Derivatives End Users Get Their Say As Dodd Frank Turns Four

by FEI Daily Staff

Last week the House Committee on Financial Services held a hearing entitled “Assessing the Impact of the Dodd-Frank Act Four Years Later.”

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The hearing opened with statements made by the members of the committee, and as has become typical, the parties were divided on the issue of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act.

Republicans, led by Chairman Jeb Hensarling (R-TX), espoused the view that the Dodd-Frank Act is based on the false premise that the financial crisis was caused by a lack of regulation, rather than “bad regulation” and that the act only serves to add complexity to market. He also pointed to the slow recovery, as a sign of the Dodd-Frank Act’s inadequacy. The solution, in their view, is to repeal the Dodd-Frank Act.

The Democratic Party, led by Ranking Member Maxine Waters (D-CA), took the position that the Dodd-Frank Act helped bring the nation out of the recession and into a recovery. While the act is not perfect and may need some revisions, they believe it has been a step in the right direction.

While there were several witnesses at the hearing most of the discussion took place with just one, former Chairman of the Committee, the Hon. Barney Frank (D-MA). However, Thomas Deas, Treasurer of FMC Corporation, was invited to testify on behalf of the Coalition for Derivatives End-Users. Financial Executives International (FEI) serves on the steering committee of the Coalition and has worked with the coalition’s 270 corporate members since Dodd-Frank’s passage to amend derivatives provisions in the law.

Most of the discussion at the hearing focused on the macro-level policy implications of Dodd-Frank, mainly the too-big-to-fail provisions, and split along partisan lines in support of and opposition to the wide-ranging law. However, although Democrats and Republicans disagree on most things in Dodd-Frank, they were united in agreement that derivatives end-users should be protected from "needless" regulations.