To exempt inter-affiliate swaps from certain regulatory requirements put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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.

I would like to thank Chairman Garrett.

I rise today in support of my legislation, H.R. 2682, the Business Risk Mitigation and Price Stabilization Act of 2012. H.R. 2682, I'm very proud to say, is truly a bipartisan bill; and I would like to thank my colleagues on the other side of the aisle, especially Mr. Peters of Michigan, Mr. Austin Scott of Georgia, and Mr. Owens of New York, for working with me on this extremely important issue.

H.R. 2682 will clarify Congress' intent under the Dodd-Frank Act and provide an explicit exemption from having to post margin for true commercial end-users of over-the-counter derivatives. Despite clear legislative history to the contrary, regulators continue to misinterpret the Dodd-Frank Act, giving them authority to impose margin requirements on end-users.

This bill will ensure once and for all that true end-users are not subjected to margin requirements that Congress never intended to be applied and make sure that regulators do not attempt to exercise authorities they were never granted by Congress in ways that will certainly do harm to the economy, specifically, by diverting working capital away from investment and expansion, which fuels economic growth and certainly job creation.

True end-users are firms and companies that use derivatives to manage their various financial risks. For example, firms use these products to lock in the costs of raw materials that they're going to need in the future, which ultimately protects American consumers and creates jobs here in America. If true end-users were required to post margin, their hedging costs may become so high that they could abandon the practice, leading to great price variations for raw materials and, ultimately, an increase in consumer prices for a whole host of products from food to energy.

At a time when constituents on Staten Island and in Brooklyn are struggling with sky-high tolls, rising gas prices, they simply can't afford to pay more for items they rely on every day. Furthermore, this legislation will not only help to keep consumers' prices stable, but it will also protect U.S. jobs. The cost savings end users will realize by not being required to post margin will free up capital for business expansion and job creation.

In fact, it has been shown that imposing a 3 percent margin on over- the-counter derivatives held by S&P 500 companies could cut capital spending by $5.1 to $6.7 billion. That could lead to 100,000 to 130,000 job losses. At a time when unemployment is 8.3 percent, this cannot be overlooked or overstated.

Finally, without this clear exemption provided in this legislation, I believe that U.S.-based commercial end users may attempt to continue hedging and avoid posting margins by moving their derivatives products overseas. That would put U.S.-based financial institutions at a major disadvantage and, as a consequence, drive even more U.S. jobs overseas. In addition, this could also encourage regulatory arbitrage and actually increase systemic risk to a worldwide financial system.

In closing, I ask that my colleagues support this commonsense, bipartisan pro-jobs legislation.

Mr. Speaker, I ask unanimous consent that 10 minutes of my time be controlled by Ms. Moore of the Financial Services Committee.

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

Today, we debate and will vote on H.R. 2779, a bill that addresses a critical issue facing American businesses.

I want to thank my fellow Ohioans, Steve Stivers and Ms. Moore, and our collective staffs for all their hard work on this important piece of legislation.

This bill that I co-introduced with my colleague Mr. Stivers will exempt derivatives trades between two affiliates of the same corporation from clearing, execution, and margin requirements. This legislation would prevent internal, inter-affiliate swaps from being subject to requirements that were designed to apply only to certain external swaps. These internal swaps are used by many American corporations in multiple sectors of our economy.

Under the Dodd-Frank financial reform law, there is no distinction between inter-affiliate and external swaps. The regulation of inter- affiliate trade should reflect the economic reality that internal trades do not increase systemic risk. As our Nation's economic recovery is getting underway, we need to ensure American businesses remain competitive. We all remember the financial crisis and the pain of recovery that is still evident today. We cannot and should not return to the wild days of Wall Street. That is why I voted for the Dodd-Frank law and why I continue to support it.

However, we should allow American businesses acting in good faith to effectively manage risk. By failing to clarify these important distinctions within Dodd-Frank, we run the risk of stalling job growth and potentially passing costs on to consumers.

Together with our colleagues in the Committee on Financial Services and the Committee on Agriculture, we have strengthened the language of the bill to ensure it cannot be used to evade other financial regulations. H.R. 2779 was approved by the House Financial Services Committee by a vote of 53 0, and the House Agriculture Committee passed it by unanimous voice vote.

It is possible for Democrats and Republicans to work together on legislation that stands to benefit American businesses and our Nation's economy. I urge my colleagues to vote ``yes'' on H.R. 2779, and I reserve the balance of my time.

Mr. Speaker, I want to thank my friend and colleague from Ohio for all of his work. I think it's an excellent bill, and I'm certainly happy to have cosponsored it with him.

I would now, Mr. Speaker, yield to my colleague and friend from the great State of Wisconsin (Ms. Moore), a member of the Financial Services Committee.

I continue to reserve, Mr. Speaker. I have no further speakers.

Mr. Speaker, I just, again, want to thank everyone involved in this bill and ask my colleagues to please support it.

I yield back the balance of my time.

Thank you, Mr. Chairman.

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

Today's bill makes several narrow changes to the law which will further clarify exactly how Congress intended for the CFTC to implement the new swap dealer registration requirements under Dodd-Frank.

In the law, Congress authorized the CFTC to exclude small financial institutions that provide swaps in connection with loans from the heavy regulations as swap dealers. We did so because we understood the importance of allowing these institutions the ability to package together loans and hedging instruments.

Offering loans in this way allows small financial institutions to offset some of their underlying risk and offer lower loan rates to local farmers, ranchers, and small businesses. These lower loan rates mean the businesses that sustain our rural communities will have greater access to the capital they need to continue to invest in their growing businesses.

With the Entity Definitions recently released by the CTFC--although not yet published in the Federal Reserve--the CFTC took steps towards resolving the issues addressed by H.R. 3336. However, it left some undone. Unfortunately, the current rule is silent on the commodity swaps for agricultural businesses, is unnecessarily restrictive of farm credit system institutions, and applies arbitrary time restrictions on excluded swaps.

H.R. 3336 would strengthen the rule passed by the CTFC by expanding the scope of the exemption to protect the way rural America has long done business. The farms, ranches, and small businesses in the district I represent have never been and never will be a part of the systemic failure of our financial system. Neither they nor the small institutions that serve them ought to be considered as a threat.

Today's legislation is carefully tailored to ensure that we do not shackle small businesses and family farms with rules that ought to apply and are meant to police the largest Wall Street banks.

I want to thank Ms. Hartzler for the work that she's done on shepherding this bill through committee. She has been a staunch advocate for protecting small businesses from the overreach of Dodd- Frank. I would also like to thank Ranking Member Boswell, my counterpart on the General Farm Committees and Risk Management Subcommittee; our chairman, Mr. Lucas; and our ranking member, Mr. Peterson, for their continued efforts at comity and bipartisanship on the House Agriculture Committee.

Like many bills moved through our committee this year, H.R. 3336 passed with unanimous bipartisan support. This is a testament to the leadership on both sides of the aisle and to the carefully crafted bill that Ms. Hartzler introduced.

With those remarks, Madam Speaker, I urge swift adoption of the Small Business Credit Availability Act.

I would like to thank the gentleman from New Jersey for yielding me time. I would also like to thank my fellow Ohioan, Ms. Fudge, for her hard work and support on this bill, and I would like to thank Ms. Moore from Wisconsin for her hard work as I recognize that she improved the bill. I would also like to thank the chairs and ranking members of the Financial Services and Agriculture Committees and their staffs for their hard work on this bill.

Mr. Speaker, this is bipartisan legislation that clarifies the Dodd- Frank Financial Reform Act by recognizing that there is an important distinction between inter-affiliate swaps and market-facing swaps. While market-facing swaps carry risk, inter-affiliate swaps do not. They're simply an accounting practice used within corporate families to assign the ownership of derivatives inside the corporate umbrella. Without providing this distinction, corporations using inter-affiliate swaps that manage their risk in a central way would be forced to pay up to three times for the way they do business. In fact, they would collateralize their derivatives against the market on one side and then on both sides of the inter-affiliate swap, so they would actually pay three times what you would pay if you didn't manage your risk in a centralized way.

The irony of that is, in managing your risk in a centralized way, it actually provides better protection and allows for experts to manage your risk. The problem with that also is it would tie up working capital that could be used to create jobs here in the United States and get our economy moving and focusing on our recovery.

There are important protections in this bill, as well, that the lady from Ohio already alluded to. We put protections in this bill to make sure that businesses that utilize this provision are, indeed, truly affiliated. We also made sure that there were reporting requirements so that these swaps adhere to transparency in the marketplace. We also made sure that it's very clear that any attempt to use these provisions to evade provisions under the Dodd-Frank bill for someone who is just trying to evade the law and does not have true inter-affiliate swaps would not be allowed. We also ensured that regulators keep their authority to manage the safety and soundness of America's financial institutions.

The bottom line is we should not overcharge businesses for an accounting method they use that does not generate additional risk. By passing this legislation, we are preventing these internal transactions from being subject to duplicative regulations that could drive jobs overseas and increase costs for consumers.

This bill was reported unanimously in the Financial Services Committee 53 0, and it passed by unanimous voice vote in the Agriculture Committee. I urge my colleagues to vote in favor of this legislation.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2779) to exempt inter-affiliate swaps from certain regulatory requirements put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act, 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 extraneous material on this bill.

Mr. Speaker, I yield myself 2 minutes.

The legislation that is before us today ensures that American businesses will not be needlessly forced to use up the capital that they need to create jobs simply to satisfy some duplicative regulations. Under H.R. 2779, the inter-affiliate trades would be only exempt from costly margin, clearing, and real-time reporting requirements. Swap trades facing non-affiliated counterparties would still be subject to all the other regulatory requirements under proposed agency rules. So, without this bill, companies could face double--yes, double--the margin and regulatory cost.

To my point, last June the office of the OCC--that's the Comptroller of the Currency--estimated that margin requirements under proposed prudential regulator margin rules could conservatively cost over $2 trillion, which could increase substantially if regulators force affiliates to post margins on trades between themselves.

Without the relief of this bill, American companies face the prospect of having to post double margins on swap trades: once on a swap trade with themselves and secondly when they trade outside. So the Stivers- Fudge bill provides this needed relief.

This bill strengthens the ability of the regulators to oversee the affiliate swaps marketplace because those transactions must be reported still to a swap depository, or the CFTC or the SEC. Either way, Mr. Speaker, regulators will be able to monitor these transactions very closely. The bill also gives the SEC and CFTC the power to regulate swap transactions that are structured as affiliate trades only for purposes of evading regulation.

To conclude, Mr. Speaker, I commend the efforts of my colleagues from both sides of the aisle this morning, and I urge my colleagues to support this bipartisan bill.

I reserve the balance of my time.

Mr. Speaker, at this point, I yield 5 minutes to the sponsor

of the underlying legislation, the gentleman from Ohio (Mr. Stivers).

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

Mr. Speaker, I was hoping the gentlelady had one more speaker. I was going to reserve, as we had one other speaker on the way, but let me just check.

Without seeing him here, Mr. Speaker, I yield back the balance of my time.

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

Mr. Speaker, I yield myself such time as I may consume. I rise in support of H.R. 2682.

I would like to thank Chairman Lucas and Ranking Member Peterson for their leadership on this important issue, as well as Mr. Scott from the Agriculture Committee, and our colleagues on Financial Services, Mr. Peters, Mr. Green and, of course, Mr. Grimm.

As a cosponsor of H.R. 2682 and as one of the authors of this legislation, I believe that the definition of an ``end user'' needs to be very specific to ensure that the CFTC implements the intent of Congress in exempting true end users from certain derivatives regulations.

My district in upstate New York includes a number of entities that would be inappropriately captured as swap dealers under the proposed CFTC rules, including agricultural cooperatives, farm credit institutions, community banks, and electric cooperatives. Clearly, none of these entities were intended by Congress to be covered by these regulations.

While each of them uses derivatives to meet their business needs, they are not engaging in derivatives transactions as their primary businesses. If forced to comply with the increased margin and clearing requirements, it could make the services currently offered by end users cost prohibitive and impede their ability to conduct business, likely resulting in higher prices for my constituents and diverting capital that could otherwise be invested and used to help create jobs. These are all negative consequences that our economy can ill afford at this time.

These financial instruments are particularly important for dairy farmers in my district who depend on their cooperatives to offer them tools to manage price risks and to lock in margins. A local cooperative must have the ability to enter into swaps with its members and have affordable access to the market with other commercial counterparties to offset the risk of providing these swaps and forward contracts. Under the CFTC's proposed rules, the cooperatives would be regulated as a swap dealer even though they are using derivative contracts to hedge commercial risk and to support the viability of their members.

There is no doubt in my mind that the derivatives market needs to be regulated and that certain participants need to post margin to cover their trades in order to mitigate systemic risk throughout the financial system. However, this legislation will codify Congress' intent and ensure that commercial end users can continue to hedge against risk.

I urge my colleagues on both sides of the aisle to support this important bipartisan legislation, and I yield back the balance of my time.

Thank you, Chairman Lucas.

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

Madam Speaker, I've only been in Congress for a little over a year, but I have found the House Committee on Agriculture to be very bipartisan, and I believe that it is in large part due to the leadership of Chairman Lucas and Ranking Member Peterson.

I come to the floor today to speak in support of a bipartisan provision in the bill that is important to the American manufacturing sector--and particularly to Illinois companies like John Deere and Caterpillar, which employ almost 150,000 men and women.

Many of the manufacturers here at home have what are called ``captive finance affiliates'' whose function is to provide loans and leases to customers to purchase the goods they make. The credit that captive finance companies provide is essential to agricultural producers, construction contractors, and manufacturers, and the jobs they support here at home.

Congress provided an exemption in the current law for captive finance affiliates so that when they hedge risks associated with providing loans to their customers, they receive the same exemptions available to the parent company and other end-users. However, there is a lack of guidance in the CFTC's implementation of the exemption, leading to concern that these captive finance companies could be subject to mandatory clearing requirements or regulated as major swap participants. There is bipartisan agreement that this is not what Congress originally intended.

H.R. 3336 will provide the needed clarification for our manufacturers and their captive affiliates. It does so while also providing safeguards against abuse. First and foremost, this only applies to entities that use derivatives to manage their risks, meaning they cannot use derivatives to speculate. In addition, these entities cannot engage in financing that does not facilitate the sale of their manufactured products. The CFTC will have the authority to prevent affiliates from qualifying for this exemption.

Again, I appreciate the bipartisan nature of providing certainty on this issue. I want to thank Chairman Lucas, Ranking Member Peterson, Congressman Bill Owens, Congressman Mike McIntyre, and Congressman Randy Neugebauer for their efforts on this issue. I also really want to thank the majority and minority House Ag Committee and their staff for their work on this issue, especially Ryan McKee and Clarke Ogilvie. It is important to provide certainty for our folks back home.