Forum Post: Ag Committee advances bills easing Dodd-Frank regs (Financial Reform)

Ag Committee advances bills easing Dodd-Frank regs Amanda Peterka, E&E reporter

Published: Thursday, January 26, 2012

The House Agriculture Committee yesterday approved six bills amending the Dodd-Frank financial reform law with the goal of easing regulations on utility companies, rural electric cooperatives, community banks and manufacturers.

The mainly Republican-authored bills achieved bipartisan support and address concerns raised by farm-state lawmakers and nearly 40 witnesses during seven hearings held on the law last year. The measures would ensure that regulations implemented under the act do not reach beyond the scope Congress intended, the bills' supporters said.

"They are intended to restore the balance that I believe can exist between sound regulation and a healthy economy," Agriculture Chairman Frank Lucas (R-Okla.) said at yesterday's markup.

All of the bills passed unanimously by voice vote despite concerns raised by ranking member Collin Peterson (D-Minn.) that they would prove to be unnecessary when the U.S. Commodity Futures Trading Commission issues final rules.

"The sad part of this exercise is that we may find out later it wasn't even necessary," Peterson said. "What is potentially even sadder is that even if we do find that any of these bills are necessary, they have no future. The majority of Senate Republicans and their leadership have dedicated themselves to the repeal of Dodd-Frank."

The bills, many of which have already been approved by the House Financial Services Committee, all deal with the regulation of the over-the-counter derivatives, or swaps, market. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act mandates oversight of that market for the first time in its history.

Swaps are agreements based on expected future prices of commodities, credit and other items and have historically been made without going through an exchange. The bills approved yesterday seek to exempt commercial end-users like utilities and rural electric cooperatives who use swaps to legitimately hedge their risks in volatile markets.

Opponents of CFTC's regulations have argued that they would increase costs for those businesses and drive up electricity prices.

The "Business Mitigation and Price Stabilization Act of 2011" (H.R. 2682) would explicitly exempt those businesses from posting cash margins for swap transactions they make to hedge their risks.

Although CFTC proposed to exclude those entities in draft rules, lawmakers said they were concerned that banking regulators, including the Federal Reserve Board and Farm Credit Administration, were moving to include them in their proposed Dodd-Frank regulations.

"Banking regulators have ignored congressional intent," Lucas said, calling the bill "critical."

The committee also approved the "Protecting Main Street End-Users from Excessive Regulation" (H.R. 3527) from Rep. Randy Hultgren (R-Ill.) that defines the term "swaps" to exclude those end-users from regulation.

Subjecting agricultural cooperatives, rural electric cooperatives and public power authorities "to these overly-broad rules would threaten consumers with higher prices, or increased price volatility, for essentials such as food and electricity," Hultgren said in a statement issued after the markup.

Peterson, though voting in favor of the bill, said he was concerned it opened up loopholes in proposed regulations by using overly broad language.

For the majority of the bills passed yesterday, the committee approved an amendment offered by Peterson aimed at ensuring that CFTC does not have to go back to the drawing board on any of its proposed rules.

The other bills the committee advanced are:

H.R. 1840 from Rep. Michael Conaway (R-Texas), which would require a cost-benefit analysis of all CFTC rules. H.R. 2779 from Ohio Reps. Steve Stivers (R) and Marcia Fudge (D), which would exempt "inter-affiliate swaps," or agreements based on the expected future price of goods made between affiliates of a company, from regulation. H.R. 2586 from Rep. Scott Garrett (R-N.J.), which would ease regulations proposed by the Securities Exchange Commission on security-based swaps. H.R. 3336 from Rep. Vicky Hartzler (R-Mo.), which would ensure that small lenders are excluded from certain regulations under Dodd-Frank.