Swaps Regulatory Improvement Act
Floor Speech
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Mr. SCHNEIDER. Thank you for yielding.
Mr. Speaker, H.R. 992 resolves a widely recognized, unintended consequence in section 716 of Dodd-Frank. I join in asking my colleagues to support this bill in an effort to strengthen Dodd-Frank and to actually improve transparency and oversight in our financial system.
The overall goal of Dodd-Frank is to provide a sound, robust financial system following the upheaval of our financial markets in 2008. I support Dodd-Frank, and I am fully committed to realizing its goals, but no piece of legislation is perfect. This body has recognized that and has passed measures to correct adverse, unintended consequences that were identified after Dodd-Frank was signed into law, and that is what we are doing again here today.
This bill does not undermine the intent or overall implementation of Dodd-Frank. However, section 716, as it is currently written, could impede those very efforts. By indiscriminantly pushing out routine swap trades from heavily regulated banks to separate, less regulated firms, section 716 actually inserts more risk into our system. It could also make the use of certain risk-mitigating derivatives so expensive that businesses will stop using them to hedge uncertainty, resulting in higher costs for consumers and more financial instability.
Former FDIC Chairwoman Sheila Bair, former Federal Reserve Chairman Paul Volcker, and, most recently, Federal Reserve Chairman Ben Bernanke have all stated that this provision, as written, is problematic. If our foremost experts have concerns with it, why must we maintain this unduly risky provision?
This bill provides the soundness Dodd-Frank intended for our banking system while still prudently limiting the risks and costs. It also ensures manufacturers and our farmers still have the ability to hedge against price fluctuations--a practice that is integral to their operations and also benefits consumers.
I thank the gentlemen for their work on this issue, and I urge my colleagues to support the passage of this legislation.
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