to control subprime lending. Now, the gentleman from Alabama had been the chairman of the subcommittee with jurisdiction over subprime lending during some of those Republican years, and he never produced a bill. He said it was our fault. He wrote us a letter--myself, Mr. Watt of North Carolina, and Mr. Miller of North Carolina--and we didn't tell him we'd vote for it.

You know, I wish I could have it back. I wish I knew I was secretly in charge of the Republican agenda. I wish I knew they wouldn't do anything unless I said they could and that they would do something if I said they should, but no one told me. Where were they when I needed them to be more powerful? He didn't bring it forward. It wasn't my fault. The Republicans never checked with me as to what they were supposed to do.

In 2007, we did pass such a bill to restrict subprime lending, and The Wall Street Journal attacked us. It said it was a ``Sarbanes- Oxley'' for housing. Sarbanes-Oxley is about as nasty as you can get in The Wall Street Journal, and here is what they said about subprime lending in 2007.

So maybe that is why George Bush expanded subprime lending.

The Wall Street Journal said in 2007, complaining about our bill, ``But for all the demonizing, about 80 percent of even subprime loans are being repaid on time and another 10 percent are only 30 days behind. Most of these new homeowners are low-income families, often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank's legislation will ensure that far fewer of these loans are issued in the future.''

Yeah. Unfortunately, a couple of years too late, because we couldn't get that through. But the Wall Street

Journal was right, we would limit them, but wrong, along with the gentleman from Texas (Mr. Hensarling) about the subprime loans. And I also wanted to do affordable rental housing, which that administration opposed.

This bill has the biggest package of increased consumer protections in the history of America. And it doesn't ban products or ration products. It says there is going to have to be fair dealing. This bill says that there is a fiduciary responsibility on people selling products to individual investors for the first time. It gives the SEC the power to do it, and they are going to do it. This bill reforms the system, and I hope it is enacted.

This conference report would not have been possible without the hard work of staff on both sides of the Capitol. I thank them for their efforts and submit the following list:

Wall Street Reform--Staff

House Financial Services Committee

Jeanne Roslanowick

Michael Beresik

David Smith

Adrianne Threatt

Andrew Miller

Daniel Meade

Katheryn Rosen

Kate Marks

Kellie Larkin

Tom Glassic

Rick Maurano

Tom Duncan

Gail Laster

Scott Olson

Lawranne Stewart

Jeff Riley

Steve Hall

Erika Jeffers

Bill Zavarello

Steve Adamske

Elizabeth Esfahani

Daniel McGlinchey

Dennis Shaul

Jim Segal

Brendan Woodbury

Patty Lord

Lois Richerson

Jean Carroll

Kirk Schwarzbach

Marcos Manosalvas

Marcus Goodman

Garett Rose

Todd Harper

Kathleen Mellody

Jason Pitcock

Charla Ouertatani

Amanda Fischer

Keo Chea

Sanders Adu

Hilary West

Flavio Cumpiano

Karl Haddeland

Glen Sears

Stephane LeBouder

Office of Rep. Carolyn Maloney

Kristin Richardson

Office of Rep. Gregory Meeks

Milan Dalal

Office of Rep. Mary Jo Kilroy

Noah Cuttler

Office of Rep. Gary Peters

Jonathan Smith

House Agriculture Committee

Clark Ogilvie

House Budget Committee

Greg Waring

House Energy and Commerce Committee

Phil Barnett

Michelle Ash

Anna Laitin

House Judiciary Committee

George Slover

House Oversight and Government Reform Committee

Mark Stephenson

Adam Miles

House Legislative Counsel

Jim Wert

Marshall Barksdale

Brady Young

Jim Grossman

Senate Banking Committee

Ed Silverman

Amy Friend

Jonathan Miller

Dean Shahinian

Julie Chon

Charles Yi

Marc Jarsulic

Lynsey Graham Rea

Catherine Galicia

Matthew Green

Deborah Katz

Mark Jickling

Donna Nordenberg

Levon Bagramian

Brian Filipowich

Drew Colbert

Misha Mintz-Roth

Lisa Frumin

William Fields

Beth Cooper

Colin McGinnis

Neal Orringer

Kirstin Brost

Peter Bondi

Sean Oblack

Steve Gerenscer

Dawn Ratliff

Erika Lee

Joslyn Hemler

Caroline Cook

Robert Courtney

Abigail Dosoretz

Senate Agriculture Committee

Robert Holifield

Brian Baenig

Julie Anna Potts

Pat McCarty

George Wilder

Matt Dunn

Elizabeth Ritter

Stephanie Mercier

Anna Taylor

Cory Claussen

Senate Legislative Counsel

Rob Grant

Alison Wright

Kim Albrecht-Taylor

Colin Campbell

Laura McNulty Ayoud

Congressional Research Service

Baird Webel

Parliamentary inquiry, Mr. Speaker.

This is a legitimate parliamentary inquiry, probably the first one I have ever made or heard. But there was a lot of confusion.

Is it the case apparently that there is no debate on a motion to recommit on a conference report?

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself 5 minutes.

Mr. Speaker, today I would like to address the good, the bad, and the ugly in this bill.

The good: There is consumer protection. There is more disclosure and transparency. There are some bipartisan provisions in this bill that add a whistleblower office to the SEC. But the bad and the ugly far outweigh those.

In total, this bill is a massive intrusion of Federal Government into the lives of every American. It is the financial services equivalent of ObamaCare, the government takeover of our health care system.

If finally enacted, it will move us further toward a managed economy, with the Federal Government's making decisions that have been and should stay

in the hands of individuals and private businesses.

For instance, it will make the compensation of every employee of a financial firm subject to rules set by a government overseer. Can you imagine anything as basic as what an employer pays an employee controlled by a Federal bureaucrat in Washington? It will even apply to clerical employees. Government regulators will be empowered to seize and break up even healthy firms they decide are systemic risks and to even appoint new management to run these private companies.

As I said on the floor earlier today, this bill will institutionalize AIG-type bailouts of creditors and counterparties, and it will saddle taxpayers with the losses resulting from out-of-control risk-taking by Wall Street institutions--gamblers. My colleagues on the other side of the aisle will tell you this bill does not include a bailout fund. They are wrong.

As I explained earlier, here it is, laid out. You can lend money to a failing company. Now, how do you get money back from a failing company? You can purchase their assets. You can guarantee their obligations. You can sell or transfer their assets. It is there.

What does this cost?

As I explained earlier, the FDIC can borrow up to 90 percent of a firm's assets. That's $2 trillion in the case of Bank of America alone. They could borrow $2.1 trillion in that case alone. That is a bailout fund, period.

Not only will it make bailouts permanent, but it will empower government employees to go around settled bankruptcy law in so-called ``resolutions,'' done behind closed doors, with unequal treatment of creditors at the whim of politically influenced government officials. This has already happened. A financial firm's ability to survive a crisis like the one we went through 2 years ago will depend, as it did then, on whether its CEO can get the President of the New York Fed on the phone on a Saturday night, as one firm did. Friendships and being well-connected should not determine the success or failure of private enterprises.

Finally, it imposes an $11 billion tax disguised as an FDIC assessment. To fund this new government spending, they tax Main Street banks and financial institutions. They raise their FDIC premiums even though those premiums would go to bail out Wall Street firms and not to save depositors, as the system was designed to do.

Mr. Speaker, if you voted against this bill on the floor, if you voted against it in committee, you need to vote against it again, because it is even worse than when it came out of the House.

We have seen the anger and frustration generated by the injustice of too-big-to-fail bailouts. We have seen the folly of implied guarantees as with Fannie and Freddie. We have seen, time after time, the failure of government-run schemes to create jobs and to grow the real economy. Nevertheless, here the majority party is again, doing the same thing over and over, blindly hoping that, suddenly, this time, they will get a different result. Well, you're right. The American people are demanding a different result, and in a series of recent elections, they have told incumbents to go home and to spend their own money, not theirs--not the taxpayers'.

In conclusion, if you choose to bail out the creditors and counterparties of the big Wall Street firms or to loan them money when they get in trouble, don't expect the voters to bail you out come November.

I reserve the balance of my time.

Will the gentleman yield?

When I say they shouldn't bail out the creditors and counterparties, I don't care whether they are in receivership or not. They should not bail them out, period.

At this time, I yield 3 minutes to the gentleman from Texas (Mr. Smith), the ranking member of the Judiciary.

Mr. Speaker, I yield 2 minutes to the gentleman from Missouri (Mr. Blunt).

At this time I yield 3 minutes to the gentleman from Indiana (Mr. Pence).

(Mr. PENCE asked and was given permission to revise and extend his remarks.)

At this time, Mr. Speaker, I yield 2 minutes to the ranking member of the Subcommittee on International Monetary Policy and Trade, the gentleman from California (Mr. Gary G. Miller).

Mr. Speaker, at this time I yield 2 minutes to the gentleman from Georgia (Mr. Price), the chairman of the Republican Study Committee.

I yield 2 minutes to the gentleman from California (Mr. McCarthy).

I yield 2 minutes to the gentleman from Florida (Mr. Putnam).

I yield 2 minutes to the gentleman from Virginia (Mr. Cantor), the Republican whip.

Mr. Speaker, at this time I yield 4 minutes to the gentleman from California (Mr. Issa), the ranking member of Oversight and Government Reform.

(Mr. ISSA asked and was given permission to revise and extend his remarks.)

Mr. Speaker, at this time I yield 3 minutes to the gentleman from Texas (Mr. Paul), the ranking member of the Domestic Monetary Policy Committee.

(Mr. PAUL asked and was given permission to revise and extend his remarks.)

I yield myself 15 seconds.

Mr. Speaker, I don't think you would go to a funeral home and lend the corpse money. So I don't know why you would lend money to a failing firm. You ought to just go ahead and put them in bankruptcy like we want to do.

Mr. Speaker, at this time I yield 3 minutes to the gentlelady from Illinois who's the chairman of the Financial Services Oversight Committee (Mrs. Biggert).

Mr. Speaker, I yield 7 minutes to the gentleman from Oklahoma (Mr. Lucas), who is the ranking member of the Agriculture Committee, to then yield time to his members.

Mr. Speaker, can I inquire as to the time left on both sides?

At this time I yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), who is the ranking member of the Capital Markets Subcommittee.

Mr. Speaker, I yield the gentleman 1\1/2\ additional minutes.

At this time I yield 4 minutes to the gentleman from California (Mr. Royce), a senior member of the committee.

Mr. Speaker, at this time I yield 5 minutes to the gentleman from Texas (Mr. Hensarling), the ranking member on the Financial Institutions Subcommittee.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I hear two people that I know are leaders of the majority; and they each, Mr. Hoyer and Ms. Pelosi, I know they appear to be sincere when they say that never again will the American people be asked to bail out those on Wall Street who made reckless deals; no longer will the taxpayer be put on the hook.

Yet there is an inconvenient truth here for my Democratic friends, and that is the clear wording of the bill. I mean I think it is elementary that before we pass legislation that we read it. I would not repeat this except that my colleagues in the majority continue to say time after time after time that there is no bailout, and there is. There is an AIG-style bailout. Now, AIG cannot be saved under this legislation. In fact, we changed that, and we both insisted in a bipartisan way that the AIGs of today will not survive. They will not survive under this bill. AIG, under this bill--and in bipartisan way we agree--failed. We say we put the AIGs into bankruptcy, and they are resolved in that way. My Democrat colleagues say that an AIG-like failing company will be put in an FDIC supervised resolution authority.

Now, Mr. Frank is correct when he says, Wait a minute. Wait a minute. This only occurs when these firms are being placed in liquidation. They are being liquidated.

Well, now, I agree with him, but is there no bailout of anyone on Wall Street? Well, of course there is. It is a very expensive bailout.

In the Dodd-Frank bill, it is section 204D(1-6). I mean, go write this down. Go and read it. It says that the FDIC can, one, lend to a failing firm; two, purchase the assets of a failing firm; three, guarantee the obligation of a

failing firm; four, take a security interest in the assets of a failing firm; five, and/or sell the assets that the FDIC has acquired from the failing firm.

Why would you lend a failing firm money? I keep asking that. The second thing is: Where is the bailout fund in this bill?

There is no bailout fund in this bill. There is $19 billion that is assessed towards community banks. They are FDIC assessments that are raised, which are about $9 billion, and there is the TARP program that ended 3 months sooner than it should have. We were told somehow, because we were not going to start any new programs in that 3 months, that somehow--hocus-pocus--it saves us about $10 billion. It is hocus- pocus because you cannot spend the money on the new programs in this bill and then turn around and suddenly pull out of a hat that same money and give it back to the taxpayers. It just doesn't happen.

Also, Speaker Pelosi may forget that one of the first signs of trouble was not in September of 2008 but in July of 2008 when we suddenly realized that Fannie and Freddie were insolvent and that many of our banks, almost all of our banks, had major positions in their shares. Why did they have major positions in the shares of Fannie and Freddie? They lost all of that money because the government had said, If you'll invest in that, we'll give you a special rating, and we'll count it as the same as treasuries. It disappeared overnight.

Now, that was in July, not in September. Banks took a hit on that. The Democrats said at that time--and the Bush administration and Secretary Paulson--we've got to give $400 billion to Fannie and Freddie because, in 1999, under the Clinton administration, you said let's loan to people with poor credit; let's loan to people without much of a downpayment. Republicans and Democrats both rushed to use this as a source of cheap money, and it failed.

Republicans said--and still say and say as this bill is on the floor--wait a minute. You're going to reform these companies before you pour taxpayer dollars in them. Every Republican in the House voted, no, we will not give them taxpayer money until they are reformed and there is a plan to liquidate them.

The chairman says we need to liquidate them. What about Fannie and Freddie? Why aren't we liquidating them? We're not. The biggest bailout that we've had is of Fannie and Freddie. Who did we bail out? Did we bail out the banks that had shares? No, we bailed out the Chinese bondholders. Secretary Paulson said, You know what? The Chinese might not lend us any money.

Let me tell you that we'll sure need the Chinese to lend us money if this bill passes, because there is a derivatives section in here.

Now, we have a letter that Chairman Peterson produced, which said this doesn't affect end users, but it's a letter. The truth is we were in conference last week when we fought this out, and we voted for an exemption for end users. The Democrats voted against one. We've been told in the past 48 hours, 72 hours, by groups like the International Swap and Derivatives Association that this bill will cost businesses $1 trillion. $1 trillion. That is capital. It doesn't matter whether they trade on the derivatives or if someone does it for them. Someone has to post that capital, and that goes through and is an expense for that commercial company.

If you take $1 trillion out of the economy suddenly, sure, you are going to have a crisis like this bill anticipates. This bill says, if there is such a crisis, then a receiver is appointed. Chairman Frank keeps saying, A receiver is appointed. A receiver is appointed.

That's right. That receiver, after 30 days, is authorized to borrow 90 percent of the fair value of the failing companies.

Chairman Frank, that is $8.5 trillion. That money is not in this bill. There is not even $10 billion in this bill for this type of resolution. So you have to go to the banks or you have to go to the financial companies or you're going to get it after the fact. If they're failing, how are they going to pay it?

I want to close with a positive. The 320 Members of this House who took a stand can take a stand in just a few minutes.

Collin Peterson, Chairman Peterson, said that there are no requirements that end users post margins. We all agree that, if they had to, it would be $1 trillion out of these companies. $1 trillion, according to Joe Biden, will produce 700,000 to 1.4 million jobs and will produce as many as 200,000 jobs a month. So that is the hit to this economy if this does apply to end users.

So we have a motion to recommit. First, it says there is an exemption on end users. Now, you have said that there is one, and you have this letter from Chairman Dodd and Blanche Lincoln saying there is one, so that's half of it. So you'd vote for that because you're saying it's in there.

Secondly, there is the Federal audit. We need the taxpayers to demand--and the voters are demanding--of Mr. Hoyer transparency at the Fed. They are spending trillions of dollars. They are committing trillions of dollars. Let's have this audit of the Fed.

Mr. Speaker, the American people are sick and tired of back room deals and secret manipulations of the economy to benefit political cronies at the expense of taxpayers.

The voters and taxpayers are demanding transparency and accountability and they will not be pacified with false promises or misdirection. Calling a bank tax an ``assessment'' fools no one, especially the voters.

That's why I will be offering a motion to recommit at the conclusion of this debate that will replace the weak Federal Reserve Audit in the conference report with a robust provision patterned after a bill co- sponsored by 320 members of this House when it was offered by Congressman Paul.

Taxpayers want to see for themselves what their government is doing with their money. And that includes specifically the Federal Reserve, an institution that has unfettered powers and whose errors of judgment were a contributing cause of the financial crisis.

Monetary policy fueled the credit boom and bust cycle. The Fed needs to be held accountable for any mistakes it has made in the past and any it may be making now. Failing to hold the Fed accountable increases the likelihood of those mistakes being repeated in the future, and exposes taxpayers to an unacceptable level of risk.

The American people support a full audit of the Federal Reserve System to achieve the level of transparency needed to protect taxpayer dollars and ensure accountability.

With each taxpayer dollar it committed during the financial crisis, the Fed assured the American people they would not take losses. American taxpayers deserve more than the central bank's assurances; they deserve proof. A full audit of the Federal Reserve System is the only way to create the openness that a democratic society like ours demands.

The second element of the Motion to Recommit attempts to correct one of the most damaging aspects of this bill and that is saying a lot because there are a number of seriously misguided provisions in this legislation.

Several items in the conference report will impact companies' ability to create jobs.

It has been reported that BP and Enron have tried to manipulate markets using derivatives but we do not need any new law to regulate that kind of illegal activity. It is already illegal. We do need regulators to enforce the rules.

The lack of an end user exemption for commercial companies in the derivatives title will pull an estimated one trillion dollars of resources from job creation and investment.

Coincidentally, the combined stimulus packages enacted in the last two years also amounts to about one trillion dollars. Vice President Biden told us on June 2nd that the Obama stimulus package alone would result in the creation of between 700,000 and 1.4 million jobs in the remainder of 2010. Under the vice president's logic, diverting one trillion dollars from productive commercial business capital could presumably destroy up to 1.4 million jobs.

Instead of allocating precious resources to hire more people or increase wages, commercial companies will have to post capital every time they enter into a derivatives contract to hedge against legitimate business risk.

If this legislation--supposedly intended to regulate the financial services industry--is enacted, capital requirements will force non- financial companies to abandon legitimate hedging strategies and accept excessive volatility at a cost that will ultimately be borne by their customers and employees.

Margin requirements for ``end-users'' are not a new issue for Members of the House. Chairman Frank tried to insert an amendment in the House bill last December which would have explicitly allowed regulators to set margin requirements for end-users. It failed overwhelmingly, by a vote of 150 to 280.

Withdrawing a trillion dollars from the private sector could well sow the seeds of the

next crisis because it could destabilize the financial system, possibly triggering another vicious cycle of government bailouts to correct the results of bad government policy.

The House should ensure that the potential economic harm in these derivative provisions is avoided by approving this Motion to Recommit and sending this defective legislation back to the conference to be rewritten.

Mr. Speaker, I want to add these comments regarding Section 913 of the Report calling for a review by the Securities and Exchange Commission, SEC, of the current regulation of investment advisers and broker-dealers.

The Conference Report on H.R. 4173 directs the SEC to conduct a study to evaluate the effectiveness of current standards--both at the state and federal levels--with respect to investment advisers and broker- dealers when providing personalized investment advice and recommendations about securities to retail customers.

Before the SEC proceeds with any new rules and regulations in this area, it is critically important that the unique roles of different financial professionals, their distinct relationships with their customers, and the nature of the services and disclosures they provide be fully examined and well understood. These definitive factors should provide information to guide the SEC in determining if any new rules and regulations are needed and defining the details of any such measures that might be proposed.

The conferees included the requirement for a comprehensive study for these purposes, and I anticipate that the SEC will follow the intent of Congress with a thorough and objective analysis in this regard.

Mr. Speaker, I have a motion to recommit with instructions at the desk.

Yes.

Mr. Speaker, on that I demand the yeas and nays.

Parliamentary Inquiry

I thank the chairman for yielding, and I congratulate the chairman for the extraordinary work he has done. I thank Mr. Bachus too, who is, I think, one of the really responsible leaders in the minority in terms of issues of substance. And when there are differences, they are honest differences.

Mr. Speaker, I come to the floor, and when I do, I hear portions of the debate, sometimes not all of the debate. I want to make an observation, though. I listened to the gentleman from New Jersey, and he remarked on what the people were saying. And I think that, frankly, his remarks reflected the difference in the perspective between the two parties.

Indeed, that perspective has been reflected in my three decades here, under Mr. Reagan and others who have served as President and lastly with Mr. Bush, Mr. Obama's immediate predecessor. And that perspective was, if the regulators would simply get out of the way, things would be fine. Mr. Royce indicates that the market will take care of things. ``The market will discipline itself,'' he said. Phil Gramm said that with respect to the derivatives.

Unfortunately, I voted for that bill that Mr. Gramm was for. I made a mistake. Brooksley Born was correct. The market did not discipline itself. In fact, the market took extraordinarily irresponsible steps. What I hear, I tell my friend from New Jersey, the people saying is, Don't let the big guys trample on us. Don't let the big guys put us at great risk. Don't let the big guys make decisions that they take the risk and we take the loss. That's what I hear the people saying, and that's what I think this bill is designed to respond to.

This week Mr. Boehner compared reforming Wall Street to killing an ant with a nuclear weapon. Well, that may sound colorful, but this is the greatest economic crisis that any of us--I'm looking around on this floor--have experienced in our lifetimes. And I am closer to experiencing the last one than any of you, I think, on the floor are. But none of us, even at my advanced age, were alive during the Great Depression. So this is the first time that we have experienced such a deep, deep recession.

But I will tell you, the 8 million Americans whose jobs it took away think it was a mighty big ant that squashed them and their families, or the millions more who saw their savings devastated or the families in every one of our districts who have lost their homes. They're thinking to themselves, Mr. Boehner, that was a mighty big ant that came my way. And not to more than half of the Nation's working adults who report that they have been pushed by the recession into ``unemployment, pay cuts, reduced hours at work or part-time jobs,'' according to a Pew Research Center Survey reported in today's Washington Post.

Now, some of you may think that was an ant that walked through here, but some think it was a pretty big elephant. It squashed them and hurt them.

I don't mean an elephant in the symbol of your party, a respected animal with a long memory.

But we have differences, and the differences are, as I've said before, that you perceive regulation as harmful.

My analogy is, if you take the referee off the football field, I guarantee the split end's going to leave early. He's going to try to get an advantage. And I guarantee the little guys on the field are going to get trampled on by the big guys because there's no referee to say, Time out. You broke the rules.

This bill is about putting the referee back on the field and saying, Obey the rules. Do not trample on the little people. Don't take risks that you will expect them to pay for.

More than half, Mr. Speaker, of today's families have been affected. There is no way to overstate what happened to them, and there is no mistaking the cause of the crisis: The Wall Street culture of reckless gambling, and a culture of regulatory neglect that the last administration wants to perpetuate it, and some want to return to.

I simply think that would be a mistake. I tell my friend from New Jersey, the people I talk to think it would be a mistake as well. They don't like what's happened. They don't want it to happen again, and this is an effort to make sure that's the case.

Never again. Never again should Wall Street greed bring such suffering to our country. And never again should Washington stand by as that greed manifests itself as irresponsible risk taking where a few share the profits, but Main Street bears the brunt of Wall Street's lost bets.

Now, let me say that I voted for that bill--I was wrong--the Gramm bill that said Brooksley Born was wrong, we didn't need to regulate derivatives. And by the way, there were a number of Democrat leaders who said that as well, that we didn't need to, and Mr. Greenspan said it as well. He's admitted he made a mistake, and he was distressed by that mistake.

Now, we can't erase that crisis, but we can work to rebuild what we lost. As Democrats have done every time, we've supported job creation, from the Recovery Act to ``Cash for Clunkers'' to the HIRE Act to the additional tax relief for small businesses, that's, frankly, been obstructed by the minority party in the other body who have made a high-stakes political bet on recovery's failure. That would be a shame.

We can also, just as any responsible family would, ensure ourselves against a repeat crisis and protect America's jobs from another devastating collapse. The Wall Street Reform and Consumer Protection Act, which Mr. Frank and Mr. Dodd have led to this point, means an end to the irresponsible practices of the big banks.

And I want to say the community banks, which I think Mr. Royce referred to, he's absolutely right. They were not the problem, none of our community banks. They, frankly, cared that people could pay their money back, and they were careful in giving loans and careful in making sure that people to whom they gave loans could pay them back.

It was those who securitized them, that put them in these big, fancy documents, that didn't care whether they could pay them back because, for the most part, they made their money on the transaction, not on the long-term responsibility of the debtor.

I'm happy that among our financial institutions there are responsible actors who appreciate effective oversight and understand that it stimulates investment, enterprise, entrepreneurship, and job creation. Why? Because people can trust the system because they know the referee is on the field watching, and they know, therefore, the game will be honest.

No bill, of course, can create an economy without risk, nor should it. But this bill will bring accountability to Wall Street and Washington, protect and empower consumers, forestall future financial meltdowns, and prevent taxpayer money from being put on the line again to bail out Wall Street excess.

I want to say to my friend who mentioned that we bailed out Wall Street, how quickly you forget that it was President Bush and Secretary Paulson and Ben Bernanke, appointed as Chair of the Federal Reserve by President Bush, that asked for that bill; and that your leadership, for the most part, supported and urged its adoption. So, with all due respect, it was President Bush's administration that asked for that bailout, not Democrats.

What Democrats did, when they said there was a crisis, acted in a bipartisan way to respond to that crisis. And, very frankly, I think we precluded a depression.

Americans have an obligation of responsible borrowing, but financial companies also have responsibilities to make loans fair and transparent. By creating a Consumer Financial Protection Bureau, we can make sure that both sides live up to that bargain.

The Consumer Financial Protection Bureau will strengthen and modernize oversight of Wall Street by putting the functions of seven different agencies in one accountable place. It seems to me that that would appeal to people who want not so much proliferation of various agencies crossing one another.

In addition, corporations like AIG and Lehman Brothers will no longer be able to make the kind of gambles that risk the health of our entire economy and, indeed, the world's. Institutions that place the biggest economic bets will be required to keep capital on hand to meet their obligations, should those bets fail, and not expect the taxpayer to do that.

This bill also reduces the conflicts of interest that allowed credit rating agencies to wrongfully declare such institutions in good health long after they were dangerously overloaded. Of course, the regulators weren't watching. There was a philosophy, of course, that regulation got in the way.

And it prudently regulates the inherently dangerous derivatives that Warren Buffett called, and I quote, ``weapons of financial mass destruction'' for the ability to bring down entire economies when bets go bad.

Should a major firm still find itself on the verge of collapse, this bill insulates the rest of the economy and keeps taxpayers off the hook, off the hook for any future bailouts.

Mr. Speaker, a tremendous amount of irresponsibility in Washington and on Wall Street went into the crisis from which we are still struggling to recover. That crisis, of course, started in December 2007. Actually, it started long before that, as I said, in the late nineties. Middle class families who worked hard and played by the rules overwhelmingly paid the price.

But there's a kind of irresponsibility even worse, failure to learn. We know what greed and neglect can do. None of us can plead ignorance.

Let's show, Mr. Speaker, ladies and gentlemen of this House, that we've learned something from the crisis. Let's keep it from happening again. That is, I tell my friend, what I hear from my constituents. They want to have us stop it from happening again. They're angry about it. I'm angry about it. I'm sure that the ladies and gentlemen on both sides of the aisle are angry about it. This is an opportunity to ensure, to the extent we possibly can, that this tragedy to so many millions of families does not happen again.

I yield to my friend.

Reclaiming my time, I thank the gentleman for his question.

As I said at the outset, I do believe we come from a different place. And I do believe it is accurate to state that all of the Republican Presidents who have served during the time that I have served have advanced the proposition that regulation at the Federal level was overburdensome and it ought to be reduced.

Certainly, we ought to reduce regulation that is neither effective and is intrusive to the growth of our economy and to the effective operation of businesses. But with respect to that, I say to my friend, I think what we saw during the last decade was an excessive

commitment, as Mr. Greenspan pointed out, to the proposition, as Mr. Royce stated, Just get out of the way; they will discipline themselves.

Frankly, the split end that leaves 2 seconds early because the referee is not on the field is not a bad person. He is trying to get an advantage. And that's the difference I think between our perspectives. I understand that difference of the perspectives, so I agree with you that we do have a difference in perspective. I believe this strikes the right balance.

And I yield to my friend the chairman.

Reclaiming my time, and I will now leave the stage after a little more than my minute, I will say to my friend that the chairman's answer, I think, reflects my view of our different perspectives.

Madam Speaker, by direction of the Committee on Rules, I call up House Resolution 1490 and ask for its immediate consideration.

Madam Speaker, for purposes of debate only, I yield the customary 30 minutes to my friend from Texas (Mr. Sessions), and I yield myself such time as I may consume.

General Leave

I ask unanimous consent that all Members be given 5 legislative days in which to revise and extend their remarks on House Resolution 1490.

Madam Speaker, House Resolution 1490 provides for consideration of the conference report to H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act. This rule provides for 2 hours of debate on the conference report, it waives all points of order, and, further, the rule provides for one motion to recommit, with or without instructions.

Madam Speaker, today we will take an historic vote on the most significant reform to our financial industry since the New Deal. These comprehensive reforms will reduce threats to our financial system, increase oversight and prevent future bailouts. The bill strikes a responsible balance, ending the ``wild west'' era on Wall Street, while laying a new regulatory foundation for long-term growth which is stable and secure.

In the fall of 2008, this country was brought to its knees by a financial crisis, the likes of which I hope we never experience again. A crisis of this magnitude calls for reforms of similar proportion. Many elements on and off Wall Street contributed to the meltdown, and this bill carefully crafts responsible solutions in each area. The bill

protects consumers through the creation of a Consumer Financial Protection Bureau that will oversee the loan writing for banks and nonbanks and serve as the primary watchdog for consumers. For the very first time, nonbank entities will have Federal oversight, a critical element to reining in abusive practices and products. An oversight council is established under this bill to make certain financial institutions do not become a systemic threat to our economic stability.

We establish a process to close and liquidate significant financial institutions so if a failing firm begins to fail, it is closed, and it will no longer be too big to fail. This dissolution mechanism ensures Main Street comes first--not Wall Street. We deal with hedge funds, credit rating agencies, mortgage reform, executive compensation, and investor protection in this bill. We bring these issues out of the shadows and into the light so there is transparency to protect the system.

I worked to ensure a study on high frequency trading was included in this bill. As we saw from the ``flash crash'' in May, when the Dow Jones lost nearly a thousand points in a matter of minutes because of computer error, we need to know the effects of technologically advanced practices such as high frequency trading on the long-term investor. Also, transparency will be brought to the derivatives markets. Businesses and manufacturers will be able to reduce their own risk while protections are put in place for the overall system, providing regulators with a clear picture of the derivatives market.

Another important provision in the House was strengthened in conference. It calls for strong limits on proprietary trading, or what most are calling ``the Volcker rule.'' This provision strikes a good balance in banning proprietary trading without disrupting client services and asset management. In other words, banks can no longer gamble with their customers' money. The bill we are considering here today ensures there is no place to hide by closing loopholes, improving consolidated supervision, and establishing robust regulatory oversight.

I'm proud to stand here with my colleagues today providing for consideration of a bill making the necessary reforms and establishing robust regulatory oversight. In this bill we protect consumers, taxpayers, and depositors. I urge my colleagues to vote in favor of the rule and the underlying bill.

I reserve the balance of my time.

I will just take one moment, Madam Speaker, to remind my friend from Texas that by cutting taxes for the wealthiest Americans, prosecuting two wars without paying for them, and letting Wall Street run amok, in the last month of George Bush's term in office, we lost 780,000 jobs that month. This country lost a lot of jobs. By not enforcing reasonable regulation, we lost all sorts of jobs. But since January, February of 2009 until last month, we reversed that to the point where there were 400,000 jobs created, a swing of over 1.2 million jobs per month in this country. My

friends on the Republican side of the aisle oppose reining in Wall Street. We know, and Americans across this country know that something has to be done.

With that, I yield 3 minutes to my friend from California, Congresswoman Matsui.

Madam Speaker, I would respond to my friend from Texas that, first of all, losing 780,000 jobs a month, as we were when George Bush left office, that's job killing. That's terrible. One of the things we're trying to do is right that ship. Second, he says that they set up a bankruptcy process for these banks. Well, as Democrats, we said, These failing banks, if they're failing, we're not going to let them linger along like they might in a chapter 11 bankruptcy. We close them. We liquidate them. That's the purpose of this. No more bailouts.

With that, I yield 2 minutes to my friend from Connecticut (Mr. Larson).

Madam Speaker, I yield 2 minutes to the gentleman from Connecticut (Mr. Himes).

I have to smile when I listen to my friends talk about job killing, when letting Wall Street run wild, gambling like it was just a big casino, results in 780,0000 jobs a month being lost to the point that during this recession we have lost 8 million jobs. And we've got to put people back to work. We need certainty, we need reasonable regulation. That's the purpose of this bill.

I yield 2 minutes to my friend from Georgia (Mr. Scott).

I would say to my friend from Illinois, with whom I work on lots of things in this arena, I don't know where she is coming from saying there are taxes on small banks. There are FDIC charges so that they have sufficient reserves, but there are no taxes, as she would suggest.

I yield 2 minutes to my friend from North Carolina (Mr. Miller).

Mr. Speaker, how much time does each side have?

Mr. Speaker, Mr. Royce mentions 2003, 2004, 2005 should have changed the GSEs in Fannie Mae and Freddie Mac. Well, the Republicans controlled the House, the Republicans controlled the Senate, the Republicans controlled the White House, and they didn't do it.

In fact, his former chairman on financial services, Republican Mr. Oxley, says the critics forgot that the House stepped up on reforming bills, but he fumes about the criticism that people are giving about Fannie Mae and Freddie Mac. He says all the--this is from the Financial Times, September 9, 2008: All of the handwringing and bedwetting is going on without remembering how the House stepped up on this. He said: What did we get from the White House? We got the one-finger salute. Very graphic quotation from Mr. Oxley, Republican chairman of the House Financial Services Committee saying that it was the White House that stopped the changes that needed to be stopped, and it's the billions of dollars from those mortgages from 2003, 2004, 2005, 2006 under Republican leadership that are weighing down Fannie Mae and Freddie Mac that under the Democrats we offered conservatorship and that's what they're in now, like a bankruptcy.

With that, I yield 2 minutes to my friend from Minnesota (Mr. Ellison).

Mr. Speaker, I yield 2 minutes to the gentleman from Maryland (Mr. Van Hollen).

Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Hare).

Mr. Speaker, how much time is remaining on both sides?

I yield 2 minutes to the gentleman from New York (Mr. McMahon).

Mr. Speaker, I appreciate the comments of my friend from Texas, but we couldn't disagree more about the value of this bill and the process we have gone through to get to this point.

I would first like to thank the chairman and also the ranking member of the Financial Services Committee for holding hearing after hearing, taking testimony for the last year-and-a-half, almost 2 years, on the various subjects that are addressed within the bill, and for holding a very open and transparent conference that highlighted much of the bill and the differences between the House and the Senate. I think that kind of transparency is what we need to see in the financial markets, and that is at the heart of all of this.

In September of 2008, we had a terrible financial free-fall, starting with placing Fannie Mae and Freddie Mac in conservatorship, and then a whole series of failures towards the end of that month. Ultimately the President of the United States, George Bush, he and his chief cabinet officers asked this Congress to support the banking system in

a way that none of us could have ever conceived, but that was needed in an emergency to save the banking system and keep this economy going in some fashion or another.

Even so, under the rules and the approach taken by the Republicans who were in office throughout the Bush administration and this Congress from 1994 on to 2006, Wall Street was unregulated. It was allowed to just go wild, and it resulted in a terrible cataclysm that we are all paying for now.

The bill that is before this body addresses nine separate subjects: Consumer protection; investor protection; it deals with credit rating agencies; derivatives; hedge funds; insurance; it deals with salaries so that we don't incentivize too big of risk taking by executives so they put their banks or their financial organizations at risk; and it deals with too-big-to-fail, putting a structure in place so that if financial institutions get way out there, over-leveraged, as we saw in 2008, that we have a system in place where we can liquidate them and close them, not put them on life support in a bankruptcy, as my Republican colleagues would suggest.

This is a time to bring certainty back into the market and reasonable regulation and reasonable enforcement back to the financial system. The bill that is being brought to this Congress and this House today does just that.

This country needs to rein in Wall Street. We need to protect Main Street and the taxpayers, the people that live throughout this country. This bill goes a long way toward doing that.

With that, I urge a ``yes'' vote on the previous question and on the rule.

I yield back the balance of my time, and I move the previous question on the resolution.

The previous question was ordered.

I thank the gentleman for yielding.

Mr. Speaker, I rise today in support of the conference report on H.R. 4173, The Wall Street Reform and Consumer Protection Act.

I want to start by thanking Chairman Frank, who has demonstrated his great policymaking skills and leadership on this important issue.

The staffs of both the House Agriculture Committee and the Financial Services Committee have worked closely on this legislation for the past year, and it is thanks to our efforts that we have a conference committee report for us today.

One of the bill's key components is title VII, which brings greater transparency and accountability to derivative markets. When the House considered financial reform in December, derivatives were one area in which we had strong bipartisan support. The House produced a very good product. The Senate's efforts on derivatives went in a very different direction. As with any legislation with such stark differences, compromises had to be made.

This comprehensive legislation represents a middle ground between the House and Senate products. While no one got everything they wanted in this bill, I think we got a bill that will help prevent another crisis in the financial markets like the one we experienced in 2008.

The House Agriculture Committee started looking at some of the issues addressed in this legislation even before evidence of the financial crisis started to appear. I am pleased that the conference report contains many of the provisions the House Ag Committee endorsed over the course of passing three bills on this topic. Let me briefly talk about some of those provisions.

Our in-depth review of derivative markets began when we experienced significant price volatility in energy futures markets due to excessive speculation--first with natural gas and then with crude oil. We all remember when we had $147 oil. The Ag Committee examined the influx of new traders in these markets, including hedge funds and index funds, and we looked at the relationship between what was occurring on regulated markets and the even larger unregulated over-the-counter market. This conference report includes the tools we authorized and the direction to the CFTC to mitigate outrageous price spikes we saw 2 years ago.

The House Agriculture Committee also spent a great deal of time considering the role of derivatives in the collapse of the financial markets and debating different approaches to regulating these financial tools.

In the end, it was the Agriculture Committee, on a bipartisan basis, that embraced mandatory clearing well before the idea became popular. Clearing is not only a means to bring greater transparency to the derivative markets, but it also should reduce the risk that was prevalent throughout the over-the-counter market. The conference report closely follows the House approach to mandatory clearing.

In crafting the House bill and the conference report, we focused on creating a regulatory approach that permits the so-called end users to continue using derivatives to hedge risks associated with their underlying businesses, whether it is energy exploration, manufacturing, or commercial activities. End users did not cause the financial crisis of 2008. They were actually the victims of it.

Now, that has been of some concern and, frankly, a misinterpretation of the conference report's language regarding capital and margin requirements by some who want to portray these requirements as applying to end users of derivatives. This is patently false.

The section in question governs the regulation of major swap participants and swap dealers, and its provisions apply only to major swap participants and swap dealers. Nowhere in this section do we give regulators any authority to impose capital and margin requirements on end users. What is going on here is that the Wall Street firms want to get out of the margin requirements, and they are playing on the fears of the end users in order to obtain exemptions for themselves.

One of the sources of financial instability in 2008 was that derivative traders like AIG did not have the resources to back up their transactions. If we don't require these major swap participants and swap dealers to put more backing behind their swap deals, we will only perpetuate this instability. That is not good for these markets, and it is certainly not good for end users.

I am confident that after passing this conference report we can go home to our constituents and say that we have cracked down on Wall Street and the too-big-to-fail firms that caused the financial crisis.

With that, I urge my colleagues to support the passage of this conference report.

I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Pennsylvania (Mr. Holden).

Yes, I fully agree. The language says that institutions to be considered for the exemption shall include those with $10 billion or less in assets. It is not a firm standard. Some firms with larger assets could qualify, while some with smaller assets may not. The regulators will have maximum flexibility when looking at the risk portfolio of these institutions for consideration of an exemption.

Mr. Speaker, I yield such time as he may consume to the gentleman from Iowa (Mr. Boswell).

The gentleman is correct. My interpretation of the exclusionary provision from the definition of swap that he mentioned is that the exclusion would apply to transactions in which the parties' delivery obligations are booked-out, as the gentleman described. The fact that the parties may subsequently agree to settle their obligations with a payment based on a price difference through a book- out does not turn a forward contract into a swap.

Excluding physical forward contracts, including book-outs, is consistent with the CFTC's longstanding view that physical forward contracts in which the parties later agree to book-out their delivery obligations for commercial convenience are excluded from its jurisdiction. Nothing in this legislation changes that result with respect to commercial forward contracts.

I thank the gentleman.

I encourage people to support the conference report.

I have no further requests for time, and I yield back the balance of my time.

Mr. Speaker, I would like to enter into the Record a letter that Chairman Frank and I received from Chairmen Lincoln and Dodd on the treatment of end users under the derivatives title of the bill. As the letter makes clear, we have given the regulators no authority to impose margin requirements on anyone who is not a swap dealer or a major swap participant.

While the regulators do have authority over the dealer or MSP side of a transaction, we expect the level of margin required will be minimal, in keeping with the greater capital that such dealers and MSPs will be required to hold. That margin will be important, however, to ensure that the dealer or major stock participant will be capable of meeting their obligations to the end users. We need to make sure that they have that backing.

I would also note that few, if any, end users will be major swap participants, as we have excluded ``positions held for hedging or mitigating commercial risk'' from being considered as a ``substantial position'' under that definition.

I would ask Chairman Frank whether he concurs with my view of the bill.

Mr. Speaker, I rise today to discuss some of the jurisdictional issues that arise out of Title VII of H.R. 4173. The bill brings a new regulatory regime to swaps as it will be defined under the Commodity Exchange Act, CEA. Title VII of H.R. 4173 extends the Commodity Futures Trading Commission's, CFTC's, exclusive jurisdiction under the CEA to also include swaps, except as otherwise provided elsewhere in Title VII. Also included in Title VII are two savings clauses for the Securities and Exchange Commission, SEC, and one for the Federal Energy Regulatory Commission, FERC.

Title VII allocates authority over swaps and security-based swaps as follows. First, the CFTC has exclusive jurisdiction over swaps, including swaps on broad-based security indexes. Within the swap definition is a category of swaps called security-based swap agreements. For this specific category of swaps, the CFTC will continue to exercise its full jurisdictional authority, while the SEC may exercise certain specific authorities over these products, as outlined in Title VII. Title VII also clarifies that the SEC has jurisdiction over security-based swaps, which are swaps on narrow-based security indexes and single securities, and that the two agencies share authority over mixed swaps.

Nothing in the SEC savings clauses, or any other provision of Title VII, alters the existing jurisdictional divide between the CFTC and SEC established by the Johnson-Shad Accord which, among other things, provides the CFTC exclusive jurisdiction over futures (and options on futures) on broad-based security indexes. Nor do these savings clauses, or any other provision of Title VII, divest or limit the authority that the CFTC shares with the SEC over security futures products as authorized by the Commodity Futures Modernization Act of 2000.

This bill also clarifies the authorities of the CFTC and FERC over financial instruments--both swaps and futures--traded pursuant to FERC or state approved tariffs or rate schedules.

Section 722 preserves FERC's existing authorities over financial instruments traded pursuant to a FERC or state approved tariff or rate schedule, which under current law does not extend to CFTC-regulated exchanges and clearinghouses, because these are within CFTC's exclusive jurisdiction. The CFTC's authorities over futures and swaps traded pursuant to FERC or state approved tariffs or rate schedules are also fully preserved. The bill further specifies that, outside of regional transmission organizations/independent system operators (RTOs/ISOs) markets, the CFTC shall continue to have exclusive jurisdiction over financial instruments traded on CFTC-regulated exchanges, such as NYMEX or ICE, traded through swap execution facilities, or cleared on CFTC- regulated clearinghouses.

To avoid the potential for overlapping or duplicative FERC and CFTC authority, the bill provides the CFTC with the authority to exempt financial instruments traded within an RTO/ISO from CFTC regulation if the CFTC determines the exemption would be consistent with the public interest and the purposes of the Commodity Exchange Act.

Section 722 also preserves FERC's anti-manipulation authority as it currently exists under the Federal Power Act and the Natural Gas Act prior to enactment of this legislation.