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Friday, December 02, 2011

House Financial Services Committee Passes Jobs Creating Bills

It is not for lack of jobs bills languishing in the pipeline of Congress. The House of Representatives has passed some more jobs creating bills in the past few days yet no action is being taken in the Senate.

The latest bills come from the House Financial Services committee.

These bills reform Dodds-Frank legislation to ease regulations declared by job creators as job killers.

The Full Committee approved the following bills to fix the derivatives provisions of the Dodd-Frank Act:

H.R. 2586, the Swap Execution Facility Clarification Act:
H.R. 2586 directs the CFTC and SEC to promulgate rules for swap execution facilities and security-based swap execution facilities (SEFs) to effectuate Congressional intent that SEFs can serve as an alternative to exchanges and provide an execution facility for illiquid or thinly-traded swaps. The legislation was approved by a voice vote.

H.R. 2586 ensures SEFs can serve as a platform for executing swaps and security-based swaps by:
•requiring immediate execution of matched trades;
•allowing market participants to receive and respond to a single quote;
•removing regulatory obstacles that require SEFs to have a minimum number of participants receiving bids or offers; and
•Ensuring that trading platforms executing swap transactions include voice-based and hybrid trading models.
•Does not allow the government to dictate market structure.
H.R. 2586 was introduced by Capital Markets Subcommittee Chairman Garrett and Rep. Robert Hurt.

H.R. 2682, The Business Risk Mitigation and Price Stabilization Act
The Business Risk Mitigation and Price Stabilization Act provides clarity to the derivatives title of the Dodd-Frank Act by reconfirming the end-user exemption from margin and capital requirements. End-users are firms and companies that use derivatives to manage their risks, not to speculate. H.R. 2682 was approved by a voice vote.

Through colloquies during the debate on Dodd-Frank and plain-language statute, legislators made their intent clear that the derivatives title was not meant to impose margin requirement on end users. Yet, regulators have interpreted the derivatives title to give them authority to impose margin requirements on end-users.

H.R. 2682 was introduced by Reps. Michael Grimm, Gary Peters, Austin Scott, and William Owens.

H.R. 2779, introduced by Rep. Steve Stivers.
H.R. 2779 provides an important clarification to the Dodd-Frank Act derivatives title, which treats inter-affiliate swaps the same as swaps between unrelated counterparties. Without correction, companies may face double the costs associated with hedging legitimate business risks. The legislation was approved unanimously by a vote of 53 to 0.

H.R. 2779 ensures entities under a common corporate ownership are able to appropriately manage risks without unnecessary costs. Under the legislation, inter-affiliate swaps will be exempt from the margin, clearing and reporting requirements of the Dodd-Frank Act.

H.R. 2779 was introduced by Reps. Steve Stivers and Marcia Fudge.

Some common sense is needed. Business leaders need some reassurance that regulations will not hamstring them in expanding their businesses and manage risk. Our nation's economy cannot recover until those looking for work find it.

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