Bill to help small firms raise money stalls
Bipartisan legislation sought by President Obama to help small businesses raise money hit a big speed bump when Democratic leaders abruptly postponed a key vote after an attempt to bolster investor protections was rejected by Republicans in the Senate.
The GOP also defeated a popular provision that would have expanded the lending authority of the nation’s Export-Import Bank as the floor debate devolved into a partisan standoff.
Concerns have mounted from consumer groups and federal regulators that the bill, which already won overwhelming support in the House, would open the door to a new generation of investor fraud, particularly from online solicitations. The White House supports beefed-up protections.
“We need to stop, slow down, carefully amend this legislation,” said Sen. Jack Reed (D-R.I.), who led efforts to change the bill.
House Majority Leader Eric Cantor (R-Va.) dismissed the concerns of Senate Democrats as “phantom investor protection issues,” saying they were making eleventh-hour claims to stall the Jumpstart Our Business Startups, or JOBS, Act.
“Senate Democrats have worked overtime to find excuses,” Cantor said earlier this week.
The legislation would loosen federal regulations on small and start-up businesses as they seek investors.
Companies with less than $1 billion in annual revenue could bypass certain Securities and Exchange Commission reporting requirements for public offerings — a provision that SEC Chairwoman Mary Schapiro said was too broad and included large companies. She suggests limiting the exemption to companies earning less than $350 million.
The legislation also would exempt “crowd-funding” — an emerging way of creating pools of small investors with solicitations online and through social media — from some reporting requirements.
Democratic-led efforts to change those provisions and others that they said would protect investors were shot down in a largely party-line vote.
Republicans also rejected an effort to expand the lending capacity of the nation’s Export-Import Bank, which provides financing for companies. Leading conservatives oppose the bank, calling it a government slush fund for certain industries.
The influential Club for Growth calls the entity the “Bank of Boeing” because the aircraft company receives Export-Import Bank financing. But key business groups, including the U.S. Chamber of Commerce, supported the reauthorization.
The bank’s authorization expires in May, and the proposal would have gradually increased its lending capacity to $140 billion a year by 2015 from $100 billion.
