The House Financial Services Committee Tuesday voted out amended legislation that would postpone implementation of Section 7 of the Dodd-Frank Wall Street Reform Act to October 2012.
The Republican measure (HR 1573) cleared the committee by 30-24, with the vote falling along party lines. The House Agriculture Committee voted out a similar bill earlier this month, postponing implementation of Dodd-Frank until Dec. 31, 2012, but an amendment offered Tuesday by House Financial Services Chairman Spencer Baucus (R-AL) moved up the deadline to October 2012.
Rep. Barney Frank of Massachusetts, the ranking Democrat on the House panel and one of the authors of Dodd-Frank, argued that the GOP amended bill does not give regulators -- the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission -- more time to work on the rules but rather "prevents the regulators from acting when they think they are ready.
"I reject the notion that this [Baucus amendment] is aimed at giving them more time." While the Republican legislation does not repeal Dodd-Frank, it postpones any "substantive regulation of the swaps" market until October 2012 -- or two years and three months after Dodd-Frank was passed by Congress.
House Republicans introduced HR 1573 in response to industry complaints that the CFTC is rushing the rulemaking process of Section 7 of Dodd-Frank. At NGI's recent GasMart 2011 conference in Chicago, companies also said the rules proposed by the agency so far are too prescriptive (see Daily GPI, May 13).
Dan. M. Berkovitz, general counsel for the CFTC, defended the agency against the accusations Tuesday. "We believe that we're proceeding on an appropriate schedule," he said at the Natural Gas Roundtable in Washington, DC. The agency is moving forward "efficiently but deliberately."
Berkovitz said the CFTC supports phasing in the new reforms. "The hammer is not going to drop" on the market on the same day a notice appears in the Federal Register, he said. He further said CFTC Chairman Gary Gensler wants to move to final rulemakings this summer.
Berkovitz said the CFTC is "looking at very closely...what happens on July 16," the original implementation date for Dodd-Frank. He said some of the provisions of the act that don't require rulemaking will be effective on that date, while provisions that require rulemakings won't be effective until after the rulemakings are completed.
He declined to speculate on whether HR 1573 would clear Congress. "That's beyond my capability to give a prediction" on that, Berkovitz said. It's expected that the measure may pass the House, but would face hurdles in the Senate.
In a related development Tuesday, a House Appropriations subcommittee was on track Tuesday to vote out a spending bill that would cut the CFTC's funding by 15% in the next fiscal year -- significantly below what it would need to implement reforms under Dodd-Frank.
Earlier this year the White House requested $308 million for the agency to hire additional staff and purchase up-to-date technology to monitor the markets. The CFTC was allocated $202 million for the current fiscal year that ends on Sept. 30, and would be appropriated -- under the spending bill proposed by the House Appropriations panel's Agriculture Subcommittee -- $171.93 million for fiscal year 2012.
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