Casey explains Swaps and Pensions

An email from Sen Casey (D-PA) 18Apr15
(Bold and underline added)

Thank you for taking the time to contact me about provisions in the Fiscal Year 2015 appropriations bill to repeal Section 716 of the Dodd-Frank Act and reform multiemployer pensions. I appreciate hearing from you about this issue.

On December 13, 2014, Congress passed an appropriations bill to fund all government operations, except for the Department of Homeland Security, through September 30, 2015 The President signed the bill into law on December 16, 2014. This appropriations bill is not perfect; however, it contains a number of important provisions that I fought to include to create and protect jobs in our Commonwealth. Though I strongly disagree with parts of it, as a United States Senator I have an obligation to consider the package as a whole. Taken in totality, I concluded that the bill will help create and protect jobs in Pennsylvania, as well as prevent another government shutdown. As a result, I voted in favor of the bill.

Included in the budget bill was a provision to repeal Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 716, also known as the swaps push-out rule, requires banks to relocate some types of derivatives trading activities in subsidiaries that are not eligible for federal deposit insurance.

I strongly supported the passage of the Dodd-Frank Act in 2010 because the bill contained essential measures to protect taxpayers, businesses and consumers from the type of excessive financial risk that triggered the 2007 financial crisis. I am troubled by the fact that a provision eroding part of the Dodd-Frank Act was attached to an essential spending bill. Nevertheless, I voted for the Fiscal Year 2015 appropriations bill because I believed it was important to our economy and was essential to prevent another government shutdown.

As a member of the Senate Committee on Agriculture, Nutrition and Forestry, which has jurisdiction over markets in financial derivatives, I take seriously the risks that inadequately regulated derivatives markets pose to the broader economy. Please be assured that should further legislation to reform derivatives regulations come before the Senate for consideration, I will have your views in mind.

The spending bill also contained an amendment, added by the House of Representatives, which makes several fundamental reforms to rules governing multiemployer pension plans. The bill also allows plans projected to become insolvent within the next 15 to 20 years to suspend or reduce benefit payments. Any benefit reductions will be subject to several restrictions. They will need to be approved both by the Treasury Department and by a majority of plan participants in a vote. Additionally, disabled beneficiaries and beneficiaries 80 years or older will be exempt from any benefit reductions and benefit payments will remain at a minimum of 110 percent of the level guaranteed by the Pension Benefit Guaranty Corporation (PBGC).

These pension reforms also included a permanent extension of flexible funding rules for critical and endangered plans that were set to expire at the end of 2014. Additionally, the bill will give the PBGC more flexibility to facilitate mergers between multiemployer plans and double the premium that multiemployer plans pay to the PBGC.

I have serious concerns about these reforms, specifically about the provisions allowing cuts to pension benefits. These provisions are a significant departure from a longstanding policy principle that protected retiree benefits from cuts or suspensions. I am disappointed that such significant changes to pension policy were added to a must-pass spending bill just days before a potential government shutdown. As a member of the Senate Committee on Health, Education, Labor and Pensions and the Senate Committee on Finance, which share jurisdiction over the PBGC, I am committed to ensuring that these reforms are implemented in a way that is fair, transparent and protects the basic rights of plan participants. Please be assured that should further legislation affecting multiemployer pension plans come before the Senate for consideration, I will keep your views in mind.

Again, thank you for sharing your thoughts with me. Please do not hesitate to contact me in the future about this or any other matter of importance to you.

For more information on this or other issues, I encourage you to visit my website, http://casey.senate.gov. I hope you will find this online office a comprehensive resource to stay up-to-date on my work in Washington, request assistance from my office or share with me your thoughts on the issues that matter most to you and to Pennsylvania.

Sincerely,
Bob Casey
United States Senator

P.S. If you would like to respond to this message, please use the contact form on my website: http://casey.senate.gov/contact/

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