The House late Tuesday passed H.R. 2289, the Commodity End-Users Relief Act, by a vote of 246-171 to reauthorize the Commodity Futures Trading Commission until 2019. The CFTC has operated without Congressional authorization since it expired Sept. 30, 2013.
The Commodity End-Users Relief Act aims to address concerns created by reforms to derivatives markets that arose after the 2008 financial crisis. According to the House Ag Committee, the reforms have "impacted end-users unintentionally" and the bill helps exempt end-users from some of the more costly regulations.
Bill sponsors Mike Conaway, R-Texas, House Ag Committee chairman, and Reps. Austin Scott, R-Ga., and David Scott, D-Ga., said the legislation improves CFTC operations while protecting farmers and market users from MF Global and Peregrine-like failures.
Specifically, the protections include requiring regulators to confirm customer fund account balances held at depository institutions to avoid flawed reporting, as was seen in the Peregrine Financial failure.
Protections also include additional requirements for financial firms in the areas of reporting, clarity and transparency when working with end-users.
The CFTC reform portion of the legislation requires leadership alterations, five-year forward planning stipulations and critically, a prohibition on the Commission's ability to issue policy statements, interpretive rules and guidance that function as law without public notice.
Though supported by a variety of key ag groups, the White House on June 2 said it would veto the bill on the grounds that it "undermines the efficient functioning of the Commodity Futures Trading Commission by imposing a number of organizational and procedural changes and would undercut efforts taken by the CFTC over the last year to address end user concerns."
The White House offered a similar response to an identical CFTC reauthorization bill that passed the House in June 2014, but was not acted upon by the Senate.
"I am proud to put forth this strong, bipartisan bill that has a positive impact on virtually every portion of our nation's economy," Conaway said in response to the bill's passage Tuesday. "H.R. 2289 builds on the work of the previous two Congresses to reauthorize the CFTC and contains important customer protections, enhances the Commission's cost-benefit analysis requirements, and provides relief for end-users from burdensome requirements."