October 14, 2009

WASHINGTON - Congressman Spencer Bachus, the top Republican on the Financial Services Committee, made the following statement today during the Full Committee mark up of the OTC Derivatives Markets Act, the Financial Product Approval Agency, and credit card legislation.

"Thank you, Mr. Chairman. Today we are considering three bills which, when combined, could have a devastating impact on our economy.

"The bill the regulate over the counter derivatives represents yet another instance of government over-reach in an innovative market by forcing derivative transactions to be more standardized and cleared through regulated clearinghouses.  During the Committee hearing to examine the derivatives legislation, we heard from witnesses that it will drive up cost for the whole economy and could lead to capital restraints for users of derivatives.

"Regarding the legislation to expedite the effective date of the CARD Act rules not yet implemented, we were told by the Federal Reserve that the industry needs sufficient time to get their systems in place and tested, to get staff trained, and to ensure their risk models are appropriate.  Otherwise, it could severely hamper credit availability.

"To make matters worse, the Committee will then consider legislation to create a massive new government bureaucracy that will restrict credit and limit consumer choice.  This proposal is not about consumer protection; it is about creating a new Financial Product Approval Agency with the powers to review and approve financial products.  Real consumer protection involves consumer choice, competitive markets, vigorous enforcement of anti-fraud laws, effective disclosure and product innovation.

"Placing broad rulemaking authority in the hands of an untested agency will limit innovation and restrict credit.  Now is not the time to restrict choice and credit, especially when our small businesses-the engine of our economy and our number one job creators-are having trouble obtaining the credit they need to grow and create jobs.  

"Mr. Chairman, this Financial Product Approval Agency you propose to create does not address the root cause of the crisis.  Addressing modernizing our outdated regulatory system is a proper response to this crisis.  Restricting consumer choices and rationing credit is not.

"At a time when unemployment continues to rise, we should focus on solutions that get Americans back to work, rather than creating vast new taxpayer funded regulatory regimes that unnecessarily increase government intervention in the economy, restrict choice, stifle innovation and ration credit.

"I yield back the balance of my time."

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