111–55 (Committee on Financial Services)
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HEARING TO EXAMINE THE REGULATION OF OVER-THE-COUNTER DERIVATIVES JOINT HEARING BEFORE THE COMMITTEE ON AGRICULTURE AND THE COMMITTEE ON FINANCIAL SERVICES HOUSE OF REPRESENTATIVES FIRST SESSION JULY 10, 2009 Serial No. 111–23 (COMMITTEE ON AGRICULTURE) Serial No. 111–55 (COMMITTEE ON FINANCIAL SERVICES) ( Printed for the use of the Committee on Agriculture agriculture.house.gov U.S. GOVERNMENT PRINTING OFFICE 53–021 PDF WASHINGTON : 2009 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN COMMITTEE ON AGRICULTURE COLLIN C. PETERSON, Minnesota, Chairman TIM HOLDEN, Pennsylvania, FRANK D. LUCAS, Oklahoma, Ranking Vice Chairman Minority Member MIKE MCINTYRE, North Carolina BOB GOODLATTE, Virginia LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas JOE BACA, California TIMOTHY V. JOHNSON, Illinois DENNIS A. CARDOZA, California SAM GRAVES, Missouri DAVID SCOTT, Georgia MIKE ROGERS, Alabama JIM MARSHALL, Georgia STEVE KING, Iowa STEPHANIE HERSETH SANDLIN, South RANDY NEUGEBAUER, Texas Dakota K. MICHAEL CONAWAY, Texas HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska JIM COSTA, California JEAN SCHMIDT, Ohio BRAD ELLSWORTH, Indiana ADRIAN SMITH, Nebraska TIMOTHY J. WALZ, Minnesota ROBERT E. LATTA, Ohio STEVE KAGEN, Wisconsin DAVID P. ROE, Tennessee KURT SCHRADER, Oregon BLAINE LUETKEMEYER, Missouri DEBORAH L. HALVORSON, Illinois GLENN THOMPSON, Pennsylvania KATHLEEN A. DAHLKEMPER, BILL CASSIDY, Louisiana Pennsylvania CYNTHIA M. LUMMIS, Wyoming ERIC J.J. MASSA, New York BOBBY BRIGHT, Alabama BETSY MARKEY, Colorado FRANK KRATOVIL, JR., Maryland MARK H. SCHAUER, Michigan LARRY KISSELL, North Carolina JOHN A. BOCCIERI, Ohio SCOTT MURPHY, New York EARL POMEROY, North Dakota TRAVIS W. CHILDERS, Mississippi WALT MINNICK, Idaho PROFESSIONAL STAFF ROBERT L. LAREW, Chief of Staff ANDREW W. BAKER, Chief Counsel APRIL SLAYTON, Communications Director NICOLE SCOTT, Minority Staff Director (II) VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN COMMITTEE ON FINANCIAL SERVICES BARNEY FRANK, Massachusetts, Chairman PAUL E. KANJORSKI, Vice Chairman, SPENCER BACHUS, Alabama, Ranking Pennsylvania Minority Member MAXINE WATERS, California MICHAEL N. CASTLE, Delaware CAROLYN B. MALONEY, New York PETER T. KING, New York LUIS V. GUTIERREZ, Illinois EDWARD R. ROYCE, California NYDIA M. VELA´ ZQUEZ, New York FRANK D. LUCAS, Oklahoma MELVIN L. WATT, North Carolina RON PAUL, Texas GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois BRAD SHERMAN, California WALTER B. JONES, North Carolina GREGORY W. MEEKS, New York JUDY BIGGERT, Illinois DENNIS MOORE, Kansas GARY G. MILLER, California MICHAEL E. CAPUANO, Massachusetts SHELLEY MOORE CAPITO, West Virginia RUBE´ N HINOJOSA, Texas JEB HENSARLING, Texas WM. LACY CLAY, Missouri SCOTT GARRETT, New Jersey CAROLYN MCCARTHY, New York J. GRESHAM BARRETT, South Carolina JOE BACA, California JIM GERLACH, Pennsylvania STEPHEN F. LYNCH, Massachusetts RANDY NEUGEBAUER, Texas BRAD MILLER, North Carolina TOM PRICE, Georgia DAVID SCOTT, Georgia PATRICK T. MCHENRY, North Carolina AL GREEN, Texas JOHN CAMPBELL, California EMANUEL CLEAVER, Missouri ADAM H. PUTNAM, Florida MELISSA L. BEAN, Illinois MICHELE BACHMANN, Minnesota GWEN MOORE, Wisconsin KENNY MARCHANT, Texas PAUL W. HODES, New Hampshire THADDEUS G. MCCOTTER, Mississippi KEITH ELLISON, Minnesota KEVIN MCCARTHY, California RON KLEIN, Florida BILL POSEY, Florida CHARLES A. WILSON, Ohio LYNN JENKINS, Kansas ED PERLMUTTER, Colorado CHRISTOPHER JOHN LEE, New York JOE DONNELLY, Indiana ERIK PAULSEN, Minnesota BILL FOSTER, Illinois LEONARD LANCE, New Jersey ANDRE´ CARSON, Indiana JACKIE SPEIER, California TRAVIS W. CHILDERS, Mississippi WALT MINNICK, Idaho JOHN H. ADLER, New Jersey MARY JO KILROY, Ohio STEVE DRIEHAUS, Ohio SUZANNE M. KOSMAS, Florida ALAN GRAYSON, Florida JAMES A. HIMES, Connecticut GARY C. PETERS, Michigan DANIEL B. MAFFEI, New York PROFESSIONAL STAFF JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel (III) VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN C O N T E N T S Page Bachmann, Hon. Michele, a Representative in Congress from Minnesota, pre- pared statement ................................................................................................... 7 Bachus, Hon. Spencer, a Representative in Congress from Alabama, opening statement .............................................................................................................. 6 Frank, Hon. Barney, a Representative in Congress from Massachusetts, open- ing statement ........................................................................................................ 5 Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening statement .............................................................................................................. 4 Submitted letter ................................................................................................ 59 Submitted material .......................................................................................... 60 Minnick, Hon. Walt, a Representative in Congress from Idaho, opening state- ment ...................................................................................................................... 2 Peterson, Hon. Collin C., a Representative in Congress from Minnesota, open- ing statement ........................................................................................................ 1 Prepared statement .......................................................................................... 2 WITNESS Geithner, Hon. Timothy F., Secretary, U.S. Department of the Treasury, Washington, D.C. ................................................................................................. 8 Prepared statement .......................................................................................... 11 Submitted questions ......................................................................................... 63 (V) VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN HEARING TO EXAMINE THE REGULATION OF OVER-THE-COUNTER DERIVATIVES FRIDAY, JULY 10, 2009 HOUSE OF REPRESENTATIVES, COMMITTEE ON AGRICULTURE, JOINT WITH COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The Committees met, pursuant to call, at 10:04 a.m., in Room 1100, Longworth House Office Building, Hon. Collin C. Peterson [Chairman of the Committee on Agriculture] presiding. Members present for Committee on Agriculture: Representatives Peterson, Holden, McIntyre, Boswell, Baca, Scott, Marshall, Cuellar, Costa, Ellsworth, Walz, Kagen, Schrader, Dahlkemper, Pomeroy, Childers, Minnick, Lucas, Goodlatte, Moran, Johnson, Rogers, King, Neugebauer, Conaway, Smith, Latta, Roe, Luetkemeyer, Thompson, Cassidy, and Lummis. Members present for Committee on Financial Services: Rep- resentatives Frank, Kanjorski, Waters, Maloney, Watt, Sherman, Meeks, Moore of Kansas, Capuano, Hinojosa, McCarthy of New York, Baca, Lynch, Miller of North Carolina, Scott, Green, Cleaver, Bean, Ellison, Wilson, Perlmutter, Donnelly, Foster, Carson, Childers, Minnick, Adler, Kilroy, Kosmas, Himes, Peters, Bachus, Royce, Lucas, Manzullo, Biggert, Hensarling, Garrett, Gerlach, Neugebauer, Putnam, Bachmann, Marchant, McCotter, Posey, Jen- kins, Lee, Paulsen, and Lance. Staff present for Committee on Agriculture: Robert L. Larew, Claiborn Crain, Adam Durand, Scott Kuschmider, Merrick Munday, Clark Ogilvie, James Ryder, April Slayton, Rebekah Solem, Kevin Kramp, Tamara Hinton, Bill O’Conner, and Jamie Mitchell. OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN CONGRESS FROM MINNESOTA Chairman PETERSON. Good morning everybody, and welcome to today’s hearing. I want to welcome Treasury Secretary Geithner, and thank him for his time, and I want to thank Financial Services Chairman Frank and his staff for working with me and my staff to have this joint hearing today. In the interest of time, I will submit my full statement for the record, we have 111 Members of Congress who serve on these two Committees. And I know many of my colleagues who are attending today’s hearing have questions for the Secretary. (1) VerDate 0ct 09 2002 16:18 Oct 28, 2009 Jkt 041481 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 I:\DOCS\111-23\53021.TXT AGR1 PsN: BRIAN 2 Last month, the White House presented broad reform proposals to overhaul the financial regulatory system. I am pleased to note that several key provisions regarding over-the-counter derivatives are similar to what the House Agriculture Committee passed this year as part of a bipartisan bill H.R. 977, which would strengthen oversight of futures, options and over-the-counter markets. How- ever, the devil is always in the details and I look forward to hear- ing additional details today about the Administration’s reform ideas. And I hope Secretary