House Financial Services Chairman Spencer Bachus (R-Ala.) sent a letter to Treasury Secretary Timothy Geithner on Tuesday expressing concern over swap rules and their potential to put U.S. firms at a disadvantage.
Bachus wrote that regulators were wrong in their claims that the international community would follow the United States’ lead on derivatives reforms and, as a result, capital and liquidity will begin to flow out of the United States to more regulatory friendly environments.
According to the letter, there is no concrete evidence that international regulators will adopt controversial provisions in Title VII of the Dodd-Frank Act, such as the “swap push-out rule,” which Bachus wrote could have a competitive effect on U.S. financial markets and derivatives end-users.
Bachus included a list of questions in the letter that he requested be completed and returned to him by Aug. 15.
The list included a question asking Geithner if he believes that a non-U.S. entity that is an affiliate or subsidiary of a U.S. company is a sufficient statutory basis for extraterritorial application of Title VVI requirements.
“The mere fact that a non-U.S. entity is an affiliate or subsidiary of a U.S. company does not create a ‘direct and significant’ impact of the U.S. and should therefore not be determinative as to whether such a non-U.S. entity should be subject to Title VII’s requirements,” Bachus wrote.