Today, the House Agriculture Committee and House Financial Services Committee held a joint hearing to examine the regulation of over-the-counter (OTC) derivatives. Secretary of the Treasury Timothy F. Geithner appeared before the two committees to discuss the OTC derivative regulatory proposals the Administration released last month.
Agriculture Chairman Collin C. Peterson of Minnesota and Financial Services Chairman Barney Frank of Massachusetts co-chaired this morning’s hearing.
“Several of the Administration’s key provisions regarding over-the-counter derivatives are similar to a strong, bipartisan bill, H.R. 977, which our Committee passed in February," Chairman Peterson said. “Secretary Geithner’s appearance today was informative, and I hope our two Committees can work with the Administration in a bipartisan fashion as we move forward to bringing a sense of order to the OTC markets. The failures of the institutions that dealt in these products have put the American taxpayer on the hook, so just sitting back and doing nothing is not an option."
“I am pleased that our two committees had the opportunity to have a joint hearing to learn more about how we can regulate OTC derivatives," said Agriculture Committee Ranking Member Frank Lucas of Oklahoma. “Today was a solid, preliminary step in that public policy process. It's clear that ignorance of this financial instrument by both regulators and market participants is the greatest threat to the stability of our economic system. However, we must be careful with our actions because too much regulation will overload the system with costs that will ultimately be detrimental to consumers. I look forward to continuing this complex, legislative process."
In February, the House Agriculture Committee passed H.R. 977, the Derivatives Markets Transparency and Accountability Act, legislation to increase the transparency and strengthen oversight of futures, options and OTC markets.
H.R. 977 would impose a clearing requirement on all prospective over-the-counter transactions. As an alternative to clearing, lightly-traded, customized over-the-counter transactions could be reported to the Commodity Futures Trading Commission (CFTC) as long as the reporting parties demonstrate their financial integrity and abide by net capital requirements established by CFTC. The bill would also give CFTC the authority, with the President’s consent, to suspend naked credit default swap trading whenever a Securities and Exchange Commission short selling suspension order is in effect.
Additional information on H.R. 977, as well as information on previous hearings covering derivatives, can be found on the Agriculture Committee website at http://democrats-agriculture.house.gov/inside/legislation.html.
Secretary Geithner’s opening statement is available on the Committee website at http://democrats-agriculture.house.gov/hearings/index.html. A full transcript of the hearing will be posted on the Committee website at a later date.
http://democrats-agriculture.house.gov
Source: House Committee on Agriculture
