This week my Republican colleagues and I passed legislation that would work to roll back the excessive regulations put in place by the Obama Administration. Two important bills passed were H.R. 1633, the Farm Dust Regulation Prevention Act of 2011 and H.R. 10, the Regulations From the Executive in Need of Scrutiny Act of 2011 (REINS Act). These bills are a victory for business. Ultimately, they will facilitate businesses’ growth by cutting excessive bureaucratic red tape.
Also, the week was marked by an important investigative hearing in the House of Representatives. The Agriculture Committee held a hearing on Thursday investigating the collapse of MF Global, a derivatives broker dealing in futures and options, and the disappearance of over $1 billion.
H.R. 1633, Farm Dust Regulation Prevention Act of 2011
H.R. 1633 would amend the Clean Air Act to prohibit the Administrator of the Environmental Protection Agency (EPA) from proposing, finalizing, implementing, or enforcing any regulation revising the National Primary Ambient Air Quality Standard. This legislation does not prohibit a state, tribal or local government from regulating nuisance dust if they so choose.
The EPA acknowledges that more stringent standards are not necessary to protect public health. In fact, EPA’s own assessment acknowledges scientific uncertainty in the justification to change the current standard. In contrast, making the standard more stringent would prevent job creation, raise input costs for farmers, and greatly slow economic development throughout rural America.
H.R. 10, Regulations From the Executive in Need of Scrutiny Act of 2011
H.R. 10 is a featured bill of the House Republican Plan for America’s Job Creators. This bill requires Congress to take an up-or-down, stand-alone vote on all new major rules with an annual economic impact of $100 million or more, before they can be enforced on the American people, job creators, or State and local governments. Last year, 100 major rules were finalized by the Executive Branch alone. As a key part of the House Republicans jobs agenda, the REINS Act ensures accountability and transparency for regulations with the greatest impact on our economy and protects America’s job creators that are being buried under an estimated regulatory burden of $1.75 trillion.
MF Global Bankruptcy Investigative Hearing
The sudden collapse and bankruptcy of MF Global has resulted in the disappearance of more than a $1 billion. This money belonged to farmers, ranchers, and businesses across the U.S. Ultimately, trust has evaporated in what was a reliable method to manage risk in the agriculture community.
Video: House Ag Committee MF Global Bankruptcy Hearing – Rep. Conaway
Video: Rep. Conaway Bloomberg TV interview re: MF Global Bankruptcy hearing
Opening Statement on MF Global Bankruptcy Investigation
"Mr. Chairman, thank you for convening this morning’s hearing. The sudden collapse of MF Global is cause for this committee’s concern and a subject that my constituents and I are deeply anxious about.
The narrative so far is short of facts and long assumptions, inferences, and innuendos; I hope that the witnesses today can shed some light on what happened and how to prevent it from happening again.
For me, the central and overriding fact that we must confront today is that one month after the bankruptcy of MF Global, tens of thousands of our constituents are still missing substantial sums of their money. This missing money was not invested for market gains, it was not loaned at interest, and it fact it was not intended to be risked at all. This money was set aside by many of our nation’s farmers and ranchers to help reduce their risk and their exposure to forces outside their control.
Many of these investors have now lost tens if not hundreds of thousands of dollars, due largely to events that they could not have foreseen and could not have prepared for. In what may be the only bit of irony found in these events, it was the forces beyond their control that ultimately cost these investors their money.
Today’s hearing is not about the colossal bet that Governor Corzine placed on European Sovereign debt, it is beyond the scope of this committee to judge these investment strategies. What we are here to discover today is why innocent bystanders were harmed as Mr. Corzine’s strategy imploded. It appears as if he bet not only his own farm, but the farms and ranches of thousands of Americans as well
The crisis we face is not in the collapse of a financial institution like MF Global – our broader capital markets will swallow the demise of this firm with little ill effects. Instead, we face a crisis of trust in the futures markets and the institutions that serve them. In many respects, this crisis is more pernicious than the concern caused when tens of thousands of investors lose money.
A cornerstone of the futures community has long been that customer money is sacrosanct. The segregation of customer funds was a principle that was considered inviolable until last month. As MF Global plunged into bankruptcy and revealed that they had lost these supposedly untouchable funds, a new uncertainty about the safety of their margin accounts has begun to grip the farmers and producers we represent. This once powerful tool for mitigating risk has suddenly become risky in itself.
The missing funds in MF Global accounts have hammered a bell that cannot be unrung. From this day forward, margin accounts held at Futures Commission Merchants will never again be seen as risk free. The impact this new knowledge will have on the broader futures market and how it gets priced into transactions will reverberate long after MF Global was extinguished as a going concern.
One of today’s witnesses, Governor Corzine, once aptly described a “crisis of confidence in corporate management and corporate financial statements” as he wondered if the corporate accounting scandals at the end of the dot com boom called into question “not only the integrity of our equities markets, but the fundamental underpinnings of our economic well-being.”
We are here today because the Governor could not heed his own concerns. Whether or not there was any wrongdoing or malfeasance on his part, his actions and the actions of his firm have called into question the integrity of the futures markets and the fundamental underpinnings of the economic wellbeing of hundreds of thousands of Americans.
The consequences of the uncertainty his management of MF Global have wrought will be profound and the damage to my constituents will be substantial if Congress, regulators, and the futures community are unable to swiftly rally the confidence in the controls and procedures used to safeguard other’s money.
Moving forward from the collapse of MF Global will take time. Our first priority must be to return as much money to investors as quickly as possible. I understand that Trustee Giddens is hard at work at that effort. I look forward to hearing from Mr. Kobak about the progress of that effort.
Second, we must do our due diligence into discovering what happened at MF Global. What processes failed in the segregation of customer funds from the risky bets staked out by management? Was the breakdown a systemic issue or the result of certain bad actors? Today’s hearing is the beginning of the process of uncovering just what happened.
Finally, once we know what happened, we must examine the rules that protect customer funds at Futures Commission Merchants. Undoubtedly, there will be proposed changes that result from this event, but we cannot litigate through regulation. We must not overreact with our rules in an effort to punish one bad actor. Any new scheme is imposed must be rational, effective, and trustworthy.
I appreciate the willingness of the witnesses to come and share their thoughts on the matter today. I look forward to working with my colleagues, the regulatory agencies, and members of the industry to repair the damage done to the futures market by the imprudence of a few."
Veterans Memorial Drive
I am proud to report the citizens of San Angelo recently dedicated River Drive as “Veterans Memorial Drive.” This road, which flows along the Concho River through the city, will serve as a daily reminder of the sacrifices our Armed Forces and their families make to defend our freedom. San Angelo and the State of Texas have a proud military tradition, and I am honored to interact with these Patriots regularly at home and when I am in Washington, D.C. As I reflect on this dedication, I remember not only the struggles of our veterans while in uniform, but also the role they continue to play in West Texas, the home we know and love.
National Defense Authorization Act
I was recently chosen by Speaker Boehner to serve on the bipartisan, bicameral conference committee to preside over the National Defense Authorization Act for Fiscal Year 2012, and to authorize spending levels for fiscal year 2012 for military activities of the Department of Defense. It is an honor to be selected to participate in this process. I am eager to work with my colleagues in this conference to generate a final product that ensures for our national security and the care of our troops.
