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Today, Congressman Jim McGovern (MA-02), second-highest ranking Democrat on the House Rules Committee, spoke on the House floor to call out House Republicans for using H.R. 2289, the Commodity Futures Trading Commission (CFTC) reauthorization bill, to undermine the Commission’s ability to enforce protections put in place by the Dodd-Frank Act that would help to keep the financial industry accountable and prevent another financial crisis.

“Since my friends on the other side of the aisle assumed the majority, they have made it their mission to undermine the Dodd-Frank Act and hamstring the ability of our regulators to put in place strong rules to prevent another financial crisis,” Congressman McGovern said.

“Congress has not done its part to provide the agency with the resources it needs to police these incredibly complex markets, populated by highly sophisticated and extremely powerful entities. Remember AIG, the insurer brought down by derivatives trades that the CFTC is now policing? If that memory is fuzzy, I’m sure you remember the funds we provided to bail AIG out – that came to a total of $67.8 billion,” McGovern added. “That would be enough to fund the CFTC at the level requested in the President’s budget for over two hundred years.

“The Commission needs a Reauthorization, but it certainly doesn’t need one saddled with changes that will hamstring its internal operations, prolong its rulemakings through an inflexible cost benefit analysis requirement that opens it to litigation risk, and force it to allow a race to the bottom on international rules governing a global market.”

The full text of Congressman McGovern’s floor speech is below.

As Prepared For Delivery:

“Today I rise in strong opposition to this rule and the underlying legislation. 

“Since my friends on the other side of the aisle assumed the majority, they have made it their mission to undermine the Dodd-Frank Act and hamstring the ability of our regulators to put in place strong rules to prevent another financial crisis. 

“And this legislation is no exception.  

“H.R. 2289 reauthorizes the Commodity Futures Trading Commission through 2019, while making substantial changes to the CFTC’s internal operations and rolling back key Dodd-Frank provisions intended to strengthen our financial regulatory framework. 

“I have specific concerns with the new cost benefit requirements imposed in Title II of the legislation.  The CFTC already conducts cost-benefit analyses on its rulemakings, and this provision could significantly slow down the rulemaking process while also creating openings that will put the CFTC at the risk of increased litigation. 

“Title II of H.R. 2289 also proposes several unnecessary changes to the Commission’s internal operations that could make it more difficult to manage the agency. 

“According to CFTC Chairman Massad, the provisions contained in Title II could weaken the Commission’s ability to respond in a timely and effective manner. For example, if these measures were currently in place, it would have made it more difficult for the Agency to positively respond over the past 10 months to concerns raised by market participants.  

“Also included in this bill are substantial changes to rulemakings taking place at the Commission under the Dodd-Frank Act. 

“I’m particularly concerned by the Cross-Border language contained in the bill, which will undercut the efforts already underway by the Commission to negotiate on an international system of safe and robust derivatives rules that are necessary to apply to the global derivatives market.  H.R. 2289 requires the CFTC to create a rule that will automatically allow U.S. banks and foreign banks conducting business in the U.S. to do so under the rules imposed by foreign jurisdictions – all of which are currently more lenient than our own. We’ve seen this kind of race to the bottom before, and we know how it ends.  

“Worse yet, is that this legislation hamstrings an agency that is already woefully underfunded. 

“The Congressional Budget Office estimates that the CFTC will need 30 additional personnel annually to handle the increased workload imposed by both the new Cost Benefit Analysis requirements and the mandated Cross Border rule contained in this legislation.  Will my friends on the other side of the aisle provide the necessary funding increases to the CFTC to carry out these requirements? 

“I doubt it. 

“Dodd-Frank significantly expanded the CFTC’s role in overseeing our financial markets, and they have already completed over 80 percent of their required rulemakings, the best rate of any financial regulator.  They have done so, despite the fact that Congress has not done its part to provide the agency with the resources it needs to police these incredibly complex markets, populated by highly sophisticated and extremely powerful entities. Remember AIG, the insurer brought down by derivatives trades that the CFTC is now policing? If that memory is fuzzy, I’m sure you remember the funds we provided to bail AIG out – that came to a total of $67.8 billion. That would be enough to fund the CFTC at the level requested in the President’s budget for over two hundred years.

“The Commission needs a Reauthorization, but it certainly doesn’t need one saddled with changes that will hamstring its internal operations, prolong its rulemakings through an inflexible cost benefit analysis requirement that opens it to litigation risk, and force it to allow a race to the bottom on international rules governing a global market.

“I ask my colleagues to join me in opposing this rule and the underlying legislation.” 

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