Democrats Move to Slow ‘Jobs’ Bill
March 14, 2012 – 10:51 p.m.
The Senate has agreed to begin debate Thursday on fast-moving legislation to loosen securities regulations that affect smaller companies, and, although passage appears certain, it is unlikely to occur before early next week.
Democrats and Republicans generally remain at odds over how best to spur economic growth and curb still-high unemployment, but they have reached consensus on the desirability of helping small enterprises raise capital.
That has led sponsors to say they are promoting a “jobs” bill, which, in turn, has pushed the bill (HR 3606) toward enactment relatively quickly.
A vote on passage in the Senate appears unlikely Thursday, said a Senate Democratic aide, and that probably means action on the measure will slip until at least March 20, as Democratic opponents of the measure try to bolster protections for investors.
“We need to slow this train down,” said Sen. Jeff Merkley, D-Ore., who noted that the legislation was not considered by the Banking, Housing and Urban Affairs Committee.
Senate leaders have not agreed to a process for considering amendments, and at least two are likely to be offered. One is expected from the bill’s critics, and one would reauthorize the Export-Import Bank.
The bill is intended to ease access to capital for smaller, closely held companies and allow them to more easily make initial stock offerings to the public. It passed the House last week with broad bipartisan support and gained momentum after Senate Democrats reversed course and decided to take up the House bill rather than introduce an alternative of their own.
In the face of this seeming rush to enactment, some consumer advocates and securities experts raised concerns that the legislation would leave investors vulnerable to fraud. Senate Democrats had promised to offer a similar measure with expanded investor safeguards, but dropped their plans after it became clear that Republican opposition would doom such a measure, said Sen. Charles E. Schumer, D-N.Y.
Those Senate Democrats who remain opposed to the House measure, however, have called for a more deliberate floor debate and changes to the bill.
“There are things we can do to help companies grow and create jobs while still protecting investors, but the bill passed by the House does not do that,” said Senate Majority Whip Richard J. Durbin, D-Ill.
“I urge my colleagues, before they rush to judgment,” he said. “Take the time to read it.”
Durbin and Merkley are working with Democrats Jack Reed of Rhode Island, Carl Levin of Michigan and Small Business Chairman Mary L. Landrieu of Louisiana on an amendment to add investor protections. Provisions of the amendment have not been made public.
The strength of GOP resistance, however, suggests that their amendment will not garner the 60 votes needed for adoption under the Senate’s usual mode of floor action. Indeed, while the concerns of some more liberal lawmakers may temporarily slow action on the measure, momentum is clearly on the side of the bill’s backers.
“I think we all agree, regardless of political party, we must act quickly on the small business jobs bill passed overwhelmingly by the House,” said Senate Majority Leader Harry Reid, D-Nev., on Wednesday. “Democrats are eager to move this bill forward, which will improve innovators’ access to capital and streamline how companies sell stock.”
The Obama administration, which already had signaled its support for the House bill, offered only tepid reinforcement Wednesday for the amendment sought by the measure’s critics.
“The president strongly supports the efforts of Senate Democrats to find common ground by supporting the most effective aspects of the House bill to increase capital formation for growing businesses, while also improving the House bill to ensure there are sufficient safeguards to prevent abuse and protect investors,” said White House spokeswoman Amy Brundage.
Senate Republicans, for their part, have complained that Reid waited to consider the House bill. Instead of taking up the measure as the next business after work on a two-year surface transportation authorization bill (S 1813), Reid instead had initially scheduled 17 cloture votes on judicial nominations, which Republicans called an unnecessarily partisan exercise.
Eventually, an agreement between Reid and Senate Minority Leader Mitch McConnell, R-Ky., avoided the clash over judges, paving the way for consideration of the regulatory measure. Reid received unanimous consent Wednesday to begin debate on the bill Thursday morning.
‘Crowdfunding’ and More
The legislation contains several elements, most of which were already passed by the House as individual bills last November. But they languished until House Majority Leader Eric Cantor, R-Va., combined them into a single package, which passed by a 390-23 vote last week.
One of the most contentious elements would permit “crowdfunding” — the use of social media and the Internet — to finance new businesses. In a crowdfunding stock sale, companies would be permitted to issue securities totaling as much as $1 million without registering the sale with the Securities and Exchange Commission.
Sponsors say this practice would open smaller companies to a wider pool of potential investors. But Durbin complained that it would bring “organized fleecing to the Internet, letting the next generation of Ponzi players go viral.”
Another disputed element of the bill would allow “emerging growth companies,” those with gross revenue below $1 billion, to sell shares to the public without fully complying with some requirements of the 2002 Sarbanes-Oxley corporate accounting law (PL 107-204).
Ex-Im Bank Authorization
Although efforts to insert investor protections into the House measure do not appear likely to succeed, that does not mean the Senate will simply clear it for the president’s signature.
Senate Democrats hope they will succeed in amending the bill with a reauthorization of the Export-Import Bank, whose authority to lend will soon expire. The amendment would also raise the current limit on total loans by the bank.
If the amendment is adopted, as seems likely, that would complicate but probably not derail the underlying bill’s trajectory. Some conservatives oppose raising the bank’s lending cap, including Cantor, who hopes to unveil his own legislation to overhaul the bank’s charter later this month.