The U.S. House Agriculture Committee continued its series of hearings this week to examine the role of credit derivatives in the U.S. economy. Agriculture Committee Chairman Collin Peterson of Minnesota organized the hearing to continue the committee's inquiry into credit derivatives, particularly credit default swaps, and their part in the credit and financial crisis that took down some of the largest financial institutions in the world.

"In the wake of the unwinding of billions of dollars of obligations in this extremely opaque and, at times, hard to value credit default swaps market, several companies have stepped forward and are seeking approval to operate clearinghouses for credit derivatives," Peterson said. "Today this committee heard from stakeholders about the major issues surrounding establishment, operation and regulation of such exchanges in order to reduce counter-party risk and increase the transparency of these products."

"I am pleased that the Commodity Futures Trading Commission was recognized by the witnesses as the appropriate regulator for credit default swaps clearing," said Rep. Steve King of Iowa.

The committee heard from two panels of industry stakeholders representing domestic and international exchanges, trade associations, and institutional traders. The hearing examined recent events in the credit default swaps market, the possible establishment of over-the-counter clearing of such contracts, and the role of existing regulatory agencies in overseeing the central clearing of swaps trades. This follows committee hearings on these topics on Oct.15 and Nov. 20.

Witness testimony for this hearing and previous hearings on credit derivatives are available on the committee Web site.

The witness list included:

  • Terrence Duffy, executive chairman, CME Group, Chicago
  • Johnathan Short, vice president and general counsel, IntercontinentalExchange,, Atlanta
  • John O'Neill, senior analyst, Fixed Income Derivatives, LIFFE, NYSE/Euronext, London
  • Thomas Book, member of the executive board, Eurex Clearing AG, Frankfurt
  • John Damgard, president, Futures Industry Association, Washington, D.C.
  • Robert Pickel, chief executive officer, International Swaps and Derivatives Association, Washington, D.C.
  • Don Thompson, managing director and associate general counsel, J.P.Morgan on behalf of J.P.Morgan and the Securities Industry and Financial Markets Association, New York,
  • E. Gerald Corrigan, managing director, Goldman Sachs & Co., New York
  • Bryan Murtagh, managing director, Fixed Income Transaction Risk Management, UBS Securities LLC, Stamford, Conn.

Source: The U.S. House Committee on Agriculture