–Retransmitting Story Published 14:56 ET Thursday
By Denny Gulino
WASHINGTON (MNI) – In signing the JOBS Act Thursday afternoon,
President Obama cheered the high-tech community of cash-hungry
entrepreneurs while angering some regulators, union backers, the AARP
and even Democratic supporters — mixing his signals to the government’s
financial regulatory troops who publicly or privately recommended
against the legislation.
The afternoon signing ceremony was accompanied by the president’s
statement of how small businesses create a big proportion of new jobs
and that the legislation is intended to help those firms grow faster.
The event put on display a rare mix of Republican and Democratic
backers, bipartisanship that masked the degree of disagreement.
“One of the great thing about America is that we are a nation of
doers,” Obama said. “We think big and take risks,” citing inventor
Edison, Ford, Boeing, Google and Twitter. “This is a country that’s
always been on the cutting edge and the reason is that America has
always had the most daring entrepreneurs in the world.”
“The last few years have been pretty tough on entrepreneurs,” he
said. “For business owners who want to take their companies to the next
level, this bill will make it easier for you to go public, and that’s a
big deal.”
“Because of this bill startups and small business will now have
access to a big new pool of American investors, namely the American
people,” he said before sitting down and applying his signature.
White House adviser Gene Sperling, given the task of defending the
legislation, had been doing interviews earlier in the day saying the
firms which will benefit the most are not brand-new startups, but those
which need to reach the next stage of their emergence, and have to raise
more funds to do so. Eventually, their easier access to start-up funds,
he said, will lead to more jobs.
Regulators, many academic experts, some Democratic lawmakers,
organized labor — and even some convicted felons — have said the law
is creating new loopholes and invitations for fraud by relaxing
regulations in place for eight decades that impose rules for disclosure
on those seeking public investment. Besides, many said, few new jobs
will result.
SEC Chair Mary Schapiro warned the Senate Banking Committee March
13 that without “appropriate protections, investors will lose confidence
in our markets” and ultimately, capital formation will become harder,
not easier. SEC Commissioner Luis Aguilar followed with similar remarks
three days later.
The AARP asked, in an objection registered with Congress, whether
older investors, already disproportionately represented among “boiler
room” and “penny stock” fraud victims, will now be an even easier target
of investment scams.
The acronym JOBS stands for Jump-start Our Business Start-ups, and
while allowing easier investment in unproven companies, limits the
amount per company any individual can give an entrepreneur under the law
to $2,000.
The law allows so-called crowd funding — basically Internet
appeals for money — a digital age innovation that can quickly aggregate
large sums without requiring as many details be made available to
investors. But in the Senate the SEC was reinserted into the process as
a necessary overseer of the crowd funding and some disclosure
requirements were added back in.
Even stronger protections advocated by Democratic Senators Carl
Levin and Jack Reed could not get the needed 60 votes.
By lending his support to a business measure, Obama was able to
apply some rhetorical judo to his Republican opponents who early on did
not expect such determined White House backing for a pro-business
measure. At the same time some of Obama’s usual Democratic supporters
have been inclined to keep any opposition more subdued than it would be
otherwise, in deference to their party’s leader.
As initial public offerings diminished after the financial crisis,
concern grew late in the past decade that the trend might continue
without some government action. The cause was taken up by Obama’s
industry dominated Council on Competitiveness.
Nevertheless Democrats like Senators Levin, Reed, Dick Durbin and
Mary Landrieu were openly critical.
For organized labor, the JOBS Bill turned out to be one more defeat
and disappointment that even a Democratic White House could not be a
reliable ally. AFL-CIO President Richard Trumka said the White House
push made him “disappointed and angry.” His opposition did not cut into
the 73 Senate votes for the bill. “When the next bubble bursts,
Americans will know who to blame,” he said.
For regulators, the signing was a different kind of defeat. The
signal from the White House that regulatory concerns about the JOBS Act
are not a high priority comes in a year when development of Dodd-Frank
regulations is stretching the resources of independent financial
regulatory agencies like the SEC, CFTC and FDIC.
At the same time their efforts have been met with repeated industry
attacks. While getting steady support from Treasury Secretary Timothy
Geithner, the strong White House support for legislation they opposed
caught them by surprise.
The JOBS act exempts companies with less than $1 billion a year in
revenues from some disclosure and governance requirements as they make
initial public stock offerings. It allows companies to raise up to $1
million a year through the “crowdfunding” mechanism and frees them to
bypass normal registration requirements to solicit investors.
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$]