Supporters of the bill say it's needed to ensure that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) do not issue different sets of rules for offshore derivatives trades under the Dodd-Frank financial reform law. These swaps are often used by companies to help hedge pricing risks.
"It's hard to imagine a proposal in which proposals are more different," Garrett said. He added that the bill would require both agencies to issue a formal rule, which is more enforceable than simple guidance.
Several Democrats argued that the bill would delay the process of writing rules and guidance at the SEC and the CFTC. The Obama administration on Tuesday had the same complaint, and said it opposes the bill for this reason, and said the two agencies were making progress.
"Given these ongoing coordination efforts, passage of this bill would be premature and disruptive to the current and ongoing implementation of the reforms," the administration said. "The administration believes regulators should be given the time necessary to complete their work."
But Republicans dismissed those arguments by saying the agencies have had nearly three years to write rules, and have failed.
"Dodd-Frank was passed almost three years ago, and we're no closer today to final rules than we were three years ago," Garrett said. He and other supporters also noted that the bill still gives the agencies nine months to agree on final rules.
The bill would also limit the extent to which the SEC/CFTC rules would apply to offshore swaps. Supporters of the measure say the swaps rules were only intended to apply to offshore trades that have a direct impact on commerce in the United States, or swaps done offshore to avoid U.S. regulations.
But they say the CFTC has proposed applying U.S. rules to a much broader range of swaps. In response to that, the bill would initially exempt foreign entities from G20 nations from U.S. rules, based on a presumption that the rules in these G20 nations are broadly equivalent.
Democrats pounced on this change as one that would allow some swaps transactions to take place outside U.S. regulatory guidelines.
"I'm not against swaps. I'm not against swaps conducted on foreign soil. I simply want them subjected to United States regulation," Rep. Michael Capuano (D-Mass.) said. "This is a huge hole to the regulatory process of the United States of America."
Republicans pointed out that the bill would still allow the SEC and CFTC to ultimately find that some nation's rules are not equivalent, and apply U.S. rules to swaps involving those countries.
"At any given time if the SEC and CFTC come to the conclusion that these regimes are not broadly equivalent and somehow they present risk to our economy, with the stroke of a pen they can change that presumption," said House Financial Services Committee Chairman Jeb Hensarling (R-Texas). "But not on day one."
While many Democrats said they oppose the bill, many spoke in favor of it, including Rep. David Scott (D-Ga.). He said the bill is needed because three years after Dodd-Frank, it's still not clear from regulators which swaps activities will be subject to U.S. regulations.
"If something is shameful, that is shameful," said Scott, a leading cosponsor of the legislation.
"Let me be clear: this is not an effort to roll back Title VII of Dodd-Frank or to weaken its reach overseas," added Rep. John Carney (D-Del.) said. "In fact, it's intent is to harmonize regulations for cross-border swap transactions to eliminate confusion."
Passage of the bill by the House sends it to the Senate, where it is not clear if Democratic leaders will consider it.