In this report, we assess today’s House Agriculture Committee hearing on the regulatory framework for clearinghouses and their challenges if one of their members fail. That this session was convened at the full committee level without a near-term threat or pending bill specifically on CCPs points to the battle now under way over CCP systemic regulation and risk. The House-passed reform legislation repeals Dodd-Frank’s Title VIII and thus ends FRB authority over CCPs and certain rights for CCPs that came with these rules. Chairman Conaway (R-TX) and four witnesses pushed for allowing all CCPs to deposit funds with the Fed and for access to the discount window in certain scenarios. As FedFin noted in our prior report, we do not expect any final reform legislation simply to repeal the Dodd-Frank systemic regime for CCPs, but we also think significant changes will be made to it once Treasury recommendations are released for this critical sector. Following recent statements from FRB Gov. Powell, Ranking Member Peterson (D-MN) took aim at the treatment of initial and variation margins in the calibration of the SLR and witnesses suggested initial margins should be deducted.
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