Key Vote Letter On H.R. 4173, the "Wall Street Reform and Consumer Protection Act of 2009"
December 10, 2009
TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:
The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, strongly opposes H.R. 4173, the "Wall Street Reform and Consumer Protection Act of 2009," because it fails to achieve the meaningful financial regulatory reform necessary for vibrant capital markets and to fuel long-term economic growth and job creation. The Chamber strongly supports amendments to the legislation that would address several important concerns and strongly opposes several other amendments that would exacerbate the deep flaws in the bill as currently drafted.
The financial crisis has highlighted problems that have existed within the U.S. financial system for quite some time. Before the crisis erupted, the Chamber called for a broad-based overhaul of the U.S. financial regulatory system as a means to increase the efficiency of capital markets and provide businesses with the opportunity to grow and expand. The Chamber was not alone in pointing to the fact that a patchwork system of regulation creates inefficient capital markets and thwarts the ability of the economy to grow.
While there are positive elements of H.R. 4173, including the preemption standard for the Consumer Financial Protection Agency in the Manager's Amendment, they are significantly outweighed by provisions that will only magnify and exacerbate flaws within the existing regulatory structure and hamper the growth of the economy.
The Chamber strongly supports two amendments, one offered by Rep. Minnick, the other by Rep. Murphy, which would address some of the shortcomings of H.R. 4173:
- Minnick #88—This amendment would establish a Consumer Financial Protection Council to coordinate and strengthen efforts by existing federal financial regulators to protect consumers. Such a council is a significant improvement over the stand-alone agency in the base bill that would add another regulatory layer to a broken regulatory system, unwisely separate safety and soundness regulation from consumer protection, and significantly curtail the availability and affordability of credit for consumers and small businesses.
- Murphy #129—This amendment appropriately limits the definition of Major Swap Participant (MSP) to those entities with derivatives positions large enough to significantly impact the financial system, reducing the ability of regulators to designate business end-users as MSPs. Business end-users that do not pose systemic risk and do not speculate should not be designated MSPs and subsequently be subject to onerous regulatory requirements such as mandatory central clearing, exchange trading and margin and capital requirements.
The Chamber opposes several other amendments:
- Frank #66—This amendment would authorize regulators to impose margin requirements on business end-users. Margin requirements imposed upon end-user transactions would require companies across the country to divert significant amounts of working capital to margin accounts—capital that companies could otherwise use to grow, create jobs or invest in new technologies.
- Stupak #47 and 48—These amendments would change the definition of MSP to include, rather than exclude, a wide range of end users, requiring them to centrally clear, exchange trade, or post cash margin on their transactions. Among other things, these amendments would provide regulators with additional authority to restrict the use of certain risk-management tools or to increase the costs of employing them. The amendments would also subject new transactions to significant legal uncertainty. Finally, they would restrict choice in the method of executing derivatives trades, hampering end users' ability to obtain competitive pricing. These amendments would undermine prudent risk management by companies across the country.
- Conyers #201—This amendment would unwisely expand the bankruptcy code, granting new powers to bankruptcy judges to modify the terms of existing, legitimate mortgage contracts. The Conyers amendment injects greater risk into the lending process that will ultimately lead to increased mortgage costs for primary residences in the form of higher interest rates, down payments, points, and fees.
The Chamber believes that H.R. 4173 is far from achieving the financial regulatory reform that is needed for the economic growth and job creation for a prosperous 21st century economy. The Chamber will continue to work with Congress to achieve these goals. The Chamber will consider votes on, or in relation to, these issues in our annual How They Voted scorecard.
R. Bruce Josten