Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing entitled “Building the New Derivatives Regulatory Framework: Oversight of Title VII of the Dodd-Frank Act.”
The Committee heard testimony from regulators and market participants, and looked at the progress of the rulemaking required under the Dodd-Frank Act to improve the transparency and accountability of the U.S. derivatives market.
Below is Chairman Johnson’s statement as prepared for delivery:
“Today we will review the implementation of the new regulatory framework for the OTC derivatives market required by the Dodd-Frank Act.
“This is our Committee’s first oversight hearing on this issue since the passage of Dodd-Frank. While I know there are many other issues that Senators may like to raise with the regulators before us today, we should focus our questions on the subject of this hearing.
“The Dodd-Frank Act brings much needed transparency and accountability to our derivatives market and addresses problems that greatly exacerbated the 2008 financial crisis. I commend all of the regulators here today and their staffs for the extraordinary work and long hours they have dedicated to these important reforms.
“Creating a new framework to regulate the vast $600 trillion swaps market in this age of instantaneous global capital movement is an enormously complicated task that demands close cooperation with international regulators.
“We must create new rules of the road to ensure that our financial markets remain the envy of the world. Our regulators should follow Congressional intent to craft rules that are based on relevant data that reflect the unique structure of the swaps market, while avoiding rulemaking for political expediency – and I ask Chairman Gensler, Chairman Schapiro and all our regulators to work carefully to do what is necessary to get this right.
“This effort will require strong coordination both within and among the regulators to review the full set of final rules in a holistic way before they are promulgated. The regulators must also integrate meaningful public input into this review. I urge our regulators to work together to craft a streamlined, harmonized set of workable rules that protect the ability to hedge risks in a cost effective manner and minimize unintended consequences that could send American jobs overseas.”
