Jumpstart America Act aims to generate capital for small businesses, thereby producing jobs
Washington -- Senate Republicans Tuesday killed efforts by Louisiana Sen. Mary Landrieu and other Democrats to add investor protections to legislation aimed at helping small businesses raise more capital. Landrieu, chairwoman of the Senate Small Business Committee, argued over two days that the legislation, which passed the House by a large margin, is well-intentioned but would strip regulations targeted to prevent scandals as occurred with the collapse of Enron.
View full sizeU.S. Sen. Mary Landrieu was photographed in Algiers in June.Houston-based Enron, an energy and commodities company, failed in 2001, costing some investors and many employees their life savings.
Republicans said that the bill, The Jumpstart America Act, would generate capital for small businesses, thereby producing jobs. They said the legislation retained sufficient protections for small investors.
The bill exempts companies with revenue up to $1 billion from a series of disclosure rules, including an independent test of internal financial controls, for five years.
Landrieu said the House measure takes away important investor protections and adds some pretty big firms to those eligible for new funding mechanisms.
It's important, she said, that Americans be given basic financial information so they won't jeopardize their hard-earned savings on shaky investments disguised as sure things.
Landrieu said the legislation "could be taken advantage of by very sophisticated people who understand how to take good ideas and twist them into greed and fraud -- if we don't have the right protections."
An amendment proposed by Landrieu and three other Democrats needed 60 votes to advance, but got only 55, with just one Republican, Scott Brown, R-Mass., voting yes.
After the vote, and a second killing another Democratic amendment to extend and expand the Export-Import Bank, Senate Majority Leader Harry Reid, D-Nev., said Democrats would meet to decide on their next move.
Rep. Spencer Baucus, R-Ala., who led efforts to pass the legislation in the House, disputed the Democratic criticism. Baucus said Democrats are engaging in a "cynical campaign strategy of running against a so-called do-nothing Congress."
The White House earlier said the president would sign the bill into law, but expressed hope Monday the Senate would work with the House to make some changes.
In essence, the bill would exempt companies with up to $1 billion in annual revenues from some disclosure requirements for raising capital through initial public offerings or sale of stock. Democrats, including Landrieu, wanted to reduce the maximum annual revenue to $350 million.
The legislation also would eliminate a Securities and Exchange Commission regulation that bars companies from using advertisements to solicit investors. Republicans said it is a needed change, what with banks still reluctant to fund start-up companies and new products.
Landrieu said there's a way to meet the bill's goals while still providing small investors with the information they need.
"If you want to start a company in America, you can ask your friends, your parents, your children, or your neighbors -- you can do a small circle of investors," Landrieu said. "But once you sort of make that known publicly, in a public way, such as in a radio announcement, or on a billboard, or ... on the Internet, there are rules and regulations you have to follow to make sure you are telling the truth. Those regulations, in large measure, have been taken out of the House bill."
Bruce Alpert can be reached at balpert@timespicayune.com or 202.450.1406.
