Vote Explanation for H.R. 238 — Commodity End-User Relief Act

I voted against H.R. 238, the Commodity End-User Relief Act, which would reauthorize the Commodity Futures Trading Commission (CFTC) through 2021 and make significant changes to the way the CFTC regulates derivatives and swaps since the passage of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. This legislation is the same misguided legislation that was put before last Congress.

The current regulatory framework for derivatives and swaps ensures that the market is capped, checking the possibility of instability that can result in real price hikes for commodities upon which American families rely. These limits ensure help markets remain more stable.

This legislation expands on an already existing requirement, first implemented by President Bill Clinton, to ensure that the CFTC utilizes cost benefit analyses (CBAs) to evaluate the benefit of its proposed regulations. Democrats and Republicans agree that the federal government should justify how it spends money. However, it is also important that these justifications are not so laborious that they keep agencies and government entities from doing their jobs. As a result, the Commission has had the ability to waive this requirement for smaller regulatory actions, such as instructions and guidance issued to its employees. H.R. 238 would overturn this authority and require the Commission to perform a CBA for all actions, no matter how small, the effect of which will be greatly increasing government paperwork and red tape. Indeed, this work would require an additional 30 employees, despite budgetary cuts included in the underlying bill.

The nonpartisan Congressional Budget Office estimates that the provisions of H.R. 238 will cost the Commission an additional $45 million over ten years. Despite these increased costs, the bill contains a flat authorization of funding level of $250 million over five years. This is $50 million decrease in the operating budget of the Commission, which is unrealistic given the increased costs of this legislation.

Moreover, one of the dangers of the CBA requirement is that determination of financial “benefits” due to increased regulation are often hypothetical. It is impossible to provide a number for the savings to the U.S. economy due to Dodd-Frank’s prevention of another financial crisis. In contrast, industry can tell you exactly how many dollars they have lost due to the limitations placed on their ability to make money on uncleared credit default swaps; no matter the risk these deregulated swaps pose to market stability.

In total, this bill increases government red tape, increases costs to the commission for no foreseeable benefit, and may increase the likelihood of another financial crisis like 2008. For these reasons, I opposed this bill, which passed the House on Republican support with a vote of 239 to 182.