Business Risk Mitigation and Price Stabilization Act of 2012

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 3336) to ensure the exclusion of small lenders from certain regulations of the Dodd-Frank Act, as amended.

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks on the bill, H.R. 3336.

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

Madam Speaker, I rise to voice my support for this bill. First and foremost, I would like to thank my committee's ranking member, Mr. Peterson, and his staff for their diligent work on this bill on behalf of end-users and small business lenders. We have a longstanding tradition of bipartisanship at the Agriculture Committee, and their work was invaluable. I'd like to thank Representative Hartzler for her leadership on H.R. 3336 on behalf of the small business institutions and the businesses they serve.

I would like to acknowledge and thank Representative Hultgren and Representative Boren, whose legislation, H.R. 3527, will not be considered today. As a result of their leadership and Mr. Peterson's support, many of the critical issues for end-users addressed in H.R. 3527 were resolved by the CFTC in its final ``definitions rule.''

I think we can reasonably feel assured that agricultural cooperatives and other end-users out in the countryside won't be unnecessarily deemed ``swap dealers'' and regulated like the largest financial institutions. As I said from the outset, if the CFTC on its own resolves concerns we have raised for months in our committee room, we would not proceed with legislation. And that's what we've done with H.R. 3527. However, concerns with the implementation of title VII remain, and so we are here today to proceed with H.R. 3336. This bill addresses issues that are important to community and farm credit banks--organizations which are instrumental to the economic vitality of our towns and rural communities.

In the Dodd-Frank Act, Congress was careful to ensure that new regulations wouldn't impose unnecessary costs on small institutions that might deter them from extending credit to businesses across America. Small banks pose very little risk to our financial system. Within the banking system, 96 percent of the notional value of derivatives is held by the five largest banks. The very small remaining percentage of the derivatives exposure in our financial system is spread across hundreds of small institutions. That's why Congress never intended for these community lenders to be regulated the same as the largest global financial institutions.

This bill aims to restore Congressional intent by exempting small banks, credit unions, nonprofit cooperative lenders, and farm credit institutions from costly clearing requirements under Dodd-Frank. It also ensures that banks can continue to provide risk management tools to their borrowers.

In addition, thanks to the leadership of Representatives Schilling, Owens, and McIntyre, provisions of H.R. 3336 will ensure captive finance affiliates of manufacturing companies like John Deere and Caterpillar are eligible for the same exemptions as their parent companies and other end-users. These affiliates are an important source of credit to consumers and businesses and promote our manufacturing sector.

Lastly, through the hard work of Representatives Costa, Cardoza, and Baca, H.R. 3336 clarifies that utilities will not be miscast as swap dealers because they enter into contracts that are required by State law. The legislation clarifies that complying with State laws alone won't also draw new and costly Federal regulations.

There are many Members on both sides of the aisle at the Ag Committee who have spent time getting this bill to where it is today. We have been careful not to create loopholes or to stray from congressional intent. The bill does not open the door for large financial players to evade regulations or engage in speculative or highly risky activities.

Madam Speaker, in this economy, it all comes back to jobs. To create new jobs, businesses need access to credit to make new investments. This bill ensures that businesses maintain access to credit from community lenders.

So I urge my colleagues to support H.R. 3336 and ensure that America's small businesses can continue to access the credit they need to build our economy.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I would like to yield 4 minutes to the gentlewoman from Missouri (Mrs. Hartzler), who is the primary sponsor of our important piece of legislation today.

Madam Speaker, I yield 4 minutes to the gentleman from Illinois (Mr. Schilling).

Madam Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Conaway).

Madam Speaker, I would note to my colleague, the ranking member, I have one additional speaker, and then myself for whatever close I may have.

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

Madam Speaker, I yield myself the balance of my time.

I think, as we've heard here today, this piece of legislation is an effort, in a very bipartisan way, to address some of the issues in Dodd-Frank that need to be fixed. If you care about production agriculture, if you care about Main Street business, if you care about the people who work in the factories that produce the products and do the things that make this great economy move forward, then you'll support H.R. 3336.

It won't affect the five biggest financial institutions that do 96 percent of this kind of business, but it will help the people who really toil and struggle every day to make a living. It will help the small communities where those good folks live. It's a positive effort to address issues that have come to light in the course of the Ag Committee's exhaustive hearings.

I simply thank my colleague, Congresswoman Hartzler, for working diligently on this bill. I thank the ranking member and my colleagues.

Let's vote for H.R. 3336. Let's try and help the folks back home.

With that, Madam Speaker, I yield back the balance of my time.

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

Madam Speaker, today, the House considers H.R. 3336, a bill which makes clarifying changes to the Dodd-Frank Act. Like two other Dodd- Frank bills that the House passed previously--H.R. 2779, the inter- affiliate bill, and H.R. 2682, the margin bill--this legislation was crafted in a bipartisan manner.

As the Ag Committee continues to oversee the implementation of Dodd- Frank, I firmly believe that the CFTC is ultimately going to get the rules and regulations right. If you look at the Dodd-Frank rules that have already been completed, by and large they have been bipartisan and responsive to the

concerns that we have heard during our oversight hearings.

For example, during a legislative hearing last year, we heard concerns about business conduct standards and the potential impact it could have on pension plans' ability to use swaps to hedge risk. When the commission approved a bipartisan final rule establishing these business conduct standards, the general response from the pension community was satisfaction.

More recently, the CFTC approved last week--again with a bipartisan vote of 4 1--rules defining who will be subject of Dodd-Frank's new oversight. Again, the general view from the end-user community is that the rule addresses their concerns. In fact, I believe one of the bills the committee voted on earlier, H.R. 3527, which rewrote the swap dealer definition, now no longer seems necessary.

I talk frequently with CFTC Chairman Gensler, and from what he has told me, I am confident that the remaining concerns that H.R. 3336 seeks to address will ultimately be resolved satisfactorily by the CFTC. I think somebody used this bill to send a message to the CFTC, and since that message is consistent with the original intent of Dodd- Frank, I have no objection to it.

As originally considered by the committee, H.R. 3336 is meant to address concerns raised by farm credit institutions, credit unions, and small banks that worry about being forced to clear. Under current law, the CFTC is supposed to develop an asset-based exemption from clearing. When you look at the swap activity of some of the banks, questions were raised whether a fixed-asset test was appropriate. The risk-based test contained in the bill will, I think, prove more than adequate and certainly will provide incentives to banks to more robustly back up their swap positions, to the extent that they are not doing so now.

During the committee's markup of H.R. 3336, Representatives McIntyre and Owens raised concerns they heard on behalf of captive finance companies which fear that the exemptions provided to them under the Dodd-Frank law will not be implemented properly. This bill not only addresses those concerns, it closed a potential loophole in Dodd-Frank which could have allowed captive finance companies to use the original Dodd-Frank exemption to engage in speculation or swap activities unrelated to the commercial business without proper oversight.

Also, during the markup, Representative Costa raised concerns on behalf of California utilities, which fear being classified as swap dealers for entering into transactions necessary to comply with State regulations. Working with members of the California delegation, we were able to adequately address these concerns as well.

Given that the legislation clarifies what Congress intended to do with the original Dodd-Frank law, I urge my colleagues to support its passage.

And with that, Madam Speaker, I reserve the balance of my time.

Madam Speaker, I now yield such time as he may consume to the distinguished gentleman from California (Mr. Costa).

Madam Speaker, again, this bill clarifies what was the original intent of the Dodd-Frank deliberations. Some of what's in this bill, I think, has already been resolved, but there are some clarifications here. If

there is duplication, it doesn't do any harm, so we support this bill and encourage that it be adopted.

I yield back the balance of my time.

Madam Speaker, I rise today in support of H.R. 3336, the Small Business Credit Availability Act.

This bipartisan measure received unanimous support in the House Committee on Agriculture and ensures, as the previous speakers have indicated, that small financial entities such as community banks, farm credit system institutions, and credit unions will not be burdened with costly regulations resulting from the reform of our financial system. That was never Congress' intent.

I appreciate very much the work of Chairman Lucas and Ranking Member Peterson and their staffs, as well as the bill's sponsor, Representative Hartzler, to reach an agreement with not only myself, but my colleagues, Congressmen Baca and Cardoza, who are also on the committee, as well as the California delegation on the underlying text of this bill. Without your support, obviously we could not address this issue pertaining to California.

While we work to maintain the viability of small businesses recognized in H.R. 3336, we also must look for ways to avoid unintended consequences resulting from the implementation of the Dodd-Frank Act on other entities, in this case, such as utilities.

It's always the difficult challenge we have in Congress, the law of unintended consequences, that we must respond to.

Because of California's regulatory environment, I expressed concerns in the committee that California's energy providers, our utility companies, might be or would be inadvertently, as we believe, swept up by the ``swap dealer'' definition, which is the efforts that the committee has addressed. Over several weeks, we worked together with the staff and the utilities to develop language that provides the clarity needed to ensure that companies within California that provide energy for all businesses and residences--which are ultimately California's ratepayers--are not penalized by the Federal regulators for simply complying with State law.

H.R. 3336 includes language clarifying that the actions undertaken to comply with State or local laws or regulations are excluded in determining whether or not an entity is considered a swap dealer. Let me be specific. The language clarifies that resource adequacy contracts entered into to satisfy California's Public Utilities Commission procurement requirements, renewable energy credits used to satisfy the California Renewable Portfolio Standard, and emission allowances to satisfy California's greenhouse regulations should not--and this is the key line--should not be considered in determining whether or not an entity is a swap dealer.

My colleagues, we should understand that the situation we're dealing with in these examples, these transactions, are closely regulated by California's Public Utilities Commission or the California Air Resources Board, and they pose no systemic risk to our financial systems or to the ratepayers.

While California is currently affected, it is possible that these concerns could be shared by energy providers in other States. That's why the committee, in their wisdom, chose to address this issue to help not only California, but possibly to extend to other States that might be similarly affected. For these reasons, I encourage my colleagues to support this bill.

I once again want to thank the chairman, thank Ranking Member Peterson, Chairman Lucas, and the author of the bill, Representative Hartzler.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2682) to provide end user exemptions from certain provisions of the Commodity Exchange Act and the Securities Exchange Act of 1934, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks and to add any extraneous material on the bill.

I yield myself 3 minutes.

Mr. Speaker, this bipartisan bill would do what? It would provide a clear exemption from margin requirements, margin requirements imposed by the Dodd-Frank Act on where? On swap transactions for so-called end- users who use derivatives to hedge their business risks and whose swap transactions really do not pose a systemic risk to the financial system.

Following the really late night of the Dodd-Frank conference committee deliberations, numerous assurances were made that margin would not be required on end-users' transactions. Now, these assurances were subsequently followed up by formal letters and colloquies by the very same architects of the bill themselves. Everyone was told that Congress clearly intended for the language to exempt end-users from the bill's margin requirements.

Unfortunately, the regulators have interpreted it a different way, and they have interpreted Dodd-Frank's somewhat rushed language as not providing a clear exemption for these end-users.

Representative Grimm's bill here today finally provides American businesses with the certainty that they need to use derivatives to hedge against business risk. End-users, you know, were not the cause of the financial crisis; and by any measure whatsoever, end-users are not systemically significant.

Who are these end-users that we're talking about here? Well, they are the Main Street businesses from all over the country that represent all types of industries that rely on the use of derivatives to responsibly hedge their own business risk, and so they should not be and were not ever considered under the same umbrella, if you will, of regulations as banks are that are subject to posting margins on their swap transactions.

In requiring end-users to be subject to a mandatory margin requirement, what it basically does is force commercial entities to act like banks. So, without a margin exemption, the cost of hedging for these would rise dramatically, and that would needlessly tie up working capital that otherwise could and should be used to expand business investments, build factories, or create jobs.

So I conclude on this. It is critical that we provide U.S. Main Street businesses across this country with this important certainty, with this clarity. I urge my colleagues on both sides of the aisle to support this bipartisan bill.

I reserve the balance of my time.

At this time, I yield 5 minutes to the gentleman from New York (Mr. Grimm), the author of the underlying legislation and also someone who has been instrumental in making sure that we could work in a bipartisan manner to get it to the floor today.

Once again, Mr. Speaker, I would like to yield 3 minutes to the gentleman from Texas (Mr. Conaway).

Mr. Speaker, I think we have one more speaker. I yield 2 minutes to the gentleman from Georgia (Mr. Austin Scott).

I yield back the balance of my time.

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

Mr. Speaker, I would like to note that I will be yielding 10 minutes of time to my colleague from the Ag Committee, Mr. Owens.

I yield myself such time as I may consume.

Mr. Speaker, I do want to concur with those who've announced that bipartisanship is alive and well at the committee level and on the floor of this House today. I'd like to thank my colleagues on the other side, Mr. Garrett and Mr. Grimm, for their cooperation and our ability to work together.

I'd also like to especially thank the staff of the full committee and the staff of each congressional office for the outstanding work the staff members have done. It is very difficult to get legislation to this point without the benefit of staff having had a helping hand, and we thank the staff.

Mr. Speaker, the passage of the Wall Street Reform and Consumer Protection Act of 2010 established a system for regulating the over- the-counter--that's the OTC--derivatives market. Authority is provided to the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the banking regulators, which have been proposing the regulation that will eventually govern the OTC derivatives market.

Previously, banks and other financial companies were able to amass considerable risk using OTC derivatives without reporting to the regulator or to the public. The Wall Street Reform Act requires that most derivative transactions, primarily those between dealers, now be centrally cleared and exchange traded whenever possible and that all transaction data be collected and publicly reported at clearinghouses or swap-data repositories.

The new rules are intended to allow regulators and the public to better analyze the derivative risk-taking activities of banks and other financial companies. The new rules are not intended to hold in place onerous requirements on companies that use derivatives only as a means to hedge the risk of the company.

H.R. 2682 clarifies Congress' intent when passing the Wall Street Reform legislation by more clearly exempting end-users that are only using swaps to hedge or to mitigate commercial risk.

H.R. 2682 is also consistent with a colloquy between Representatives Frank and Peterson, as well as a letter from Senators Lincoln and Dodd, which noted that the reform legislation provided the regulators with sufficient authority to exempt end-users from the margin requirements.

This bill passed favorably out of both the House Financial Services Committee and House Agriculture Committee with strong bipartisan support. In no way should H.R. 2682 undo any of the important protections of reform legislation. Its purpose is to recognize the end- users' responsibility to use swaps as a part of their businesses.

I congratulate Mr. Grimm and Mr. Peters, and I encourage you to support this bill.

I reserve the balance of my time.

Mr. Speaker, I would simply close by indicating that I concur with my colleagues. This legislation does enjoy the bipartisan support that we believe will help us get a message to our Members that it is a good piece of legislation that should be totally supported by the membership. So, I would ask my colleagues and Members of the Congress to please support this legislation.

I yield back the balance of my time.