House Financial Services Committee Chairman Criticizes CFTC Regarding Transaction-Level Requirements in Certain Cross-Border Situations (with Lofchie Comment)

The House Committee on Financial Services Chairman Jeb Hensarling (R-TX) issued a statement criticizing the recent CFTC advisory letter related to cross-border swaps transactions. Chairman Hensarling expressed his concern that this surprise decision made by "unelected and unaccountable bureaucrats at the CFTC" will do nothing but introduce more uncertainly into America's weak economy. He stressed that the CFTC staff, "not the commissioners, but the staff," decided late Thursday afternoon that swaps transactions which were permissible that afternoon would no longer be permissible on Friday morning. He noted that this quick policy change is unfair to small businesses, farmers and manufactures that rely on cross-border transactions to stay in business. He stated that "this is another example of out-of-touch Washington bureaucrats making rules in a vacuum and acting with absolutely no regard for the impact their arbitrary and capricious actions have" on America's economy.

The House voted 301-124 to pass H.R. 1256, the Swaps Jurisdiction Certainty Act, which Chairman Hensarling stated is aimed at bringing certainty, clarification, and "some sanity" to the CFTC's recent actions. He noted that the Senate has not acted on the bill, and stated that he believes this inaction will set the stage for market confusion and a small business disadvantage against foreign competitors. He closed by encouraging the Senate to vote on the bill to stop "misguided policy that will drive capital away from our shores, eliminate American jobs, and raise prices on consumers."

Lofchie Comment: The Representative's statement sounds an alarm, but the CFTC's recent action as to the application of its rules to non-U.S. SEFs raises even more questions about process, timing and substance.

See: Chairman Hensarling's Statement.Related news: CFTC Issues Advisory on Applicability of Transaction-Level Requirements in Certain Cross-Border Situations (CFTC Letter 13-69) (with Lofchie Comment) (November 14, 2013).