Date: 2015-06-09
Speaker: DAVID SCOTT (democrat)
Chamber: H
State: Georgia

Mr. Chairman. as the ranking member of the subcommittee of jurisdiction over this bill. I would like to address the three major areas of contention here. We have put a lot of time. a lot of work in this over the years. First. we want to deal with. as Mr. PETERSON brought up. some of his concerns and share how we are responding to that. I am a sponsor of this bill. We have worked on it. It is a similar bill to what we had before. The first area I want to deal with is cross border. and then I will go to costbenefit analysis. and then end users. What is important for the House and the people of this Nation to understand is that we operate in a global market. and our United States financial system is best served with deep financial liquidity. But if global regulations are not well harmonized. are not well coordinated. or we have good crossborder access. then these global markets will fragment into separate regulatory jurisdictions and become far less liquid. to the detriment of the United States financial system. We know now that the derivatives swaps market is about an $815 trillion piece of the economy. and we must notand I am sure we will notput our financial system of the United States at a disadvantage on the world stage. By passing this bill. we will not do that. If we delay it again. we will be putting our financial system at a disadvantage on the stage. Let me deal with the first concern that has been brought up. The claim that our legislation subverts the CFTCs authority to regulate foreign derivatives. this is flatout false because at no point is an entity of the United States person able to escape U.S. rules that the CFTC. itself. has deemed equivalent. Let me read section 314 that has been referred to. In section (b)(2)(A) of 314. it clearly states that only the CFTC can make sure that foreign entities. regulations are comparable to the United States. At no point do we yield the power of the CFTC to any foreign entity unless the CFTC makes sure that that foreign entity has equivalent rules to our Nation. Now. let me go to the claim that we are making it harder to challenge the cross border in 314. We are doing no such thing. It is important that if there is a country. if there is anybody in the world that wants to challenge. that wants to have a way of challenging the ruling of the CFTC. it is in our best interest to make sure that they go through a petition process. and the petition process is there to give the CFTC ample time180 daysto review the challenge and be able to respond appropriately. And after the Commission makes its decision. we request them to report to the Congress. Now. how is that making it harder? As a matter of fact. it is making it easier and more transparent. Now. the concern about the bills attempts to rein in the CFTCs capacity to impose certain rules on Wall Street trades. this concern refers to what we refer to as U.S. persons and location tests. At no time. Mr. Chairman. does our bill state that U.S. persons are not subject to U.S. rules. Individuals and transactions are still allowed to be carved in definitions and. thus. subject to the same rules. the same tests. and regulations. And our own Commissioner Bowen. who is a Democrat serving on the CFTC. stated before my subcommittee. "risk should be about risk and not about location." Tests should be about where the risk is. instead of where someone wrote something on a piece of paper. Now let me deal with the business that our bill creates a presumption that each of the eight foreign jurisdictions with the largest swaps markets automatically have swap rules that are considered to be comparable to and as comprehensive as the United States requirements. Yes. they are correct. but that presumption comes only after the CFTC makes sure that those eight foreign markets have comparable rules to us. Here is what it says in section 1: "The Commission shall determine. by rule or by order. whether the swaps regulatory requirements of foreign jurisdictions are comparable to and as comprehensive as United States requirements." I rest my case. But now. Mr. Chairman. I want to turn to what is the most important crossborder issue. this business with the European Union. The European Union is discriminating against the United States.