--As Prepared for Delivery--
"Thank you M__ Speaker. I yield myself such time as I may consume.
"I rise in strong opposition to H.R. 992, commonly known as the swap push out bill. This bill would effectively gut important financial reforms and put taxpayers on the hook for big banks' risky behavior.
"In 2008, I voted against TARP because I didn't think the federal government should be bailing out the mess both regular banks and so-called investment banks like Goldman Sachs got themselves into with derivatives trading. Section 716 of the Dodd-Frank law ensures we won't find ourselves in this situation again. This provision is a modest measure designed to prevent the federal government from bailing out or subsidizing bank activity that is not related to the business of banking.
"Originally, Section 716 a Senate provision would have forced banks to spin off all their swap activity into a separate affiliate. The House version of Dodd-Frank had no such requirement. In a compromise, the final version of Section 716 allows banks to hold on to swaps for hedging purposes and swaps related to the business of banking primarily interest rate and foreign exchange swaps.
"Under Dodd-Frank, banks are required to move commodity swaps (including energy and agriculture swaps); non-cleared, non-investment grade credit default swaps; credit default swaps on asset backed securities, and equity swaps to a separate affiliate. This represents barely 10 percent of the world swap market; banks can keep 90 percent in the bank. Apparently this is not good enough for the big banks which is why they are pushing H.R. 992 to gut Dodd-Frank and keep playing in 99 percent of the swap market, which is pretty much the status quo.
"H.R. 992 also makes it easier for banks to hide commodity manipulation from regulators. In recent months, we have seen J.P. Morgan charged with and settling cases of alleged energy market manipulation, and the start of an investigation of Goldman Sachs for aluminum manipulation. The Federal Reserve is even reconsidering its decision letting banks get involved with owning commodities. Until the big banks are held accountable for the activities in commodity swap markets, I am reluctant to repeal limits Congress already has put in place.
"Since the passage of Dodd-Frank, it is clear that Wall Street has not learned its lesson. The loss experienced by J.P. Morgan through derivatives trading in the "London Whale" incident is proof of that. At some point, another bank is going find itself in similar trouble and run to the government with its hands out for assistance. Frankly, I think the American people are sick and tired of the banks asking for taxpayer help when they get in trouble for risky trading activities.
"In the past, I have joined other Democratic Agriculture Committee members in support of legislation to change Dodd-Frank. I have supported those efforts because those bills reaffirmed what Congress intended with the law, like protecting derivatives end-users. Well, these end-users also share my concerns. The Commodity Markets Oversight Coalition represents commodity-dependent industries, businesses and end-users, that rely on functional, transparent and competitive commodity derivatives markets as a hedging and price discovery tool, and they too oppose H.R. 992.
"H.R. 992 repeals a key, if modest, reform component of Dodd-Frank. My colleagues are certainly free to vote as they wish, but I urge them to be careful people will remember this vote. I urge my colleagues to oppose H.R. 992 so we don't put more taxpayer dollars at risk for banks' swap activity not related to their banking business.
"I yield back."