Legislative Updates: March 2011
After much speculation about when Congress would get down to the business of oversight, work finally got underway last month. On the House side they made up for lost time. The Financial Services Committee (HFSC) held eight hearings during the two weeks that Congress was in session in February, followed by six more hearings during the first week of March.
The hearings focused primarily on mortgage finance reform, but a hearing was also held on the derivatives section of Dodd-Frank. At the hearing SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler made their first appearances before the HFSC of the 112th Congress. They discussed how their respective agencies have been implementing the rules that Congress required them to promulgate. Most of the Republican Committee members queried the Chairmen about the end-user exemption and the need for economic analysis of the proposed rules while many Democratic members defended the Agencies' need for additional funding.
Unlike the House's frenetic start with fourteen hearings in three legislative weeks-the Senate Banking Committee (SBC), held just one hearing. But the hearing, "Oversight of Dodd-Frank Implementation: A Progress Report by Regulators at the Half-year Mark," was appropriate for the work that the Committee faces this year. Chairmen Schapiro and Gensler appeared before the SBC where they advocated for additional funding for their agencies and answered questions from the Committee members.
Additionally, the SBC announced their subcommittee assignments. Senator Jack Reed (D-Rhode Island) was selected as chairman of the Securities, Insurance and Investment Subcommittee, which oversees clearinghouses, exchanges and the SEC. Senator Mike Crapo (R-Idaho) is the top Subcommittee Republican and also the second-ranking Republican on the full Committee.
The House and Senate Agriculture Committees also got into the derivatives action last month, with each Committee holding a hearing on Title VII, the Derivatives Title of Dodd-Frank. During both hearings CFTC Chairman Gensler once again discussed the need for additional funding for the CFTC. He also addressed the need for clarification on the exemption of end-users from having to post margin for uncleared and pre-enactment swaps and whether the CFTC is following Congressional intent in its rule implementation. Chairman Gensler mentioned that his agency has proposed 28 of the 31 rules required of it under Dodd-Frank and that final rules should begin to be implemented shortly. However, some of the more controversial rules will be put in place past the one-year Congressional deadline.
SEC Chairman Schapiro joined Chairman Gensler at the Senate Agriculture Committee hearing. In response to a question from Senator Michael Bennet (D-Colorado) she clarified the steps that her agency is taking to manage clearinghouse risk. The SEC and CFTC are also meeting regularly to harmonize all appropriate rules that require cooperation between the agencies.
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