2014: Schweikert Voted To Reauthorize The CFTC Through 2018, While Also Reduce The Ability Of The Agency To Regulate The Derivatives Market. In June 2014, Schweikert voted for legislation reauthorizing the Commodity Futures Trading Commission through 2018. According to Congressional Quarterly, the legislation would have "reauthorize[d] the Commodity Futures Trading Commission through 2018 and would [have] largely exempt[ed] end users, or nonfinancial companies that use derivatives to hedge risks from tough rules on derivatives under the 2010 financial regulatory overhaul known as Dodd-Frank." The vote was on passage. The House passed the bill by a vote of 265 to 144. The bill died in the Senate. [House Vote 349, 6/24/14; Congressional Quarterly, 6/24/14; Congressional Actions, H.R. 4413]
2017: Schweikert Voted To Reauthorize The Commodity Futures Trade Commission Through 2021 While Also Requiring The CFTC To Conduct Cost-Benefit Analysis Of Rules. In January 2012, Schweikert voted for legislation that reauthorized the CFTC through 2021. According to Congressional Quarterly, "The bill reauthorizes the CFTC, requires the agency to prepare cost-benefit analyses of all its proposed regulations and makes several other changes to CFTC operations and procedures. Under the measure, operations and activities of the CFTC are reauthorized through FY 2021, at $250 million per year. (The FY 2016 appropriation for CFTC was $250 million; the request was $330 million.) The bill requires GAO to investigate the CFTC's resources and assess whether they are sufficient to enable the commission to effectively carry out its duties. It establishes an Office of the Chief Economist to be headed by a chief economist appointed by the CFTC, which would perform functions and duties as prescribed by the bill and the CFTC. It also explicitly states that the agency's division directors 'serve at the pleasure' of the CFTC." The vote was on passage. The House passed the bill by a vote of 239 to 182. The Senate took no substantive action on the legislation. [House Vote 54, 1/12/17; Congressional Quarterly, 1/6/12; Congressional Actions, H.R. 238]
Legislation Would Require The CFTC's Rules On Cross-Border Derivatives Allow U.S. Companies To Trade In The Eight Largest Foreign Markets With No Supervision As Long As Those Counties Have U.S. Similar Oversight; Rep. Colin Peterson (D-MN) Said This Would Lead To A "Race To The Bottom." According to Congressional Quarterly, "Derivatives are contracts with values tied to an asset at a designated point in time. The derivative may be tied to a physical commodity, a stock index, an interest rate or some other asset. Unregulated derivatives contributed to the financial turmoil of 2008. Peterson also objected to provisions in the bill that would limit the CFTC's authority to regulate cross-border derivatives trading. The agency would be required to issue rules that allow U.S. firms to carry out trades in the eight largest foreign markets without U.S. supervision as long as those countries have market oversight equivalent to the United States. He has said the provision would encourage banks to shop around for countries with the least stringent review and lead to a 'race to the bottom by multi-national banks.'" [Congressional Quarterly, 1/12/17]
Democrats Note That The Requirement For Cost-Benefit Analysis, Which Is Often Done But Not Required, Will Lead To Significant Legal Challenges. According to Congressional Quarterly, "Opponents of the bill, primarily Democrats, argue that it represents another GOP effort to chip away at Dodd-Frank and undermine the CFTC's ability to protect the public. The required cost-benefit analysis is particularly problematic, they say, arguing that the CFTC already conducts such analyses in certain instances and that codifying the requirement to expand the frequency of such analyses, as well as the factors to be considered, would open the commission up to constant legal challenges and result in lengthy or indefinite delays in the issuing of rules." [Congressional Quarterly, 1/6/12]
2015: Schweikert Voted For Legislation That Authorized The Commodity Futures Trading Commission Through 2019 And Clarified How The CFTC Regulated Derivatives And Swaps. In June 2015, Schweikert voted for legislation that reauthorized the Commodity Futures Trading Commission through fiscal year 2019 and clarified how the CFTC regulated derivatives and swaps by amending the Dodd-Frank Act. According to Congressional Quarterly, the legislation would have "reauthorize[d] operations of the Commodity Futures Trading Commission (CFTC) through fiscal 2019 and amend[ed] the 2010 Dodd-Frank Act to modify and clarify how the CFTC is to regulate derivatives and swaps. The bill would make numerous changes to CFTC operations. It would establish the Office of the Chief Economist and require the agency to conduct cost-benefit analyses of its proposed rules and improve safeguards of market data in its control." The vote was on passage and the House passed the legislation 246 to 171. The Senate took no substantive action on the legislation. [House Vote 309, 6/9/15; Congressional Quarterly, 6/9/15; Congressional Actions, H.R. 2289]
CFTC Reauthorization Mattered Because It Would Remove Instability And Uncertainty From The Market And Allow The CFTC To Do Its Job. According to the Hill, "Commodity Exchange Act reauthorization removes a source of uncertainty and instability and allows the commission and its staff to focus more squarely on carrying out its mission: to protect market participants and the public from fraud, manipulation, abusive practices and systemic risk, and to foster transparent, open, competitive and financially sound markets in the futures, options and swap markets under its jurisdiction." [Hill, 8/21/14]
The CFTC's Regulatory Scope Had Expanded Under Dodd-Frank To Include Swaps Markets, A Source Of The 2008 Financial Crisis. According to the Hill, "The CFTC's regulatory reach extends further than ever before. With the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFTC's jurisdiction now extends beyond futures and options markets and now includes swaps markets, one of the sources of the 2008 financial crisis." [Hill, 8/21/14]
Congress Had Reauthorized The CFTC Seven Times Since It Was Created In 1974. According to the Hill, "Congress has reauthorized the Commodity Futures Trading Commission seven times since its creation in 1974. While reauthorization has been the focus of past political debate, particularly the Commodity Futures Modernization Act of 2000, extending the CFTC's governing laws has never been more important than right now." [Hill, 8/21/14]
Rep. Conaway (R-TX): The Legislation Removed "Unnecessary Red Tape" For American Businesses, Specifically "End Users." In a floor speech by Rep. Conaway obtained via the Congressional Record, "H.R. 2289, the Commodity End-User Relief Act, does exactly what the name suggests: it provides relief from unnecessary red tape for the businesses that 'make things' in our country. End users are the businesses that provide Americans with food, clothing, transportation, electricity, heat, and much, much more. Companies that produce, consume, and transport the commodities that make modern life possible use futures and swaps markets to reduce the uncertainties that their businesses face. Farmers hedge their crops in the spring so that they know what price they will get paid in the fall. Utilities hedge the price of energy so they can charge customers at a steady rate. Manufacturers hedge the cost of steel, energy, and other inputs to lock in prices as they work to fill their orders. " [Congressional Record, 6/9/15]
Rep. Conaway (R-TX): The Legislation Fixed Problems With The CFTC Rules Regarding Derivatives Markets By Reducing The Regulatory Burdens. In a floor speech by Rep. Conaway obtained via the Congressional Record, "Finally, title III fixes numerous problems faced directly by end users who rely on derivatives markets. From unnecessary recordkeeping burdens, to improperly categorizing physical transactions as swaps, to narrowing the bona fide hedge definition, CFTC rules have discouraged exactly the kind of prudent risk management activities Congress intended to protect with the end-users exemptions in the Dodd-Frank bill. These regulatory burdens present challenges to American businesses and will cost them significant capital to comply with, unless Congress acts to provide the relief." [Congressional Record, 6/9/15]
Rep. Conaway (R-TX): The Legislation Brought More Certainty To How The CFTC Operated While Maintaining Consumer Protections. In a floor speech by Rep. Conaway obtained via the Congressional Record, "Title VII of Dodd-Frank sought to require that most swaps, one, be executed on an electronic exchange to ensure price transparency; two, be subject to initial and variation margin and central clearing through the lifetime of the transaction, to ensure performance on the obligation for counterparties; and, last, to be reported to a central repository to ensure that regulators have an accurate picture of the entire marketplace at any one point in time. H.R. 2289 does not roll back a single core tenet of title VII. It does not change the execution, clearing, margining, and reporting framework set up by the act. In fact, not a single witness who appeared before the House Committee on Agriculture ever asked us to upend these principles. But what they did ask for were fixes to portions of the statute that didn't work as intended, to provide more flexibility in complying with the rules when they impaired end users' ability to hedge, and to bring more certainty to the Commission and how it operates. That is exactly what H.R. 2289 provides." [Congressional Record, 6/9/15]
Rep. Scott (D-GA): The Legislation Would Not Subvert The CFTC's Authority To Regulate Foreign Derivatives. In a floor speech by Rep. Scott obtained via the Congressional Record, "Let me deal with the first concern that has been brought up. The claim that our legislation subverts the CFTC's authority to regulate foreign derivatives, this is flat-out 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." [Congressional Record, 6/9/15]
Rep. Peterson (D-MN) Opposed The Legislation Because It Eliminated "Important" Financial Regulations And Allow For A Financial Crisis Similar To That Of 2008. In a floor speech by Rep. Peterson obtained via the Congressional Record, "Mr. Chairman, I oppose this legislation because it will roll back important financial regulations and interfere with the CFTC's ability to do its work. I am very concerned that H.R. 2289 will open the door to the types of things that created the financial mess that we are just beginning to get ourselves out of." [Congressional Record, 6/9/15]
Rep. Peterson (D-MN): The Legislation Benefited Big Banks And Left The CFTC Open To Lawsuits From Those Banks. In a floor speech by Rep. Peterson obtained via the Congressional Record, "One of my biggest concerns in this bill is the new cost-benefit analysis. This is, in my opinion, all cost and not a lot of benefit unless you are one of the nine big banks who, as far as I am concerned, have not learned a thing from the financial crisis. This not only adds an unneeded layer of government bureaucracy; it opens the doors to lawsuits from major banks seeking to delay or completely derail CFTC rulemakings." [Congressional Record, 6/9/15]
Rep. Peterson (D-MN) Said That The Bill Hampered The U.S. Negotiations With European Counterparts About Banking Rules. In a floor speech by Rep. Peterson obtained via the Congressional Record, "I also have serious concerns with the trouble that will be caused by section 314, the cross-border section of this bill. Chairman Massad has been negotiating extensively and in good faith with our European counterparts to harmonize their rules with ours. I have talked to the Chairman a number of times about this, and he has assured me and it has been independently verified that they are 85 percent of the way to getting a deal in this area. This provision in my opinion will cut the negotiators off at the knees. I am worried that this provision will take us back to where we were and what was happening prior to the financial crash. The big banks at that time that have offices both in London and New York were playing us against each other, getting the United States to water down rules by threatening to move their business elsewhere and vice versa, and that was verified on committee trips that we took over to Europe and in discussions with their regulators." [Congressional Record, 6/9/15]
The Obama Administration "Strongly" Opposed The Legislation Because It Undermined The "Efficient Functioning" Of The CFTC. According to the Obama Administration's Statement of Administration Policy regarding HR 2289, "The Administration strongly opposes the passage of H.R. 2289 because it undermines the efficient functioning of the Commodity Futures Trading Commission (CFTC) by imposing a number of organizational and procedural changes and would undercut efforts taken by the CFTC over the last year to address end-user concerns." [Congressional Record, 6/9/15]
The Obama Administration Said The Legislation Would Potentially Endanger The Middle Class By Encouraging Risky Financial Maneuvers Such As Those Leading To The 2008 Recession. According to the Obama Administration's Statement of Administration Policy regarding HR 2289, "The changes proposed in H.R. 2289 would hinder the ability of the CFTC to operate effectively, thereby threatening the financial security of the middle class by encouraging the same kind of risky, irresponsible behavior that led to the great recession." [Congressional Record, 6/9/15]
The Hill: Democrats Were Concerns The Legislation Limited The CFTC's Ability To Regulate Derivatives. According to the Hill, "Passage fell on a vote of 246-171 despite concerns from Democrats that it would impede that CFTC's ability to regulate the derivatives marketplace in the aftermath of the Dodd-Frank Wall Street reform law." [Hill, 6/9/15]
Congressional Budget Office Estimated The Legislation Would Have Cost $1.1 Billion Over Four Years. According to the Hill, "The nonpartisan Congressional Budget Office estimated that the measure would cost $1.1 billion over the 2016-2020 period." [Hill, 6/9/15]