Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds to say that the gentleman from Massachusetts sets up a straw man and then knocks it down. The activities that he describes as illegal continue to be illegal, and I would say that private equity funds provide extensive reporting to investors, including audited annual financial statements. Private fund equity advisers are subject to the antifraud provisions of the Investment Advisors Act of 1940, whether they are registered or not, and fund offerings are subject to the antifraud provisions of the Securities Act of 1933. The real choice becomes, are we going to get even greater protections for millionaire investors, or are we going to help struggling single moms trying to find a job in this economy? Mr. Speaker, at this time I am happy to yield 2 minutes to the gentleman from Ohio (Mr. Stivers).

Mr. HENSARLING. Mr. Speaker, I now yield 1\1/2\ minutes to the gentlewoman from Missouri (Mrs. Wagner).

Mr. HENSARLING. Mr. Speaker, at this time I am very happy to yield 4 minutes to the gentleman from New Jersey (Mr. Garrett), a coauthor of the legislation and the chairman of the Capital Markets and GSE Subcommittee.

Mr. HENSARLING. Mr. Speaker, I am very pleased now to yield 1 minute to the gentleman from Tennessee (Mr. Fincher).

Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 429, I call up the bill (H.R. 1105) to amend the Investment Advisers Act of 1940 to provide a registration exemption for private equity fund advisers, and for other purposes, and ask for its immediate consideration in the House.

Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, listening to some of my colleagues on the other side of the aisle, it is hard not to conclude that some of them have never met a regulation that they didn't like, regardless of what it does to the hopes, dreams, and aspirations of the unemployed and underemployed in America. As I look over your chair, Mr. Speaker, and see the words, ``In God We Trust,'' I sometimes question whether some Members would like to take down the word ``God'' and replace it with ``regulators'': In Regulators We Trust. The question has never been, Mr. Speaker, the question between regulation and deregulation. The question is between smart regulation and dumb regulation; and in order to make that determination, one needs to see what cost is being imposed, again, on the hopes and dreams and aspirations of the unemployed and the underemployed. Why does this underlying regulation need to be there in the first place? Is it systemic risk? Well, even the chairman of the SEC has admitted that private equity played no role in the financial crisis. We know in terms of the economy, private equity may represent somewhere on the order of 1.5 to 2 percent of GDP. There is no evidence of interconnectedness, which many maintain is at the root of systemic risk. So what are they trying to protect? Well, investor protection. This is all about giving additional protection to millionaire investors at the expense of single moms trying to make ends meet. I am not really sure that meets the test of smart regulation. We know already that private equity fund advisers are subject, as they well should be, to the antifraud provisions of the Investment Advisers Act of 1940, whether they are registered or not. Fund offerings are subject to the antifraud provisions of the Securities Act of 1933. The SEC still has the ability to ensure that proper documentation is maintained. No, we do not want to see any investor, regardless of sophistication or income, be subject to coercion or fraud. But, at the same time, we don't want to deny small businesses--the job engine in America--the funding they need to put America back to work. There are many companies today that we recognize--Dunkin' Donuts, Baskin-Robbins, Petco, Skype, J.Crew--that all have benefited from private equity. Where would the tens of thousands, if not hundreds of thousands, of jobs they represent be today if private equity had to face yet another burden that is going to cost these small investment firms half a million dollars, a million dollars? Today, we haven't really heard that much about company likes Entrust or Universal Smart Comp, but maybe they are tomorrow's Petco or tomorrow's Toys ``R'' Us. And so it really comes down to this, Mr. Speaker, again: Are there going to be additional protections for multimillionaire investors, or are there going to be additional protections and opportunities for unemployed single moms trying to make ends meet? Our side of the aisle said, Let's help the single mom. Let's pass H.R. 1105, and put America back to work. I yield back the balance of my time.

Mr. HENSARLING. Mr. Speaker, I rise in opposition to the amendment.

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and submit extraneous material for the Record on H.R. 1105, currently under consideration.

Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, since Congress was not in session last week, perhaps some of my colleagues missed the front page headline from The Washington Post. I read: ``Among American Workers, Poll Finds Unprecedented Anxiety About Jobs and Economy.'' According to the report, American workers are living with ``unprecedented economic anxiety.'' More than six in 10 worry that they will lose their jobs. Nearly one in 3 say they worry a lot about losing their jobs. The article goes on to mention an American named John Stewart who wakes up every morning at 1:30 a.m. for a 2-hour commute to catch two different buses in Philadelphia so he can get to work on time. In the newspaper, he said: ``I can't save money to buy the things I need to live as a human being.'' Mr. Speaker, we don't have to read The Washington Post. All we have to do is listen to our own constituents, since even today millions-- millions--of our fellow countrymen remain unemployed and underemployed. I hear these stories every week myself. Recently, I heard from Ida in Wills Point, Texas, in the Fifth Congressional District that I represent. She and her 79-year-old husband own a small trucking company. She wrote me that ``because of increasing regulations in taxes in the past 4 years, we have lost all but two of our trucks.'' She goes on to write me: ``My husband is the only driver right now because I can no longer drive. He drives full-time 3,500 miles a week most weeks because we can't live on his Social Security.'' She says: ``We are really stuck in a hole.'' Millions, Mr. Speaker, are ``stuck in a hole.'' Today, we have an opportunity, Mr. Speaker, to do something to help raise many of our fellow countrymen out of that hole of economic anxiety and economic hardship. Today, we have the opportunity to pass H.R. 1105, the Small Business Capital Access and Jobs Preservation Act. I want to commend the bipartisan group of Members--two Republicans and two Democrats--who introduced the bill: Mr. Hurt of Virginia, Mr. Himes of Connecticut, Mr. Garrett of New Jersey, and Mr. Cooper of Tennessee. As chairman of the Financial Services Committee, Mr. Speaker, I want to thank all the members of the committee who came together across party lines to approve the bill. Mr. Speaker, nearly one-third of the Democrats who sit on our committee joined with 30 Republicans in supporting H.R. 1105. In short, Mr. Speaker, this is, indeed, a bipartisan jobs bill. We know that small businesses face an incredible red tape burden. In fact, a recent survey of the National Federation of Independent Business said that ``government regulations and red tape are the single most important challenge that small businesses face in creating and preserving jobs.'' Mr. Speaker, I heard from another small business person in Grand Saline, Texas, in my district. He said because of overregulation ``our business has devolved from one that provides a service for a customer into one that provides that same service as an afterthought while our real efforts go into paperwork.'' Mr. Speaker, we can debate the relative merits or demerits of the Dodd-Frank Act; but even the primary author himself, former Chairman Frank, admitted that perhaps not every aspect of Dodd-Frank achieved perfection. And many of us would argue on a bipartisan basis that the part of the act that requires small business investors who are private equity advisers to register with the SEC is perhaps one of those provisions that is in need of reform. This is a provision, Mr. Speaker, that many of us believe was aimed at Wall Street, but ends up hurting Main Street. Because of this provision embedded in Dodd-Frank, smaller firms that invest in entrepreneurs and in small businesses face yet one more significant regulatory cost, regulatory burden, more red tape. As one of the small business investors testified before our committee, it is going to cost his company $200,000 every year to comply with the regulation. He went on to say: While for some larger firms this is an insignificant cost, for a medium-sized firm such as ours that offers capital to small businesses, it is a significant expense. And pay attention to this, Mr. Speaker. He said: This money comes directly out of our funds intended for investment into Main Street. In today's economy, to help pull these people out of this hole of economic anxiety, we need more private sector, more private equity investment into Main Street. Private equity equals small business jobs. In fact, Mr. Speaker, between 1995 and 2010, 23,000 different companies across our Nation benefited from private equity investment, employing 3 million different people, and the investments that are made by private equity historically have grown jobs at three times the rate of other companies. And so what does this look like? I have to tell you, Mr. Speaker, it look likes an outfit called New Mountain Capital that invested in a company named Inmar, a national coupon and reverse logistics processing company. By helping them update their IT with a $100 million investment, they now support 4,200 different employees. The face of private equity looks like Capital South Partners that invested in a North Carolina firm, Vita Nonwovens, and now they have 95 employees in High Point, North Carolina, and I should add parenthetically, another 55 employees in my native Texas. This is the face of private equity. These are some of the small business jobs that are being created. Now, we may hear from some that this is needed to somehow battle Wall Street, but let me tell you what private equity is not. Private equity it is not Wall Street. It is not complex derivatives trading. It is not currency swaps. Mr. Speaker, it is not about systemic risk. That is not what this is about. And so, again, this was a provision aimed at Wall Street that, unfortunately, is hitting Main Street. It is time to make sure that Americans like John in Philadelphia can live like a human being. It is time to make sure that constituents like mine, Ida and her husband, don't have to drive 3,500 miles a week just so they can put food on the table. Mr. Speaker, it is time, again, for this institution to put jobs first, not regulators first, but jobs first. I urge all of my colleagues to adopt H.R. 1105. I reserve the balance of my time.

Mr. HENSARLING. Mr. Speaker, I am now privileged to yield 5 minutes to the gentleman from Virginia (Mr. Hurt), the primary author of this legislation, a real leader on our committee and in this Congress in creating jobs.

Mr. HENSARLING. I yield myself the balance of my time. Mr. Speaker, again, historically, private equity has invested in tens of thousands of small businesses, and it has helped create millions of jobs in America. The question today is: Are we going to put a roadblock in place of private equity--the small business investment engines--so that we can somehow help regulators? With all due respect to our regulators--and there are many good ones and many great ones at the SEC--I have never met a regulator who turned down the opportunity to regulate more. I have never met him. So the question is: Are we going to grant an even greater ability to take funds away from small businesses to create a work product that doesn't meet the commonsense test, the jobs test, the smell test--or any other test--at a time when people are still suffering and wondering how are they going to put gas in the tank; how are they going to take their kids to school; how are they going to afford their health care bills since, clearly, they cannot keep their health insurance even if they want to. How are they going to do this? We need private equity to fund small business to get America back to work. We need to defeat this amendment. We need to pass the underlying bill. It is time to be pro-jobs. With that, Mr. Speaker, I yield back the balance of my time.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I am now very pleased to yield 1 minute to the gentleman from South Carolina (Mr. Mulvaney).

Mr. HENSARLING. Mr. Speaker, again, I continue to be amazed at those who wish to decry the possibility of a Federal bailout in debating this bill. I wonder where their voices were yesterday when all of them, seemingly--the voices we hear today--defended the Federal Housing Administration from actually receiving a taxpayer bailout, the first in history. So when taxpayers actually have to pay, we hear choruses of ``Que Sera, Sera.'' But when a private institution loses their money that the taxpayers didn't have to pay for, all of a sudden the sky is falling. I understand that the ranking member, obviously, has the opportunity to change her mind; but clearly she was for it before she was against it. When I hear many of my colleagues decry the lack of bipartisan legislation, I don't understand why Members would try to oppose it now. It passed overwhelmingly, 53-6. For those who say this is somehow gutting Dodd-Frank, apparently they didn't consult with the former chairman of this committee, Barney Frank, who is on record saying that this addresses the valid criticisms of section 716 without weakening the financial reform law's important derivatives safeguards. It is time, Mr. Speaker, to get America back to work. It is time to make commonsense, bipartisan reforms. I respect every right of every Member to change their mind, but I hope something that passed 53-6 to put America back to work, that soon this full House will pass this legislation; and I urge its adoption. I yield back the balance of my time.

Mr. HENSARLING. Mr. Speaker, I rise in opposition to the motion to recommit.

Mr. HENSARLING. Mr. Speaker, I don't really understand the motion to recommit because regulators already have the power that is described here. Therefore, Mr. Speaker, I find the matter to be irrelevant and not a particularly good use of the House's time. For those reasons alone, it ought to be opposed. It is getting in the way of one of the strongest, most bipartisan pieces of legislation that has come to the House. It passed the Financial Services Committee by an overwhelming vote of 53-6. It will help grow the economy. It will put people back to work. It will reduce systemic risk. I want to thank all of the sponsors, especially the gentleman from Illinois, Mr. Hultgren, for his leadership on this very valuable piece of legislation. It is time to oppose the motion to recommit and it is time to pass the Swaps Regulatory Improvement Act. I yield back the balance of my time.

Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 391, I call up the bill (H.R 992) to amend provisions in section 716 of the Dodd- Frank Wall Street Reform and Consumer Protection Act relating to Federal assistance for swaps entities, and ask for its immediate consideration.

Mr. HENSARLING. Mr. Speaker, at this time I am happy to yield 1 minute to the gentleman from Florida (Mr. Crenshaw).

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material in the Record on H.R. 992, currently under consideration.

Mr. HENSARLING. Mr. Speaker, I am very pleased now to yield 4 minutes to the gentleman from Illinois (Mr. Hultgren), the chief Republican sponsor of the Swaps Regulatory Improvement Act which, again, passed our committee on a strong bipartisan basis of 53-6.

Mr. HENSARLING. Mr. Speaker, I yield myself 15 seconds to help my colleagues, who apparently haven't found time to read the underlying section 716, subsection (i), which reads in part: No taxpayer funds shall be used to prevent the receivership of any swap entity resulting from swap or security-based swap activity of the swaps entity. I would encourage my colleagues to actually read the bill. Now I am pleased to yield 1 minute to the gentleman from the volunteer State of Tennessee (Mr. Fincher).

Mr. HENSARLING. Mr. Speaker, I am now pleased to yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), the chairman of the Financial Services Subcommittee on Capital Markets and GSEs.

Mr. HENSARLING. Mr. Speaker, I yield myself 4 minutes. Mr. Speaker, America's economy remains stuck in the slowest, weakest, nonrecovery recovery of modern times. Millions of our fellow countrymen remain unemployed, underemployed. Many because of ObamaCare just had their hours cut, and millions lie awake at night wondering how they will make ends meet. Regrettably, those who create jobs in America for our constituents are drowning in a sea of red tape which is preventing them from hiring new workers. I still vividly remember the day when one of my constituents in east Texas came to me as he shut down his small business due to red tape and he said, Congressman, it got to the point where I just thought my government didn't want me to succeed. Mr. Speaker, today we have an opportunity to ensure that businesses succeed in America, succeed in hiring new workers. Today, just like yesterday, Mr. Speaker, Republicans and Democrats can again pass bipartisan legislation that will help grow our economy. This legislation is H.R. 992, and I commend the bipartisan group of members who introduced the bill: Mr. Hultgren, Mr. Himes, Mr. Hudson, and Mr. Maloney. As chairman of the Financial Services Committee, I also want to thank the members of the committee who joined together and approved this bill on an overwhelmingly bipartisan vote of 53-6. Mr. Speaker, the vote was 53-6. This bipartisan bill will relieve manufacturers, farmers, ranchers, and Main Street businesses of unintended consequences of one section of the Dodd-Frank Act. Many Americans may not realize it, but farmers, ranchers, manufacturers, and other employees use a financial product called a derivative to manage risk and protect themselves from extreme fluctuations in the price of things like fuel, fertilizer, and commodities. For example, a company like John Deere will do an interest rate swap as they finance a tractor for a farmer in east Texas in my district, and that derivative is directly linked to the cost of that tractor for my constituent. Companies like Southwest Airlines who operate in my hometown of Dallas, Texas, they will use derivatives to lock in cheaper fuel prices when the price of crude oil is on the rise. This keeps the cost of flying more affordable for customers, like the grandmother in Mesquite, Texas, who travels to visit her grandchildren in Kansas City. Perhaps a farmers co-op in Nebraska will use derivatives to finance fixed-price diesel for truckers who haul cattle. Perhaps a hospital in Los Angeles may use derivatives to hedge against the rising interest rates when financing a big investment like more beds or new lifesaving technology. Although not one single patient, not one single farmer, not one single grandmother, not one single trucker caused the financial crisis, they were all swept into section 716 of Dodd-Frank. Section 716 requires financial institutions to push out almost all of their derivatives business into separate entities. This not only increases transaction costs, which are ultimately paid by the consumers, it also makes our financial system less secure by forcing swap trading out of regulated institutions. In fact, Mr. Speaker, Federal Reserve Chairman Ben Bernanke said section 716 ``would make the U.S. financial system less resilient, weaken our financial stability, and make our economy more susceptible to systemic risk.'' To those who are loath to ever amend Dodd-Frank, no less of an authority than Barney Frank himself, former chairman of the committee, said: ``It addresses the valid criticisms of section 716 without weakening the financial reform laws, important derivative safeguards or prohibitions on bank proprietary trading.'' So again, Mr. Speaker, no law is perfect. We would be derelict in our duty if we didn't put the American people back to work and pass this law. I reserve the balance of my time.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, it is now my pleasure to yield 6 minutes to the gentlewoman from Missouri (Mrs. Wagner), the sponsor of the legislation and an outstanding freshman member of our committee who has led on this issue.

Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from Tennessee, Dr. Roe, a distinguished member of the Education and the Workforce Committee.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I rise in opposition to the motion.