December 7, 2012

MF Global Update

The House Financial Services Committee’s Subcommittee on Oversight and Investigations has been probing the collapse of MF Global for the past year. A few weeks ago, subcommittee Chairman Neugebauer released a majority staff report on MF Global. I serve as Ranking Member on the subcommittee. While I agreed with many of the observations and recommendations in the report, others required additional commentary, so I did not sign on to it.

This week, Democratic subcommittee members joined me in releasing an Addendum to the majority staff report. You can view the report here: an addendum to the majority staff report. I share the majority staff report’s praise of the National Futures Association and the U.S. Commodity Futures Trading Commission (CFTC) for moving to ban the Alternative Method. This accounting practice contributed to the loss of MF Global customer funds. The Democratic Addendum encourages regulators to determine if adequate protection for customer funds is currently in place and to continue studying ways to further protect these funds. It also urges regulators to “strengthen existing disclosure requirements so customers will better recognize and understand the risks they face.”

The Addendum additionally supports the recommendation to merge the U.S. Securities and Exchange Commission (SEC) and the CFTC. I reported to you last week that Rep. Barney Frank and I filed the Markets and Trading Reorganization Act (H.R. 6613) to accomplish this merger.

I agree with the majority staff report that the credit rating agencies should have downgraded MF Global more quickly. I disagree, however, that they failed in their overall efforts with respect to MF Global. In this case, the credit rating agencies at least rated MF Global as essentially junk from the beginning.

The Addendum also notes that while MF Global’s CEO Jon Corzine holds substantial responsibility, “neither Corzine nor any other individual could have taken these actions if the rules had been tighter and enforcement of them had been more stringent. Better rules and stricter enforcement would have made any such attempts more difficult and more readily apparent to regulators and investors.”

I thank Chairman Neugebauer for all of his work with respect to MF Global and know that we have a great deal of common ground upon which to proceed. I look forward to working with him to increase transparency and improve regulations where necessary, and to continue monitoring the regulatory improvements occurring as a result of MF Global’s collapse.

Immigration

Last week the Congressional Hispanic Caucus (CHC) released a set of principles that they would like to see included in a comprehensive immigration reform bill. I agree with the principles outlined, which you can review here. The CHC list of principles covers a range of immigration issues, including:

• requiring the estimated 11 million undocumented immigrants to register with the federal government;
• keeping families together;
• encouraging those in the fields of Science, Technology, Engineering and Math (STEM) to remain here;
• giving the many children who came here illegally through no fault of their own a path to citizenship;
• establishing reasonable enforcement mechanisms to protect our borders;
• improving our employment verification system.

The CHC’s principles are comprehensive, wide ranging and common sense. I am very interested in your thoughts on this issue as well. I am encouraged because for the first time since beginning my service in Congress, I really feel that a bi-partisan solution is possible. I look forward to passing a comprehensive immigration reform bill in the next Congress.

Event Data Recorders

Last year, I re-filed legislation that would grant vehicle owners more control over the information collected through their car’s “black box” event data recorder (EDR). I have filed this bill several times. This is a basic issue of privacy for me. Consumers should have control over that information and should have the option of turning the EDR off if they so choose. EDRs collect information leading up to an accident, such as speed and brake application. No federal law exists to clarify the rights of the vehicle owner with respect to this data.

I recently met with the National Highway Traffic Safety Administration (NHTSA) about this issue. The NHTSA has issued standards that require manufacturers who have voluntarily included EDRs in their vehicles to meet minimum requirements for the type, frequency, and accuracy of data that is collected.

The NHTSA has been open about wanting to make these EDRs mandatory in some types of vehicles and I wanted to be sure that they were aware of my privacy concerns. Just today, the NHTSA issued a notice of proposed rulemaking (NPRM) asking for feedback on a requirement to make them mandatory in all passenger vehicles. I will review the NPRM closely to determine how issues of privacy are addressed.

What’s Up Next

Next votes are scheduled for Tuesday December 11th. The list of bills to be considered has not yet been released. This week the House was in session on Tuesday and Wednesday, and considered a number of bills under suspension of the rules.