Policy

A Tale of Two Bills

The less the people know about how sausages and laws are made, the better they sleep in the night.”Although Bismarck never actually said this, he might well have, had he watched the last and present Congress try and pass two bills of keen interest to FEI members, especially the Committee on Corporate Treasury (CCT). I thought I would take you through that rather ugly process so you might better appreciate the beauty of sausage making.The first bill, titled the Business Risk Mitigation and Price Stabilization Act, was designed to amend the Dodd Frank Act to clarify that derivatives end users, i.e., non-financial companies that use derivatives to hedge risk and not for speculative purposes, were exempt from onerous margin requirements. An early version of this bill passed the House during the 112th Congress (in 2012) but never received a floor vote in the Senate (the Democrats did not want to amend Dodd Frank so quickly after its passage). Reintroduced in the 113th Congress, a new version of the bill passed the House by a huge bi-partisan margin (411-12) but stalled once again in the Senate Banking Committee. During the lame-duck session of the 113th Congress (after the November 2014 elections), House Financial Services Committee Chairman Jeb Hensarling (R-Texas) attached it to the Terrorism Risk Insurance Program Reauthorization Act of 2014 (TRIA), a must-pass government insurance guarantee bill, which the House did pass (417-7). Although brought to the Senate floor, the TRIA bill failed to make it across the finish line due to a hold put on it by retiring Senator Tom Coburn (R-Okla.), unrelated to our margin language.Undaunted, Chairman Hensarling reintroduced TRIA (with the margin bill attached) in the 114th Congress this January; it again passed the House (416-5) and was sent to the now Republican-controlled Senate. An amendment offered by Senator Elizabeth Warren (D-Mass.) to strip our margin bill language from TRIA was defeated (31-66). (Sen. Warren never actually criticized the margin bill’s substance, only the process of attaching it to TRIA.) The TRIA (plus margin) bill then passed the Senate (93-4), and the President signed the legislation on Jan. 12, 2015 (although the White House had also opposed combining the bills).Throughout this four-year process, FEI worked closely with the Coalition of Derivative End-Users to lobby members of Congress in both chambers to move the bill forward. In particular, FEI’s consistent support for...

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