Date: 2013-06-12
Speaker: DAVID SCOTT (democrat)
Chamber: H
State: Georgia

Thank you. Mr. Chairman. I yield myself such time as I may consume. Let me say at the outset that what has been clearly brought to our attention today is a great need for leadership. Thats what this is about. Derivatives are here. The other side pointed out very magnificently were dealing with a $600 trillion piece of the world economy. It must have rules. It must have regulations. This is the duty and the responsibility of the United States Congress to do so. To do otherwise would indeed weaken DoddFrank. What this bill does is strengthen DoddFrank. Now. I serve on both the Agriculture Committee and the Financial Services Committee. Im also the ranking member of the General Farm Commodity and Risk Management Subcommittee. I mention those things because I have been intimately involved in this issue for a long time. and I know the consequences if we do not respond. Now. why do we need this bill? DoddFrank has been approved almost 3 years. but right today. we still do not know what swaps activities will be subject to U.S. regulation and which ones will be subject to foreign regulations. If something is shameful. that is shameful. In section 722. the DoddFrank Act limits the CFTCs jurisdiction over swaps transactions outside the United States for those that have "direct and significant connection with activities in or effect on commerce in the United States." However. section 722. the same section. limits the SECs jurisdiction over securitybacked swaps outside the United States. as well. That brings confusion. What is the proper thing to do? Ask these two agencies to harmonize. Give us one rule so that that will apply. Thats what this bill does. We are dealing with a global market. We cannot put our American banking system at a disadvantage competitively. That is what will weaken DoddFrank. That is what will bring about another crisis beyond what we already have. So. Mr. Speaker. what we need to do is understand that on the foreign market. what are we dealing with? Were not dealing with every nation in the world. We are dealing with only the nine largest economies. and we must make sure that their regulatory regimes are as strong as ours. That is the responsibility of the SEC and the CFTC. Thats what this bill is. As far as AIG and as far as all of the other debacles that have happened. were all upset about that. Thats why we must move with this legislation. Now. very briefly. much has been said about what has happened as if weve done nothing about it. Mr. Speaker. weve put clearing in so that all swaps transactions must be cleared. Clearing of swap contracts will eliminate bilateral credit risk. and it transfers that risk to clearinghouses which requires market participants to post margins. put up their own money. Thats how you prevent another calamity. The margin requirements are there also for uncleared swaps. And the clearing rules and the margin rules taken together mean that all swap contracts will be fully secured by highquality liquid assets. and this is what will prevent another scenario. And so I started what I said with what is desperately needed here: leadership. To allow this crossborder to go unanswered any longer is weakening us. Mr. Gensler. who is the chairman of the CFTC. next week will be meeting in Montreal with the European regulators. Leadership is needed. There is a July 23 deadline that all of the international markets must meet to deal with rules and regulations. The wrong thing for us to do is not to pass this bill. And I assure my colleagues. my Democratic and Republican friends. Ive gone through the safeguards weve put in here. This will not happen again. It will not happen again because we have strengthened DoddFrank. And the head of our Fed. Chairman Bernanke. said in his own words. We need this crossborder protection. we need this legislation. So with that. I reserve the balance of my time because I have some other speakers that wed like to hear from.