Opening Statements

Remarks as prepared for delivery:

Good morning and welcome to the Agriculture Committee’s Hearing to Review the 2016 Agenda for the Commodity Futures Trading Commission.

Today’s hearing is held against a bleak backdrop for many commodity producers, especially those in farm country. The past two years have seen a dramatic fall in commodity prices, across the board, creating significant operational challenges for producers. It is in uncertain times that futures and other derivatives markets provide their greatest benefit to producers. These markets allow hedgers to look over time’s horizon and see what the collective wisdom of the crowd says about the future.

The long range price forecasts by futures markets provide invaluable information to farmers, helping them to decide whether to plant, what to plant, and how much to plant. Those same prices are used in the crop insurance policies that farmers purchase to protect against risk. Bottom line, the futures markets are instrumental in providing risk management to commodity producers. But, for many, managing risk in the market isn’t as easy as it once was.

Many producers face markets that are more brittle than they used to be, with more volatility and less liquidity than in the past. They also face increased costs to access essential dealing and clearing services. Some smaller market participants have even been “fired” by their brokers, because the FCM can no longer afford the regulatory costs of keeping them as clients.

For too many end-users, Dodd-Frank has created more complicated, more intrusive, and more costly regulatory mandates that force hedgers to choose between paying more to manage their risk or risking more to manage their cash.

This is not what Congress intended when it enacted Dodd-Frank. I believe that my colleagues who supported Dodd-Frank believed that end users, the hedgers for whom risk management markets are an essential business tool, would not be harmed by this legislation. To that end, I want to commend the Commissioners for the work they have done to find common ground on reforms to several important regulations that posed needless burdens to end-users.

That said, the Chairman’s work on end-user issues is not done. I am still deeply concerned with the Commission’s position limits proposal and the impact the new bona-fide hedging restrictions will have on agricultural producers, especially when they are struggling with low commodity prices. The proposed Reg AT rule also needs significantly more work to narrow its definitions and eliminate its potential impact on the smaller market participants that should not be swept up in it.

Finally, the CPA in me cannot close without touching on the importance of getting to the bottom of the accounting mess the CFTC finds itself in. First, I want to thank Chairman Massad for the CFTC’s responsiveness to our inquiries on this matter. The Commission’s continued openness will help this process. But, I am troubled by the accounting irregularities. Any mistake is cause for concern, but especially one that goes unnoticed for years. In this case, the failure of the Commission’s internal accounting systems has led to at least one law being broken. That is clearly unacceptable and I look forward to hearing a plan from the Chairman on how to fix the problem.

I want to welcome Chairman Massad back to the Committee. Thank you for putting in the time to prepare for this hearing today.

With that, I’d like to yield to Ranking Member Peterson for any thoughts that he might have.