Subcommittees to Examine Volcker Rule Impact on Economy, Jobs

Washington, Jan 11. A joint hearing in January held by two Financial Services subcommittees will evaluate the proposed Volcker Rule and its impact on the economy, jobs, businesses and investors.  Members of the subcommittees will also ask federal regulators about the costs of complying with the regulations as well as perceived benefits that will result from the regulations.

The Volcker Rule, a controversial part of the massive Dodd-Frank Act, directs regulators to write and issue rules prohibiting bank holding companies and their affiliates from engaging in proprietary trading and sponsoring and investing in hedge funds and private equity funds.  

Regulators have released a draft proposal of the Volcker Rule for public comment. In a sign of its complexity, the draft spans 298 pages and asks respondents to answer more than 1,300 questions. 

“From the beginning there have been serious concerns that this complex regulation will hinder American markets, competitiveness and job creation,” said Financial Services Committee Chairman Spencer Bachus.  “Despite claims from Dodd-Frank supporters that our foreign competitors would implement the same restrictions on proprietary trading, no other country has any plans to do so.  Therefore, we run the grave risk of creating an unlevel playing field that disadvantages the U.S. economy at a time when unemployment remains stubbornly high.  We must ensure that regulators take into consideration the Volcker Rule’s costs versus benefits as well as its impact on jobs, pensions, retirement savings and investment.”

The joint hearing to be held on January 18 continues the Financial Services Committee’s efforts to identify and correct job-destroying provisions in the 2,300-page Dodd-Frank Act.

Financial Institutions and Consumer Credit Subcommittee Chairman Shelley Moore Capito said, “This hearing will provide Members the opportunity to ask questions to clarify confusion surrounding the implementation of the proposed Volcker rules.  The proposed rules are extensive and the interplay between agencies fuels uncertainty about the end result.    Given the complexity and the broad impact of the proposed rules, it is imperative that Members of the Financial Institutions and Capital Markets Subcommittees have a better understanding of the potential consequences of implementing these rules.”

Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Scott Garrett said, “Like much of Dodd-Frank, the Volcker Rule is a solution in search of a problem and raises more questions than it answers.  Job-killing government overreach is not what the doctor ordered for our struggling economy.  We need smart, sensible rules that foster economic growth and robust job creation, not unnecessary ones that hamstring our economy and send American jobs overseas.”

Time of hearing:  Wednesday, January 18 at 9:30 a.m.

Location:  2128 Rayburn House Office Building

Witnesses scheduled to testify:

Panel I:

Martin J. Gruenberg, Acting Chairman, Federal Deposit Insurance Corporation

Gary Gensler, Chairman, Commodity Futures Trading Commission

Mary Schapiro, Chairman, Securities and Exchange Commission

Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System

John Walsh, Acting Comptroller of the Currency, Office of the Comptroller of the Currency

Panel II:

Douglas Elliott, Fellow, Economic Studies, Initiative on Business and Public Policy, Brookings Institution

Scott Evans, Executive Vice President, President of Asset Management, TIAA-CREF

Alexander Marx, Head of Global Bond Trading, Fidelity Investments

Douglas J. Peebles, Chief Investment Office and Head of Fixed Income, Alliance Bernstein

Mark Standish, President & Co-CEO, RBC Capital Markets

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Financial Services Subcommittee Subpoenas Corzine

Washington, Dec 7 - The Financial Services Subcommittee on Oversight and Investigations, chaired by Rep. Randy Neugebauer, has voted unanimously to subpoena Jon Corzine, the former executive of MF Global.

Corzine is being directed to testify before the Subcommittee on Thursday, December 15 at 1 p.m. when the Subcommittee will hold a hearing to examine the causes and consequences of MF Global’s collapse as well as the level of coordination between the firm’s regulators.

Corzine had been invited to voluntarily appear before the Subcommittee on December 15 but he refused the invitation through his attorney.

Subcommittee Chairman Neugebauer said, “Mr. Corzine’s appearance before the Subcommittee is necessary to help identify the causes of MF Global’s collapse and what happened to its customers’ funds. Clearly, Mr. Corzine’s testimony, along with that of other witnesses, will help the Subcommittee to properly and thoroughly examine MF Global’s corporate behavior and will assist in identifying potential regulatory failures.”

“MF Global customers who have lost millions of dollars – all without a trace – underline the importance of the Subcommittee’s focus on the MF Global meltdown,” said Financial Services Committee Chairman Spencer Bachus.

Corzine served as MF Global’s chairman and chief executive officer from March 2010 until shortly after the firm filed for bankruptcy on October 31.

Other witnesses who have been invited to appear at the hearing are: •Bradley Abelow, Chief Operating Officer and President, MF Global •Gary Gensler, Chairman, Commodity Futures Trading Commission •Richard G. Ketchum, Chairman and Chief Executive Officer, Financial Industry Regulatory Authority •William Dudley, President, Federal Reserve Bank of New York •Robert Cook, Director, U.S. Securities and Exchange Commission’s Division of Trading and Markets •Terry Duffy, Executive Chairman,CME Group

The hearing will take place in room 210 of the Capitol Visitor Center. x

Oversight and Investigations Subcommittee Prepares for Hearing on MF Global

Press Releases.Washington, Dec 2. The Financial Services Subcommittee on Oversight and Investigations is examining hundreds of pages of documents and requesting other materials surrounding the bankruptcy of MF Global as it prepares for its hearing later this month.

Subcommittee Chairman Randy Neugebauer has requested information from regulators who were responsible for overseeing MF Global, and he continues working with attorneys for the brokerage firm’s former chairman and CEO Jon Corzine about having Corzine appear before the Subcommittee to answer questions.  The Subcommittee has scheduled a hearing on the collapse of MF Global for December 15.

“Jon Corzine is only one piece of the puzzle that the Subcommittee is looking at,” said Neugebauer.  “We began to delve into every aspect of MF Global’s collapse weeks ago, and the Subcommittee is sifting through documents, working to obtain documents, and ensuring our investigation is done in a thorough – and not a hurried – fashion.”

The Subcommittee is focusing its investigation on decisions and events leading up to the collapse of MF Global, the effectiveness of regulators in overseeing the firm’s activities, and the impact MF Global’s bankruptcy will have on its customers.

Among those the Subcommittee is seeking answers from are Gary Gensler, the Chairman of the Commodity Futures Trading Commission, and Mary Schapiro, the Chairman of the Securities and Exchange Commission. x

Committee Approves More Bills To Remove Regulatory Impediments to Job Creation

Press Releases.Washington, Nov 30. Financial Services Committee continued its efforts to promote job creation by easing the burden government regulations impose on the private sector with the approval today of three bills that fix derivatives provisions of the Dodd-Frank Act.

Since January, the Committee has led efforts to identify and fix job-killing provisions in the Dodd-Frank Act, as well as remove regulatory barriers standing in the way of an economic recovery. As the nation’s economy continues to struggle, the Committee has offered proposals to help the private sector grow and create jobs. To date, the Committee has approved 18 bills designed to encourage job creation and economic growth.

Chairman Spencer Bachus said, “The three derivatives bills approved today will bring much needed certainty to the over-the-counter derivatives market. They will help ensure that the U.S. is not placed at a competitive disadvantage with the rest of the world; that markets develop based on the needs of the participants and not on what Washington bureaucrats think a market should resemble; and that end-users are able to efficiently hedge their risks."

Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Scott Garrett said, “With our economy on life support and the national unemployment rate at 9%, we need all hands on deck in Congress to bring much-needed relief to out of work Americans. I’m pleased that the Financial Services Committee answered the call today by approving several common-sense proposals that will help alleviate and clarify over-reaching regulations while breathing life into our economy and spurring main street job creation.”

In addition to the three bills dealing with derivatives provisions of the Dodd-Frank Act, the Committee also approved H.R. 3512, which revises the Abraham Lincoln Commemorative Coin Act to allow distribution of the surcharges collected on the sales of the coin.

The Full Committee approved the following bills to fix the derivatives provisions of the Dodd-Frank Act:H.R. 2586, the Swap Execution Facility Clarification Act:H.R. 2586 directs the CFTC and SEC to promulgate rules for swap execution facilities and security-based swap execution facilities (SEFs) to effectuate Congressional intent that SEFs can serve as an alternative to exchanges and provide an execution facility for illiquid or thinly-traded swaps. The legislation was approved by a voice vote.

H.R. 2586 ensures SEFs can serve as a platform for executing swaps and security-based swaps by:

• requiring immediate execution of matched trades;
• allowing market participants to receive and respond to a single quote;
• removing regulatory obstacles that require SEFs to have a minimum number of participants receiving bids or offers; and
• Ensuring that trading platforms executing swap transactions include voice-based and hybrid trading models.
• Does not allow the government to dictate market structure.

H.R. 2586 was introduced by Capital Markets Subcommittee Chairman Garrett and Rep. Robert Hurt. H.R. 2682, The Business Risk Mitigation and Price Stabilization Act The Business Risk Mitigation and Price Stabilization Act provides clarity to the derivatives title of the Dodd-Frank Act by reconfirming the end-user exemption from margin and capital requirements. End-users are firms and companies that use derivatives to manage their risks, not to speculate. H.R. 2682 was approved by a voice vote.

Through colloquies during the debate on Dodd-Frank and plain-language statute, legislators made their intent clear that the derivatives title was not meant to impose margin requirement on end users. Yet, regulators have interpreted the derivatives title to give them authority to impose margin requirements on end-users.

H.R. 2682 was introduced by Reps. Michael Grimm, Gary Peters, Austin Scott, and William Owens.H.R. 2779, introduced by Rep. Steve Stivers.H.R. 2779 provides an important clarification to the Dodd-Frank Act derivatives title, which treats inter-affiliate swaps the same as swaps between unrelated counterparties. Without correction, companies may face double the costs associated with hedging legitimate business risks. The legislation was approved unanimously by a vote of 53 to 0.

H.R. 2779 ensures entities under a common corporate ownership are able to appropriately manage risks without unnecessary costs. Under the legislation, inter-affiliate swaps will be exempt from the margin, clearing and reporting requirements of the Dodd-Frank Act.

H.R. 2779 was introduced by Reps. Steve Stivers and Marcia Fudge.                s

Evaluate the financial health of the Federal Housing Administration

Press Releases.Committee to Assess Financial Health of Federal Housing. Administration.Washington, Nov 29. The Financial Services Committee will convene a hearing on Thursday with Federal officials and industry experts to evaluate the financial health of the Federal Housing Administration (FHA), the government agency that insures nearly 40 percent of new home mortgages in the U.S.

The hearing comes on the heels of an independent auditor’s report released on November 15 that the FHA may need a taxpayer-funded bailout next year if the housing market continues to deteriorate.

The report found the FHA has just $2.6 billion in cash reserves, down from $4.7 billion last year.

Financial Services Committee Chairman Spencer Bachus said, “Since the housing bubble burst, the FHA has seen its market share increase while its fiscal condition declined. The agency’s capital reserves, which provide funds to absorb homeowner defaults, are alarmingly low. This hearing will help the Committee assess whether FHA can be fiscally self-sufficient and whether a major restructuring of FHA is necessary to ensure its future viability.

“The auditor’s report demonstrates once again why it is vitally important for Congress to create an environment where the private sector can compete on a level playing field with government-subsidized entities in our housing markets,” Chairman Bachus concluded.

The FHA was established in 1934 to provide federal mortgage insurance in order to broaden homeownership, protect lending institutions and stimulate the building industry. According to the FHA, the federal mortgage insurance program currently insures more than $1 trillion worth of mortgages on more than seven million loans. The program was intended to be self-funded, but the nation’s protracted housing downturn and FHA’s deteriorating financial condition have cast doubt on whether the FHA can continue to operate without borrowing from the Treasury. The FHA can borrow from the Treasury without Congressional approval. Click here to view the Committee’s memo for this hearing.

Witnesses scheduled to testify:

Panel I
Secretary Shaun Donovan, U.S. Department of Housing and Urban Development

Panel II
Mathew Scire, Director, Financial Markets and Community Investment, U.S. Government Accountability Office

Patrick Sinks, President and Chief Operating Officer, Mortgage Guaranty Insurance Corporation

Dr. Andrew Caplin, Professor of Economics, Department of Economics, New York University

Debra W. Still, Chairman-Elect, Mortgage Bankers Association

Moe Veissi, President, National Association of Realtors

Sarah Rosen Wartell, Executive Vice President, Center for American Progress                  j