News from the House Agriculture Committee

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## [***http://agriculture.house.gov***](http://agriculture.house.gov/) 

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Opening Statement

Chairman Collin C. Peterson

House Agriculture Committee

**Re: Full Business Meeting to Consider H.R. 977, the Derivatives
Markets Transparency and Accountability Act of 2009**

February 12, 2009

Good afternoon, and welcome to today's business meeting.

This meeting has been called to consider H.R. 977; a bill that I believe
is a strong product of many months of this Committee's public
examination of the lack of transparency and effective oversight of
regulated and unregulated derivatives.

I want to thank the members and staff from both sides of the aisle who
have put in many hours of work on this bill. Frank Lucas, the Committee
ranking member, Leonard Boswell and Jerry Moran, the Chairman and
ranking member of the General Farm Commodities Subcommittee, all have
been very helpful in putting this bill together. Committee members Jim
Marshall, Randy Neugebauer, and Mike Conaway have worked tirelessly on
this issue ever since we started examining the unprecedented price
volatility in agriculture and energy commodity contracts last year. And
I would like to recognize two of our newest members, Deborah Halvorson
and Larry Kissell, who have done great work to help shape this bill in
their short time on this Committee.

As the Committee with jurisdiction over derivative markets, we do not
take lightly any effort to amend the Commodities Exchange Act. We have
worked hard to improve on last year's bipartisan legislation on
transparency and oversight that earned a large majority when it passed
the House. The urgency to push this issue forward in the new Congress
intensified with the credit crisis, where the collapse of some of
America's largest financial institutions were linked to their heavy
involvement in the trading of unregulated credit derivatives like swaps
contracts. Their failures have put the American taxpayer on the hook, so
just sitting back and doing nothing is not an option. That is why I
believe it was important to start this debate and move a bill forward as
soon as Congress convened.

Now, I understand that upsets many on Wall Street, who probably had
their own timetable and would like to see this issue as part of a larger
regulatory bill, which would make it easier for these large banks to
choose their regulator. They have enjoyed that kind of political
advantage for decades. But they failed to make a good case before this
committee why the unregulated trading of swaps should be allowed to
continue.

(more)

H.R. 977 contains provisions that are similar to last year's bipartisan
bill, one that was approved by a vote of 283 to 133. It will strengthen
confidence in trader position limits on physically deliverable
commodities as a way to prevent excessive speculative trading.

It will close the so-called London Loophole by requiring foreign boards
of trade to share trading data and adopt speculative position limits on
contracts that trade U.S. commodities similar to U.S.-regulated
exchanges. And it will call for new full-time Commodity Futures Trading
Commission staff to improve enforcement, prevent manipulation, and
prosecute fraud.

This bill brings long overdue transparency and managed risk to the
over-the-counter credit derivatives market by using the clearing model
that has served the futures markets well for many decades. Such clearing
can occur through a CFTC-regulated facility or through a SEC-regulated
clearinghouse.   This bill prohibits the Fed from regulating derivatives
clearing. As an alternative to clearing, over-the-counter transactions
may be reported to the CFTC as long as the reporting parties demonstrate
their financial integrity and abide by net capital requirements
established by CFTC.

There are some changes in this bill from previous drafts, to reflect the
feedback we received during our hearings. This bill does not outlaw
credit default swaps, but it does give CFTC the authority to suspend CDS
trading, temporarily, with the President\'s consent. In addition, the
bill empowers the CFTC to criminally prosecute people who violate
commodities legislation. Currently, the Department of Justice has the
sole power to initiate criminal proceedings against an alleged violator.

This legislation brings real accountability and oversight to derivatives
markets. I urge the Committee to approve it and I now yield to my friend
and Ranking Member, Mr. Lucas, for any opening statement he would like
to make.

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