WASHINGTON, DC – U.S. Senator Pat Roberts, Ranking Member of the Senate Committee on Agriculture, Nutrition and Forestry, today expressed concerns that the Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank, will force American businesses overseas, raise transaction costs, stifle legitimate economic activity, increase unemployment, and create new risks and uncertainly where it didn’t exist before.

Sen. Roberts made the remarks at an Agriculture Committee hearing entitled, “One Year Later - The Wall Street Reform and Consumer Protection Act - Implementation of Title VII.”

The witnesses included, Chairman Gary Gensler, Chairman of Commodity Futures Trading Commission (CFTC); Dr. Michael Gibson, Senior Associate Director of Division of Research and Statistics, Federal Reserve Board; Mr. Brooksley Born, former commissioner, Financial Crisis Inquiry Commission; Mr. Daniel Roth, President and CEO, National Futures Association; Mr. Charles Conner, President and CEO, National Council of Farmer Cooperatives; Mr. Adam Cooper, Senior Managing Director and Chief Legal Officer of Citadel LLC on behalf of Managed Funds Association; and Mr. John Damgard, President of Futures Industry Association.

Last month, Sen. Roberts, along with Sen. Saxby Chambliss (R-Ga.) and Sen. Richard Lugar (R-Ind.), sent a letter to CFTC Chairman Gary Gensler, inquiring about what would happen on July 16th in regards to provisions of the Dodd-Frank law that have yet to be finalized. The CFTC responded late last week to the letter, indicating they would meet to discuss the commission’s actions in regards to the legal certainty of transactions made after July 16. That meeting took place yesterday, and Sen. Roberts looks forward to learning about their findings at the hearing.

Click here for audio of his opening remarks.

The following are Sen. Roberts’ prepared remarks:

“Madam Chairwoman, I appreciate you calling this hearing today. CFTC oversight is a critically important function of this committee and I’m looking forward to hearing from our witnesses today with regard to the implementation of the Dodd-Frank Act – especially since we are only a month away from the act’s effective date.

“Roughly 11 months ago the more than 800 page Dodd-Frank bill was passed and began the process of what appears to be a reengineering of our financial markets.

“What has followed has been 385 new rules and thousands of pages of new regulations, which cover areas well beyond the scope of the financial crisis or the Dodd-Frank legislation. Fifty-one of the new rules are proposed by the CFTC’s 31 different rule making teams.

“I fear some may suffer from a classic case of ‘the cure for government regulations is more government regulation.’

“I’m curious to know whether these additional government regulations will actually fix the mess created by non-market forces in the housing market and if any in-depth cost-benefit analysis of some of these rules has been done.

“I’m concerned with yet another agency putting out a litany of regulations that will raise transaction costs, stifle legitimate economic activity, increase unemployment, and create new risks and uncertainly where it didn’t exist before.

“Some of these regulations reengineer the principles-based risk management of futures markets that did not cause the financial crisis and that have operated well for decades.

“Madam Chairwoman, raising compliance costs and stifling the ability to actually manage the risks in today’s global marketplace are not objectives of this committee, and I don’t believe of this Administration.

“I have a real concern that choking off innovation in risk management, by increasing the cost of entering into a swap transaction at a time when U.S. firms are struggling to compete globally, may cause U.S. firms to seek distant shores for relief.

“I’m worried that the Fed, SEC and CFTC have spent too much time in their own respective foxholes and silos not coordinating the overall regulatory impact of this act. I’m particularly concerned, as Chairwoman Stabenow and I expressed in a recent letter to our European counterparts, that our regulatory process is headed for trouble internationally.

“Here are just a couple of the pieces I’m interested in exploring today.

1. Senators Lugar, Chambliss and I recently sent a letter concerned that the Dodd-Frank Act creates a black hole when it comes to regulating swaps transactions after July 16 of this year. What happens next? I expect Chairman Gensler will fill us in on the Commission’s actions yesterday.

2. Secondly, I have here an unusual letter from the Financial Services Agency of Japan, asking the CFTC why U.S. regulations would apply to Japanese financial institutions operating in Japan. I think that’s a fair question.

3. My third question today has me wondering why fundamental and commonly used methods of hedging on futures markets, not swaps, but wheat and corn futures markets, which have been in operation for decades without incident and had absolutely NOTHING to do with the financial crisis, would suddenly be considered speculation by one of the rules proposed by the CFTC – More on that later.

“In closing, I would simply suggest that instead of looking back over the past year at this hearing today, we should be examining the overall effect of all these new regulations on our economy and globally over the next 10 years.”

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