Entrepreneur Access to Capital Act

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks on H.R. 2930 and to insert extraneous material thereon.

Mr. Chairman, I yield myself such time as I may consume.

When I'm at home in western North Carolina, I hear frequently from my constituents, from small businesses, that they have a very difficult time raising capital in these very challenging times that we're in. And over 2 years into an economic recovery that is struggling, America's labor and capital markets continue to face unprecedented challenges. Nearly 14 million Americans remain officially unemployed, with an additional 11 million underemployed. And small businesses continue to struggle to access capital despite an endless number of government initiatives.

The origin of these barriers to capital formation rests in two Federal securities laws--the Securities Act of 1933 and the Securities Exchange Act of 1934--that have not been substantially updated since a gallon of gasoline cost 10 cents and only 31 percent of households owned a telephone. Today, a gallon of gas, as we know, costs about 35 times more per gallon than it did then, and nearly every American owns a telephone. In fact, most people have the Internet in their pocket.

So while the comparison of then and now is nostalgic, the ramifications of not modernizing our securities regulations have led to registration and reporting requirements so onerous and costly that small companies have great difficulty raising capital.

For instance, if a startup company offers an equity stake to investors through a medium like Facebook or Twitter, it is presumably in violation of SEC regulations for that communication and offering. However, soliciting money for one's favorite charity or even a political candidate through the same Internet medium is perfectly legal. So, clearly, something is not right.

Furthermore, high net worth individuals can invest in businesses before the average family can. And that small business is limited on the amount of equity stakes they can provide investors and limited in the number of investors they can get. So, clearly, something has to be done to open these capital markets to the average investor, and that's what the Entrepreneur Access to Capital Act is all about.

It removes the SEC restrictions on crowdfunding to allow entrepreneurs and small businesses to raise capital from everyday investors. Already prevalent in Europe and Asia, crowdfunding has proven that broadening the communication investment capabilities between investors and entrepreneurs can have a positive impact and a positive effect on capital formation which is the lifeblood of a strong and growing economy.

Specifically, my bill will allow companies to pool up to $1 million without the expense of registering with the SEC or up to $2 million if the company provides investors with audited financial statements. Individual contributors are limited to $10,000 or 10 percent of the investor's annual income, whichever is less.

In addition, H.R. 2930 creates a regulatory structure of investor protection

around this new, innovative form of financing with substantial intermediary requirements or issue requirements if there is no intermediary. This key mandate for investor protection is why the bill has received broad bipartisan support both in the Financial Services Committee and from President Obama.

This has been crafted both with Republican and Democrat staffers, getting input from my colleagues from across the aisle at a subcommittee markup, multiple hearings we've had on the idea of crowdfunding, as well as a full committee markup. And we worked together and passed it with a bipartisan vote coming out of committee. This was a collaborative operation, and I appreciate my colleagues and I appreciate the staff of the Financial Services Committee as well as the staff on the Oversight and Government Reform Committee and my subcommittee where we had a number of hearings on capital formation, and out of that came this idea.

This is the culmination of months of work. The process began for crafting this piece of legislation over the summer. When the President stood in this Hall, in this room just a couple months ago for his jobs bill, and when he included in the proposal this idea of crowdfunding, it was a very positive thing--not just to have a good idea that we can pass here in the House, but to have a good idea that has the possibility of getting through the Senate, where it's a very challenging time for them to pass legislation at all. And that way it can make it to the President's desk and really give entrepreneurs the opportunity to raise this capital, to actually create and grow jobs. That's why they need the capital, so we can grow jobs, create jobs and provide more opportunity for our constituents and folks across this country.

We can protect and inspire confidence in the investor community as well as allow small businesses, those companies most critical to our economy, to gain the capital needed to expand, compete, and thrive.

I urge my colleagues to support this bill that combines both the best of microfinance with the power of crowdsourcing and give folks the opportunity--the average, everyday investor--the opportunity to have an equity stake in their favorite company, not just accredited investors and not just so-called high net worth individuals. That's the purpose of this legislation. I ask my colleagues to support this legislation, and I reserve the balance of my time.

Executive Office of The President, Office of Management

and Budget,

Washington, DC, November 2, 2011.

Statement of Administration Policy

H.R. 2930--Entrepreneur Access to Capital Act

(Rep. McHenry, R-North Carolina, and 5 cosponsors)

The Administration supports House passage of H.R. 2930. In

the President's September 8th Address to a Joint Session of

Congress on jobs and the economy, he called for cutting away

the red tape that prevents many rapidly growing startup

companies from raising needed capital, including through a

``crowdfunding'' exemption from the requirement to register

public securities offerings with the Securities and Exchange

Commission. This proposal, which would enable greater

flexibility in soliciting relatively small equity

investments, grew out of the President's Startup America

initiative and has been endorsed by the President's Council

on Jobs and Competitiveness. H.R. 2930 is broadly consistent

with the President's proposal. This bill will make it easier

for entrepreneurs to raise capital and create jobs. The

Administration looks forward to continuing to work with the

Congress to craft legislation that facilitates capital

formation and job growth, and provides appropriate investor

protections.

I thank my colleague from Colorado for working actively with me and with my staff to make this bill better, as well as my colleagues, Mrs. Maloney from New York, Ms. Waters of California, and Mr. Al Green. Thank you so much for your work in working in a bipartisan way to improve the bill.

With that, I would like to yield such time as he may consume to the chairman of the Financial Services Committee, the gentleman from Alabama (Mr. Bachus).

I thank my colleague for submitting that for the record, the definition.

Now, the intention is that you have an Internet portal of sorts, but this could be done on any mass basis. But the disclosures have to be very clear--which we specify in the legislation--and we've given the SEC the ability to specify additional pieces. I have a technical amendment to clarify what the Securities and Exchange Commission staff thinks is very important to add to this bill. But I do appreciate the gentleman offering the definition.

I appreciate the gentleman.

The intention would be that the intermediary is, in essence, the conduit of funds. There's the notion of the broker-dealer, which is well established in law. What this does is, it's similar to a broker- dealer; but it is a very low-regulatory, low-cost basis of doing it.

What this is, in essence, is an intermediary defined as Websters would define an intermediary. And I think that's probably the better way to describe it.

Madam Chair, I yield myself such time as I may consume.

I need to correct the record with regard to what my colleague from North Carolina said. What he said is simply not, in fact, what this bill does.

Furthermore, as we know, securities fraud is prosecuted not just at the Federal level, but by the States as well. That will continue to exist.

Furthermore, if my colleague from North Carolina would reach out to my colleague from Colorado, I'm supporting his amendment which preserves the States' rights of action.

I yield to the gentleman.

Reclaiming my time, to correct the record, in the State of North Carolina, there is no pre-filing requirement. In the State of New York, for instance, they actually have up-front filing requirements.

Additionally, in this legislation, how it is crafted is the SEC would provide notice of this offering to the States once that offering occurs. This is something that my colleague from New York (Mrs. Maloney) crafted in the subcommittee. My staff, as well as the Financial Services Committee Republican staff, worked diligently with the Democrat staff on the Financial Services Committee as well as Mrs. Maloney's staff and came up with a three-page amendment, which was adopted on a bipartisan basis at the committee--I appreciate my colleague from New York offering that--and it has improved the bill.

Reclaiming my time, I did not receive that letter. My two Democratic colleagues from North Carolina that are on the Financial Services Committee did in fact get that letter. My colleague Mel Watt-- a fantastic member--submitted it for the record in the Financial Services Committee. I had neither a letter nor a call from my Secretary of State raising concerns about that.

With that, I would be happy to yield such time as he may consume to my colleague from New Jersey, the chairman of the Subcommittee on Capital Markets in Financial Services, Mr. Garrett.

Will the gentleman yield?

I thank my colleague for yielding.

This is a very important point of distinction here. These intermediaries are not broker-dealers. That is neither the intent on either side of the aisle. That is not the description of it. These intermediaries are there to have a low-cost conduit for capital formation and a means to do that. That is the intention.

And all the protections outlined in the bill on these intermediaries, on how they are to operate, are there to enable it to be both low-cost but also preserve individuals' capital and make sure their investment's appropriately taken care of.

Absolutely. And I appreciate my colleague yielding.

The intent is, if you're going to raise $50,000 from 5,000 people, it has to be a low-cost basis of doing that; and the traditional broker- dealer model is not efficient at those lower cost basis fundraising opportunities or equity-raising opportunities.

Yes. The idea is that, with the traditional broker- dealers, they're not in this market. So our intent with these low- dollar issuances, that has not been a traditional part of the action on Wall Street, not in the modern era, and so we're trying to carve out this opportunity for small business folks.

Correct.

Madam Chair, I reserve the balance of my time.

I yield myself 20 seconds.

I thank my colleague from New York for improving this legislation and her staff for working so diligently with my staff and the staff on the committees as well. Very wonderful and constructive process.

I think this is a better bill, and I hope the Senate can take it up and pass it and send it to the President.

I reserve the balance of my time.

Madam Chair, I yield myself the balance of my time.

The Entrepreneur Access to Capital Act is about giving entrepreneurs the power to raise money, to raise equity stakes in their business or their business idea, to grow their business or create a new business. That's really what this is about.

The legislation we have here on the floor today--I know to some of my colleagues, as some people talk about, the Internet is just a series of tubes, or they refer to the Internet as the ``Internets'' or something like that. But we understand and my colleagues understand that the Internet can be used in a positive way, in an absolutely positive way.

With a Web site like eBay, you have individuals exchanging goods that don't know each other. But they can tell their reputation. And they can exchange these goods and get quality goods for a quality price. And you have a lot of choices. We want to take that idea and give investors that same idea.

We have crowdfunding Web sites in the United States today. They help raise money for musicians or artists. And what the artists do is say, ``You know, if you invest in my ability to go into the studio and record an album,'' or whatever they call it, ``I'll give you the first download, or I'll give you the first CD.''

So you have folks pony up $50 or $25 for their favorite banks. You have folks who are raising money--folks who have a bakery--and they say, If you contribute a few bucks, you'll get six whoopie pies.

People have innovative ways of doing this. We're giving them the power, the opportunity; and we're relieving this Federal restriction that currently prevents them from having equity stakes in their favorite businesses, in their favorite ideas--their local coffee shops or their bakeries, their favorite bands or even the next Facebook. These are the opportunities that we're going to be able to give investors.

We have fraud protection in this legislation, language which has been crafted in a bipartisan way. It's a strong improvement to the bill, and I look forward to a bipartisan vote. I am very hopeful it will make its way intact through the Senate and make its way to the President's desk where he can sign it. That way, we can allow entrepreneurs and innovators that opportunity.

We take the best of micro-finance and the best of crowdsourcing and combine them in this legislation, and it's a positive thing. We can work together on important matters of creating jobs--and we have--and this is a first step. I certainly appreciate my colleague's willingness to work to improve the bill and to bring us to this day.

With that, I yield back the balance of my time.

Madam Chair, I have an amendment at the desk.

This is primarily a technical amendment based on post- markup feedback from the staff of the Securities and Exchange Commission. The final language has been negotiated between my staff and the majority and minority staffs of the Financial Services Committee.

The more substantive changes made to this amendment include: requiring the issuer to state a target offering amount and a deadline to reach the target offering amount; requiring the commission to provide a notice upon completion of the offering, which shall include the aggregate offering amount and the number of purchasers; clarifying the disqualification provision to ensure that both issuers and intermediaries, as well as their predecessors, affiliates, officers, directors or persons fulfilling similar roles, are disqualified from the exemption established in this bill should they have a history of committing securities fraud.

I appreciate the SEC staff lending their technical expertise to this amendment, and I appreciate the bipartisan effort from both the majority and minority committee staffs to further improve the final bill.

With that, I yield back the balance of my time.

I thank the gentleman from Tennessee for offering

this bipartisan amendment. This is a good-government amendment.

The old adage is ``a million bucks isn't what it used to be.'' Well, when reg D-504 of the Securities and Exchange Act of 1934 had a $1 million exemption that was put in place in 1982, that $1 million would be $2.4 million today. So, just in a short period of time, it can show you the impact of 30 years of inflation.

I appreciate my colleague for offering this amendment, as it's a very good amendment, and I certainly appreciate your representing the good folks of Tennessee.

I thank my colleague for bringing this up, and it is a great concern. I didn't have the opportunity to say, I do, in fact, support the gentleman's amendment. I appreciate him offering it. It's a very thoughtful amendment.

I believe, looking at this, when you have it on an annualized basis, that does actually allay some of those concerns. But I think you and I agree that when we don't address some of these securities laws as frequently as we should to update with technology and what happens in the market, we should have in place these measures to ensure that Congress' intent is followed even 20 years from now and can keep pace with what is reasonable in the marketplace.

I think that your concern is actually a very interesting one. And I would be happy to talk with the gentleman more about ways that we can update securities laws to deal with some of these struggles.

Madam Chair, I want to thank my colleague from Arizona (Mr. Quayle) for offering this amendment. It's a very sharp amendment, a very thoughtful approach to securities law, a very thoughtful approach to crowdfunding and the idea of allowing average, everyday investors the same opportunities that high-net-worth individuals enjoy in this country. I thank the gentleman for working on job creation and job growth.

Madam Chair, I claim time in opposition to the amendment.

Unfortunately, I have to oppose this amendment. In the course of a subcommittee legislative hearing, a subcommittee markup, and a full committee markup, this amendment was never offered. My colleague from New York serves on the Financial Services Committee. As my other colleagues have mentioned, I worked diligently across the aisle to incorporate every idea my colleagues from across the aisle had. They've incorporated them into this bill. It's a better piece of legislation because of it.

My colleague had the opportunity at the full committee markup to offer this amendment and didn't. We heard at the capital formation and crowdfunding hearing in the Capital Markets Subcommittee--I attended that, and all Members of the Financial Services Committee that were there that day were allowed to participate. None of the witnesses raised a compensation disclosure as a precondition to create successful crowdfunding securities offerings. My colleague did not participate in the hearing. And when the subject matter of the amendment could have been raised with a panel of capital formation experts, it was not raised.

This is an interesting amendment. What we have in this legislation is an enormous amount of investor protection. We want crowdfunding intermediaries to be able to compete with one another and to innovate and to offer the best platform and technology for both issuers and investors. Our belief is that businesses will be able to work with different intermediaries. If they don't see an intermediary that fits with their cost structure or the cost basis they see fit, they can be their own intermediary. That's how this bill is constructed. This amendment doesn't work technically with the construct of that. By forcing intermediaries to disclose the compensation structure to potential investors, we believe it will have a chilling effect on compensation in the market and the participation of potential intermediaries in this mode.

So unfortunately, I have got to oppose this amendment. Had the gentlelady brought this to me during the subcommittee or full committee markup, I would have been happy to work with my colleague on trying to craft workable language. But here on the floor today, I'm opposed to the amendment. I ask my colleagues to vote against this flawed amendment.

I reserve the balance of my time.

Madam Chair, I yield myself such time as I may consume.

I would ask my colleagues, do they disclose on their campaign Web sites how much it costs to process a credit card contribution?

Exactly. I don't know if my colleagues are making those disclosures when folks are contributing to their campaigns. So this restriction is actually a creation of Congress.

I understand the issue. It's a very powerful issue on compensation. This was never raised in the two subcommittee hearings I have had on capital formation on the TARP in the Financial Services Subcommittee of Oversight and Government Reform, nor in the legislative markup at the Subcommittee on Capital Markets, nor during the subcommittee markup nor the full committee markup in the Committee on Financial Services.

Furthermore, I would point my colleague to page 6 of the legislative text. We have investor protection requirements for intermediaries that go on for, really, three pages. This specifies a lot of investor protection. It has received a bipartisan vote. The time for this amendment is past. It is not best constructed here on the floor. I ask my colleagues to vote ``no.''

With that, I yield back the balance of my time.

Madam Chair, I rise in opposition to the amendment.

Unfortunately, I have to oppose this amendment. I ask my colleague from Georgia if he consulted, in the construct of this language, with the SEC staff.

I yield to the gentleman.

Reclaiming my time, we did not see this legislative text until it was filed with the Rules Committee. We worked to try to accommodate the Member with text that could be acceptable. Unfortunately, the construct of this is simply not acceptable and we couldn't come to reasonable accommodation on language that would be workable.

Look, the SEC is certainly overburdened. We all know that. I mean, they're working very hard. They currently have two Web sites right now. What this amendment would do is force them to have a third Web site.

Furthermore, in the discussion of this amendment, my colleague describes this as a public offering. The crowdfunding legislation described here is an exempt offering, very different in nature than a public offering, and is exempt from the SEC regs.

On page 6 of the legislation, subsection (a)(1), it mandates that individuals, intermediaries in this process, would have to add a warning to investors, including the intermediary's Web site, of the speculative nature generally applicable to investments in startups, emerging businesses, and small issuers, including risks in the secondary market related to illiquidity.

(2) warns investors that they are subject to the restrictions on sales requirements described under subsection (e).

Additionally, (6) requires each potential investor to answer questions demonstrating competency in:

(A) recognition of the level of risk generally applicable to investments in startups, emerging businesses, and small issuers;

(B) risk of illiquidity; and

(C) such other areas as the Commission may determine appropriate.

This part of the legislation, my staff as well as the staff of the Financial Services Committee, Democrats and Republicans, as well as the staff of Mrs. Maloney and Ms. Waters crafted this language in a very balanced way. We've included those concerns.

Unfortunately, the language before us today is deeply flawed, and with the nature of securities laws as they are in this country--and in the world, for that matter--we want to make sure that it has the appropriate balance, that it has been thoroughly vetted through counsel and actually has agreement. That is why this amendment is deeply flawed and I oppose it.

I reserve the balance of my time.

The legislative text on line 4 specifies, establish a Web site.

May I inquire of the Chair the remaining time on both sides.

Madam Chair, I yield myself the balance of my time.

I certainly appreciate my colleague's intent, but I'm simply uncomfortable with requiring facilitators or these intermediaries that we create in this legislation of what is an exempt offering under securities law to actually link to the SEC's Web site. It gives the stamp of approval of sorts, it seems to me, of this exempt offering. It actually might create more confusion, not necessarily by the gentleman's intent, but by the design of the legislation before us, by the legislative text that we have here in this amendment.

Unfortunately, that is not helpful. Actually, it would be hurtful to this matter, and that's why I have to oppose it.

Now, I am hopeful that when this legislation is signed into law by the President that the Securities and Exchange Commission Office of Education and Investor Advocacy would create an investor alert, which is their standard process, regarding crowdfunding investments like the SEC did with the microcap stock, a guide to investors, which is available on the SEC's existing Web site.

And that's the concern here. We want to make sure that this is done appropriately. We currently are operating in securities law that originated over 75 years ago, or roughly 75 years ago. So we want to make sure we get this right. Unfortunately, this amendment is ill- crafted, and that's why we have to oppose it.

I yield back the balance of my time.

I thank my colleague from Colorado for offering this amendment, and I thank my colleague for working diligently across the aisle. This was an idea that he had in the full committee markup. We worked diligently to get that done at full committee markup. It was not able to be done, but the language we have here today is a very good amendment.

The amendment ensures that the States' securities regulators have the means to police fraud, deceit, misrepresentation, and other unlawful behavior to protect investors. Since States' securities regulators already have the resources and expertise, much more so than the SEC, to examine unlawful behavior at a micro-level, it is essential that this legislation recognize and authorize them to continue to fight unlawful conduct. The powers of State securities regulators for crowdfunding are no different from what that which they have for any covered security.

Madam Chair, I claim time in opposition.

I thank the gentleman from Texas.

I would like to express my appreciation to the leadership of the House for expediting these two important bills and bringing them before the House of Representatives. I rise in support of the underlying bills, the Entrepreneur Access to Capital Act and Access to Capital for Job Creators Act.

Now, while I support the two bills before us, I do wish the rule was an open one. I will be voting against the rule. An open rule would allow the House to work its will in a true democratic process, allowing Members to come down to the floor and freely debate these bills. Unfortunately, in the Rules Committee, we were offered only a structured rule.

Now, both of these bills accomplish something very important in terms of opening up capital markets and helping startups work. Let me discuss briefly how this whole accredited investor concept works.

To be an accredited investor, you simply need to be worth $1 million or have income of $200,000 a year. Now, that's a very rarified strata of the American people.

What does that mean when you're an accredited investor? It means that you can participate in a private equity offering that doesn't need to go through the full SEC process which is cumbersome and costs a lot of money. So, in effect, many venture capital opportunities, funding opportunities for startup companies, are reserved for those who are only worth above a million dollars. They say the easiest way to make a million dollars is to already be worth a million dollars. In fact, people worth more than a million dollars have heretofore had a monopoly on participating in these kinds of opportunities.

Now, what can an average American family, let's say with a net worth of $50,000 or $100,000 do? Well, they can go to Las Vegas and they can bet it all on number 9. They can buy gold, which is being pushed by all these profit organizations, and I think we need a congressional investigation into that. Many of these organizations selling gold sell it for above market value by preying on unsuspecting people who are not accredited investors. They might be worth $50,000 or $100,000.

What you find, by the way, is that this whole concept of tying an accredited investor to net worth has its flaws. Just because somebody has several million dollars doesn't mean they're a sophisticated investor. Meanwhile, there could be somebody who's worth $10,000 who is very sophisticated. It's unfortunate that we have the whole system tied to that.

But what we see before us today are two important chinks in this armor. One is consistent with the current concept of accredited investor but at least opens it up beyond their personal networks, and the other one allows small investors to participate in a more meaningful way.

First, the Entrepreneur Access to Capital Act, crowdfunding. What this means is it provides a new way that companies, startup companies, can raise a limited amount of money, $1 million a year, or $2 million if they have audited financial statements. Now, that's a sizable amount for a company to get off the ground and get started. Many tech companies that you hear of today started with that much money or less. Historically, how did they raise that money? They would go to a venture capitalist. They would go to a wealthy individual. We call that person an angel investor. They'd get a check for $500,000. The investors had to be worth more than a million dollars. Your average American might be worth--might only have $5,000 to invest or $1,000 to invest, was unable to, under law, participate in that offering.

What this does is it opens up an avenue that allows the individual investor to invest up to $10,000 in a startup company. Now, that's a risky investment. They could lose that $5,000. They could lose that $2,000. But you know what? They could go to Las Vegas and they could lose it a lot quicker with a lot less upside.

So this gives every American the opportunity to invest in startup companies, if one of their friends is starting one, if there is some concept they are excited about, and reap the rewards as well. In addition to feeling part of something special, some of these investments, the vast minority, could return 50:1, 100:1 and could help those people acquire wealth, and that's very, very exciting.

The Access to Capital for Job Creators Act also deals with a flaw in how private equity is raised. Currently, you have to know the right people to get into a private equity deal. In fact, a company that's offering private equity is not even allowed to, under SEC regulation, post a prospectus and information on their Web site in an open environment. What this bill does is it creates a safe harbor that allows them not to advertise it in the sense of loudly promoting it and trying to sell shares, but in a sense of simply providing it in a nonpassword-protected way on their Web site to allow people who aren't part of their personal network of elite friends to participate in that private equity offering as well.

The average median household net worth in this country is about $100,000. And previously, all of these investment opportunities have been reserved for people worth over a million dollars. Now, if somebody's family, an American family watching this, or one of my constituents is worth $100,000 or $150,000 or $50,000, it may not make all the sense in the world to invest $5,000 or $10,000 in one startup, but a cap of $10,000 is a reasonable amount. It's their money and their right to do that if that's what they want to do. These bills are consistent with that. And, more importantly, they provide a new financing mechanism for startups in this country. That way, a startup that has broad appeal and a broad network can go to 1,000 people that have $1,000 each rather than one wealthy investor for $1 million. That was previously nearly impossible under current law.

Mr. Speaker, I have here a Statement of Administration Policy, and I'm proud to say that this bill, the Entrepreneur Access to Capital Act, has strong support from the administration: ``This bill will make it easier for entrepreneurs to raise capital and create jobs, and the administration looks forward to continuing to work with Congress to craft legislation that facilitates capital formation.''

I would like to applaud the leadership of the President of the United States in strongly supporting these endeavors. As a former small business owner, I know how important it is to invest in a company's future and how critical resources are for growth. The more avenues that we can provide for financing startup companies or allowing a mom-and- pop company to expand, the better it is for the growth of our economy.

More importantly, these two pieces of legislation before us demonstrate that Democrats and Republicans can work together. We can put aside our partisan differences, we can fast track a commonsense piece of legislation and work towards solutions to spur economic growth.

Now, to be clear, these two bills alone don't do enough to turn our economy around. These measures do little to address what the American people are asking us for, creating jobs in the short term and getting the economy moving. Will they have a positive impact in creating jobs and allowing for financing to flow to new startup operations? Yes, but they are not fundamentally game changers.

These bills will allow average Americans an opportunity to invest in early-stage companies. Now, many of these opportunities won't work out. American investors will lose their money. Other American investors will make money. But, again, it is a very American concept that it is your money to invest as you choose, and the best opportunities shouldn't be reserved for millionaires. We should make them widely available to all Americans.

Democrats on the Financial Services Committee have also been extremely

instrumental in improving these bills to protect business and investors. Democrats have added a critical provision requiring that issuers verify that an investor is actually eligible to purchase the offer in securities, and the change ensures there's a balance between the need to use restrictions on capital formation and protecting investors from fraud and making sure we don't get in the way of State regulation, as well.

There is a fine line; and there are, as I mentioned, some areas where sham investments are being aggressively promoted that are certainly contrary to the spirit, if not the letter, of the law.

Likewise, there are real opportunities that until this bill becomes law those who are worth under $1 million are ineligible from participating in, and as a companion those who might be worth more than $1 million but don't know the right people are unable to participate in private equity offerings. This bill remedies both of those restrictions and will help unleash capital flows to startup corporations. I'm proud to support both bills.

Executive Office of the President, Office of Management

and Budget,

Washington, DC, November 2, 2011.

Statement of Administration Policy

H.R. 2930--Entrepreneur Access to Capital Act

(Rep. McHenry, R-North Carolina, and 5 cosponsors)

The Administration supports House passage of H.R. 2930. In

the President's September 8th Address to a Joint Session of

Congress on jobs and the economy, he called for cutting away

the red tape that prevents many rapidly growing startup

companies from raising needed capital, including through a

``crowdfunding'' exemption from the requirement to register

public securities offerings with the Securities and Exchange

Commission. This proposal, which would enable greater

flexibility in soliciting relatively small equity

investments, grew out of the President's Startup America

initiative and has been endorsed by the President's Council

on Jobs and Competitiveness. H.R. 2930 is broadly consistent

with the President's proposal. This bill will make it easier

for entrepreneurs to raise capital and create jobs. The

Administration looks forward to continuing to work with the

Congress to craft legislation that facilitates capital

formation and job growth and provides appropriate investor

protections.

I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to my colleague on the Rules Committee, the gentleman from Massachusetts (Mr. McGovern).

I yield the gentleman an additional 30 seconds.

Very briefly, I yield myself 1 minute to respond before I yield to the gentleman from Michigan.

To be clear, these bills have the potential to create jobs, but there will also be many investors that lose money as a result of these bills. Again, it's their money to lose. These bills are consistent with that. And obviously these bills, in addition to causing job growth in companies, will also cause misery to some people. But it is their money to lose, and it's probably better that they bet it on some startup than they invest it in gold or they take it to Vegas. So at least there's an opportunity to create jobs. Even if the company doesn't go anywhere, that's a job for a year. And it limits the loss to 10 percent of their income. So if somebody makes $80,000, they can only lose $8,000 a year under this. Hopefully that won't put them out of house and home. And it gives them the same opportunities to invest in startup companies that millionaires have had for years. It's a very egalitarian measure.

It is my honor to yield 3 minutes to the ranking member of the Ways and Means Committee, my good friend, the gentleman from Michigan (Mr. Levin).

(Mr. LEVIN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, again I express appreciation to both majority and minority leaders for expedited action in trying to get to the President's desk these two important measures.

With that, I would like to yield 2 minutes to the gentleman from Pennsylvania (Mr. Critz).

Mr. Speaker, it is my honor to yield 1 minute to the gentlewoman from Ohio (Ms. Sutton).

Mr. Speaker, I yield 1 minute to the gentleman from New Jersey (Mr. Pascrell).

Mr. Speaker, I yield 1 minute to the gentleman from Ohio (Mr. Ryan).

I thank the gentleman. I believe we are on our last speaker.

I would like to yield 1\1/2\ minutes to the gentleman from Maine (Mr. Michaud).

I will inform the gentleman from Texas that one additional speaker has emerged.

I would be honored to yield 1\1/2\ minutes to the gentleman from Washington (Mr. McDermott).

(Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself such time as I may consume.

The bills before us do something for people of all economic classes in the country--they help working families and the poor; they're good for the middle class; and they're good for millionaires. Let me talk about each group and how it helps.

First, millionaires. It gives millionaires more ways to lose their money. Isn't that exciting?

Previously, again, you not only had to be a millionaire, but you had to be a millionaire with the right connections to be networked to a company that's doing a private equity offering. Otherwise, you weren't allowed to find out about it. This will put all millionaires on an equal footing and will give them the opportunity to examine prospectuses on company sites, have them presented to them under the Access to Capital for Job Creators Act, allow them to squander their money on startups, and to, of course, occasionally reap a reward as they hope to do.

Again, this money that's invested will then create jobs. It will help fund the companies and get them off the ground, giving millionaires many more ways to lose their money through investing in risky startup companies.

What does this do for the middle class? Again, it gives the middle class more ways to risk their money and lose their money as well.

Previously, with a middle class family, the average net worth in this country was about $100,000. They were unable to invest in a startup company. They were not accredited investors. They couldn't lose their money that way. They could go to Las Vegas. They could bet it all on number six. They could lose it all there. They could respond to a full- page ad in a paper and buy gold with all their money. That doesn't create any jobs. But no. They couldn't invest it in their neighbor's startup company. This bill remedies that.

It limits their losses, and allows them to invest 10 percent of their income. If they make $80,000 a year, they can invest $8,000 in a risky startup company. Again, nine out of 10 of these are going to go out of business--they'll lose their money--and maybe one out of 10 will make a lot of money; but this allows middle class families the same opportunities that millionaires have always had to lose their money.

What does it do for working families and the American poor? Access to capital.

What if you have an idea? What if you don't have any net worth, but you have a great idea? You need to raise $100,000, $300,000--the proverbial ``better mousetrap.'' Do you know what? You might not know any fancy venture capitalists, and you might not know a lot of people with money. But do you know what this bill allows you to do? It allows you to put that idea up on the Internet and raise money from small investors across the country--legally. There is no legal way to do that until this bill passes. There is no legal way for somebody without access to capital to raise capital in small tranches without incurring SEC oversight and having to hire lots of lawyers.

This effectively allows working American families to raise money for their ideas by crowdsourcing, or raising money over the Internet, from that newly enfranchised middle class that now has the ability to lose their money

in new ways and from the millionaires, who have always been able to lose their money but only if they knew the right people. So these bills allow new avenues for growth capital for startup companies.

Again, to be clear, most of these companies aren't going to work out. That's the nature of capitalism. Most of them are going to go out of business. They might employ three people for a year, and 2 years down the road, they'll be a footnote. But do you know what? Some of them are going to work out. We could see the next Google, the next Yahoo!, the next Microsoft. Many of these companies started as garage companies, funded by proverbial friends and family. The next great American success story can be funded by crowdsourcing. It can have thousands of investors from middle class families across the country, earning millions of dollars on their investments and limiting their losses to 10 percent of their incomes.

I am proud to support these two bills and am appreciative of the majority and minority staffs for expediting their passage and improving them in committee and through the amendment process. It's time we get back to work for the American people.

I again call on the Speaker and my Republican colleagues to put aside partisanship and give us more bills like these and more bills that can contribute to robust job growth and to do something for all American families regardless of their economic worth.

Mr. Speaker, I oppose the previous question; and I ask unanimous consent to insert the text of the aforementioned amendment to the rule in the Record, along with extraneous material, immediately prior to the vote on the previous question.

Again, I would like to point out that I will be opposing the previous question on the underlying issue. I don't necessarily agree with what some of my colleagues have said with regard to China, and I voted consistently with that in the last Congress and have in this Congress; but I do believe that the House should be able to work its will on this important matter to the American people and with regard to international relations.

There are bigger fish to fry than giving millionaires more ways to lose their money, than giving middle class families more ways to lose money and giving working families access to more capital; but these are important steps forward for capitalism, for capital growth and capital formation, and to create the next generation of great American companies that will lift us from this recession and carry forward the torch of American progress across the world.

I am honored to support both underlying bills and hope that they move to immediate passage in the Senate as well.

I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 453 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to my friend, the gentleman from Colorado (Mr. Polis), a brand-new father who today presents himself on the floor as we work together, pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

General Leave

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks.

House Resolution 453 provides for a structured rule for the consideration of H.R. 2930 and H.R. 2940. This rule allows for all seven amendments submitted to the Rules Committee by Democrats and Republicans to be made in order.

Mr. Speaker, I rise today in support of this rule and the underlying bills. H.R. 2930, the Entrepreneur Access to Capital Act, was introduced on September 14, 2011, by my friend, the gentleman from North Carolina, Mr. Pat McHenry, and was reported by the Committee on Financial Services by a voice vote last week. The second bill, H.R. 2940, the Access to Capital for Job Creators Act, was introduced by the Republican majority whip, the gentleman from California (Mr. McCarthy), and also passed the Committee on Financial Services by a voice vote last week.

Both pieces of legislation have been through regular order. Members from both sides of the aisle have had opportunities to submit perfecting ideas, and those amendments have been carefully considered. Every amendment that was submitted to the Rules Committee was made in order and will be given full and fair consideration today. The chairman of the Rules Committee, the gentleman from California (Mr. Dreier), has once again allowed the House to work its will through an inclusive legislative process.

On December 10, 2009, I stood on the floor, and I argued then against the rule for consideration of the bill known as the Dodd-Frank financial reform bill. It should be noted that I authored two proposals amongst many Republican and Democratic amendments that were all shut out that day. Then-Speaker Nancy Pelosi chose to advance the Dodd-Frank bill without any open process consideration. The result of that legislation has caused great concern in financial markets not just here in the United States, but it has caused financial concern around the world.

Today the Republican House is changing that course in consideration of bills from the Financial Services Committee. Today we are looking at a targeted removal of outdated regulations simply to encourage market access for millions of small businesses and to encourage not only investment but also jobs in America.

For those who are listening to this, you could consider this a jobs creation bill. So I would advance this cause down the street to the White House to encourage the President to know that this is yet another in a line of job-creating, job-saving, jobs-in-America bills that the U.S. House of Representatives is once again considering, and today, on a bipartisan basis, with every single amendment that was submitted to the Rules Committee through an open process on the floor of the House of Representatives, ready for us to move this bill and vote on that today.

Mr. Speaker, our economy has a revenue problem. The administration continues to promote policies that slow economic growth. Republicans believe we must create an environment that encourages investment in small business, really the engine of our national job creators. This underlying bill will do just that. H.R. 2930 would remove restrictions on crowdfunding, allowing companies to pool small investors so that small businesses and entrepreneurs can raise capital equity. Outdated SEC regulations do not allow business owners in search of investments to solicit or to advertise. This legislation is needed and it's being presented on a bipartisan agreement basis.

Yesterday, I met with community bankers from Texas--Scott Heitkamp, the president of Value Bank; John Jay, the president of Roscoe State Bank; and Milton McGee, with the Independent Bankers of Texas, among others, who described to me their inability to raise capital investment, not due to a lack of willing investors, but as a result of burdensome regulations which inhibit or do not allow this. They informed me that the SEC limit on individual investors restricts their ability to raise funds through community participation and local business creation. I was proud to tell them and I will tell them again today, I heard your story and we are here on the floor doing something about that that will be of immediate benefit and health to jobs and job creation in America today on the floor of the House of Representatives in a bipartisan agreement fashion.

H.R. 2940 allows for general solicitation and advertising which would attract private investment. Small, privately held companies will no longer be forced to have an existing relationship with potential investors. However, the legislation requires the SEC to ensure that investors are accredited.

As Congressman Jared Polis from Colorado, the lead today from the Rules Committee on behalf of the minority, indicated at the Rules Committee meeting yesterday that ``crowdsourcing'' investment through new advertising mediums, such as social media, would allow for access to new pools of available capital. These are exactly the kinds of ideas that are being brought today to the floor for the creation of investment dollars to help jobs in America and to make sure that we are prepared for our future.

Our Nation is in crisis. We cannot wait. And with an unemployment population of over 14 million people, we cannot continue the failed policies of government spending which have brought us to this point. Investment capital for small business continues to sit on the sidelines because of the uncertainty created by burdensome regulations and outdated rules. The underlying bills will foster job creation by simply allowing the private sector to participate in this endeavor.

The future success of our economy rests in the hands of private small business, not government. Unleashing their potential is the sole focus of this Republican majority in the U.S. House of Representatives. The result is an economic environment that promotes growth and generates revenue as well as the creation of jobs in America.

I urge my colleagues to vote for this fair rule that allows consideration of all requested amendments and to vote for the underlying bills.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 10 minutes to the gentleman from California (Mr. Dreier), chairman of the Rules Committee.

(Mr. DREIER asked and was given permission to revise and extend his remarks.)

Mr. Speaker, thank you very much.

At this time, I would like to extend to the gentleman from California 5 minutes.

Mr. Speaker, I yield 4 minutes to the gentlewoman from Illinois (Mrs. Biggert), chairman of the Insurance, Housing and Community Opportunity Subcommittee.

Mr. Speaker, I yield myself such time as I may consume.

We're here talking about capital formation. We're here talking about entrepreneurial spirit, catching up with ideas to go to make job creation, and then for the jobs to be here in America.

That's what this bill is about today. It is about a bipartisan attempt, Republicans and Democrats working together, through regular order, to the Rules Committee, all seven amendments--Republicans and Democrats--that were submitted coming to the floor today, and us working these few hours, a chance for, I think, not only Members of Congress to effectively present their ideas and do the will of the people, but for us, perhaps more importantly, to work together to find common ground on important issues that will aid and help Americans have sounder financial footing. That's what this bill's about today.

I know there are other bills that people want to debate and want to bring to the floor. I felt that way for 4 years when the other side was, in fact, in control. But job creation through capital investment, through the formation, is what this bill's about.

I'm very proud of what we're doing here on the floor today.

I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Regarding what is on the floor today, it is important that we recognize it is a continuing trend for job growth, job creation on not just a net basis, but on a positive basis without the loss of jobs. The Federal Government creates an average of 4,000 final rules and regulations each year, and that is what inhibits job growth. That's what the prior two Congresses have been about--massive rules and regulations, not the empowerment of the free enterprise system.

We need to remember that what we are here for is to work in the best interest of making a future brighter and better for those who are with us today and those who are behind us for their future. And that's why job creation, investment, and capital formation is important.

I reserve the balance of my time

I continue to reserve the balance of my time.

Mr. Speaker, I would like to advise the gentleman from Colorado that I have no additional speakers other than myself, and I reserve the balance of my time to close.

Mr. Speaker, I yield myself such time as I may consume.

Congress has an opportunity today to unleash investors in American business for the benefit of capital formation in America for American companies and jobs.

Additionally, we have an opportunity because we have worked so well together. There is joint agreement to ensure the safety and soundness of financial institutions in the United States with this legislation. Reforms to company-investor relations are long overdue, long overdue that would reform the industry to make them better, stronger--to add jobs, may I add.

Congress should be doing everything we can do to help economic growth and development, to jump-start the free enterprise system and put Americans back to work. That happens through capital formation. Growing our economy and slowing Federal spending will be the best way to get this government back and the economy back on track and getting out of the rising debt and deficit that is facing this great Nation.

The underlying bills provide necessary steps today for doing just that.

So I applaud my colleagues, Mr. McHenry and Mr. McCarthy, for introducing the bills that we're discussing here today. In particular, I'm proud of my committee, the committee I've served on for 14 years, the Rules Committee, under the leadership of the gentleman from California, Dave Dreier, for making sure that this bill--the power for investment, capital formation, jobs--also included ideas, ideas from both sides of the aisle, which equally, if submitted, were given not only consideration but the green light to come to the floor today to make sure that what we did, we did together; to make sure that we speak with a voice that's very powerful about the need for us to ensure that America's greatest days lie in our future through the free enterprise system.

I'm proud of what we have done here today.

I reserve the balance of my time.

Mr. Speaker, it's a rare day when members of the Rules Committee from opposing parties have a chance to do so well with each other on the floor.

Once again, I'd like to congratulate the gentleman from Colorado on being a new father. We celebrated this with the pictures at the Rules Committee just yesterday.

I encourage a ``yes'' vote on the rule.

I yield back the balance of my time, and I move the previous question on the resolution.

I want to begin by saying to the very distinguished vice chairman of the Rules Committee, Mr. Sessions, the gentleman from Dallas, that I appreciate his energy and effort on the Rules Committee. And I want to say that I think that he's very clearly made the case that we have, through this entire Congress, been focusing on the priority that the American people want us to focus on, and that is job creation and economic growth.

Now, it's a very specious claim that has been made by many that somehow this institution has failed to address the issue of job creation and economic growth. And I appreciate the good words and thoughtful comments on capital formation made by the minority manager of this rule on the floor. My friend from Colorado (Mr. Polis), who has taken on, and throughout his life has been focused on, the idea of the entrepreneur, taking the entrepreneurial spirit and generating jobs, he understands what it takes. Capital formation is a critical part of that.

The two measures that are going to be made in order under this rule go a long way in this 21st century recognizing that for us to grow the economy and create jobs, we're going to need to ensure that decreasing the regulatory burden that undermines the ability for small businesses to have access to capital as they pursue innovative ideas is something that needs to be addressed. And that's exactly what we're going to be doing.

And I say it's a specious claim, Mr. Speaker, that many people have made that this institution is not taking action. For that reason, I hope very much that with this bipartisan effort that we have here, a bipartisan effort, that we will bring to an end those kinds of statements, mischaracterizing, grossly mischaracterizing the work of the United States House of Representatives.

I believe that it's been inappropriate to make those claims for a long period of time. Why? Because we have made many, many, many efforts over the past several months to put into place policies that can help create jobs. Have they all worked at this point? No. They're all obviously prospective. But if you look at what we've done in the area of encouraging domestic energy production, that's a critically important part of getting the economy going, increasing job opportunities and reducing energy costs for our fellow Americans.

If we look at the notion of trying to ensure that we open up new markets around the world for union and nonunion workers here in the United States of America, we have just, in a bipartisan way, with the support of both Democrats and Republicans, passed measures that will open up markets for us in Colombia, in Panama and in South Korea. I was privileged yesterday to be with the Ambassador from Korea as we marked a celebration, a bipartisan celebration of that effort.

Look at the measure that was passed, again, with huge bipartisan support, dealing with the 3 percent withholding for those contracting with Federal, State, and local governments that we are bringing that to an end. That's something that the President of the United States has asked of us. We passed it out of the House of Representatives. And I have to admit, it's a measure that should easily pass the United States Senate, and I hope that Majority Leader Reid does bring that measure up in the Senate. Unfortunately, it hasn't happened so far, but I do think it's something that should pass the Democratic-controlled Senate. It has passed the Republican-controlled House of Representatives with strong bipartisan support.

Just this week we are continuing down that path towards putting into place a structure that will reduce the tax and regulatory burden to create jobs for our fellow Americans.

I think it's also important to note, Mr. Speaker, that one of the things that we need to do since we have seen an 82 percent increase in non-defense discretionary spending for the 4 years leading up to this year, it's important that we decrease the size, scope and reach of government so that those small businessmen and -women who are seeking to create job opportunities are in a climate where that can take place. That's why I say that virtually everything that we have been doing to reverse that course that we were on, with that 82 percent increase in non-defense discretionary spending, everything that we've been trying to do to pare this down, the work that's going on right now of our 12 colleagues who are part of the joint select committee charged with reducing by $1.2 trillion over the next decade the level of spending and we hope--we hope--beyond that $1.2 trillion level.

All of these things, Mr. Speaker, are geared to getting our economy growing so that our fellow Americans will have more job opportunities. And so the message is a clear one. The process that we have is a very good one. I'm happy to say that if you look at the number of amendments that have been considered on the House floor in the first 9 months of this year, we've had 842 amendments considered on the House floor. I'm very pleased that we've been able to have a greater degree of openness and transparency. We've made every single amendment in order. There were many more Democratic amendments made in order than Republican amendments made in order on the two bills that are coming before us.

We have seen, as I said, 842 amendments considered here on the floor in the first 9 months of this year. But, Mr. Speaker, in the entire 111th Congress, that's 2 years, two sessions of Congress, there were a grand total of 787 amendments considered on the House floor. And so I'm very pleased that we have, in a bipartisan way, been able to open up the floor so that Members, regardless of their political party, Democrats and Republicans alike, have been able to have their ideas considered. And that is exactly what is going to happen under this special rule which we are considering at this moment.

So, Mr. Speaker, let me say again, job creation and economic growth is what this is about. The American people are hurting. The people of my State

have an unemployment rate that is well in the double-digits. Part of the area I represent has a 15 percent-plus unemployment rate. We need to do everything that we can to get our economy moving.

I would say to anyone out there, anyone out there who would try to make the claim that the United States Congress, specifically the House of Representatives, is not taking action to create jobs and get our economy growing is just plain wrong and that kind of mischaracterization has got to come to an end.

I look forward, again, to bipartisan support for both this rule, which allows, again, every Democratic and Republican amendment that was submitted to us to be considered on the floor and also the very strong bipartisan support that I know that both of these measures will have as we proceed with debate.

Mr. Speaker, will the gentleman yield?

I would say to my friend who just yielded an additional 30 seconds, will the gentleman yield to me?

I would like to engage in a discussion, if I might, with my friend from Worcester who has just, in response to my quest to recognize that the measure that is before us today that is a job- creating measure will, in fact, Mr. Speaker, enjoy strong bipartisan support--and everyone acknowledges. I mean, all one needs to listen to is the minority floor manager of this measure that this issue is a jobs-creation item.

I yield to my friend from Worcester.

Reclaiming my time, Mr. Speaker, I thank my friend for his very thoughtful contribution. Let me respond to his points.

Mr. Speaker, this is the President's jobs bill that we are considering today right here on the House floor. The President stood just over the gentleman's shoulder and addressed a joint session of Congress on the issue of job creation and economic growth and how he wanted his jobs bill brought forward. Do you know what he said to us? He said we needed to pass the Colombia, Panama, and Korean free trade agreements. And guess what? With bipartisan votes, we have embraced and supported that provision of the President's jobs bill.

I yield to my friend.

Mr. Speaker, now I will reclaim my time to say that, since my friend has brought up the issue of Colombia, and we've disagreed on this for a long period of time, there are 40 million consumers in Colombia. And right now there are people who are union workers at Caterpillar and at John Deere and at Whirlpool and other manufacturing companies in the United States who are going to have access to those consumers because of the agreement that we have put into place.

I would like to reclaim my time, if I might, to say to my friend that if one looks at the jobs that have been created in the manufacturing sector of our economy--and I'm very sympathetic to those workers that my friend has just spoken about in his district; but, Mr. Speaker, I think it's important for us to note that the United States of America today is still the number one manufacturing country on the face of the Earth.

It is true that there are other countries that are growing in the manufacturing sector, and it is true that we have lost manufacturing jobs in the United States of America, in large part due to the tax and regulatory burden, things like repatriation and other items which play a role in discouraging economic investment here in the United States, but having said that, we can't forget that the United States still is the number one manufacturer.

So with 96 percent of the world's consumers outside of our border, the idea of saying that we're ignoring the President's request--the President stood here. And I will admit, it's with our encouragement, I encouraged him just days after he was elected, Mr. Speaker, with our encouragement he has supported the idea of opening up these markets in Colombia and Panama and South Korea. And I will say, Mr. Speaker, that as we seek to do that, we have embraced these measures and we're doing them in a bipartisan way.

And so as my friend got up and said we're talking about ``In God We Trust'' rather than talking about jobs, we do have the ability, believe it or not, to walk and chew gum at the same time. But we all know that the top priority is making sure that we get our economy back on track. And, Mr. Speaker, that is exactly what we're doing. That's exactly what we have done for

the past several months. Because in the last Congress, with the passage of things like the stimulus bill that they told us that if we passed the stimulus bill the unemployment rate would not exceed 8 percent, we all know where it is. As I said, in part of my district it's in excess of 15 percent. That has been a failed policy.

We have been putting into place policies, again, working in a bipartisan way, unlike the way the stimulus bill was put into place at the beginning of last year. We have now, I believe, established policies that can play a big role to ensuring that those workers whose hands my friend shook in his district are able to have the kind of potential job opportunity that is necessary.

I'm happy, of course, to further yield to my friend, even though he would never yield to me.

If I could reclaim my time, Mr. Speaker, to say that this is not the President's jobs bill--I will admit, it was at our encouragement--but these are things that he said when he addressed us right here in a joint session of Congress. So it is for that reason that we have been able to come together in a bipartisan way to address these very important issues.

And so I'm happy, Mr. Speaker, to recognize and support bipartisanship when it comes to getting America working again.

Mr. Chairman, I yield myself such time as I may consume.

I thank my friend from North Carolina for bringing this matter to the floor, for being the sponsor of this bill and for working with us to make this bill better.

Now, as Mr. McHenry said, this is a bill that really allows money to be raised, investments to be made by people without a lot of money. They are investors who are going to make smaller investments but in a large volume. As my friend said, this isn't 1933, and this isn't 1934 when those acts were passed. But still, what we've got to remember is sales can be made on the Internet now, or this bill will ask that sales be made of securities on the Internet. Originally, it could be on the phone, it could have been by mail, and it could have been by word of mouth. But what we've got to do with this ability to raise money across the Internet is ensure that the proper protections are put into place so that those who might deceive or defraud or in some other way mislead investors who are making these investments can be policed and the laws can be enforced if, in fact, there is some type of fraudulent act.

Now H.R. 2930 enables small companies and individuals to make use of Internet-based social networks to raise up to $1 million from friends, family, and other interested investors. While the bill caps both the total level of securities and the amount investors can invest, Democrats expressed strong concerns about the potential harm this new market could pose to investors. Originally, the bill provided few investor protections and no SEC or State regulatory oversight.

During the committee markup of H.R. 2930, Democrats added provisions requiring crowdfunding. And ``crowdfunding'' is a term that really isn't seen in our law to date. And what it is is the sale of securities, the solicitation of investments across the Internet in small amounts. So Democrats asked that there be notice given to State regulators so that they could police the activities against wrongful conduct, deception, fraud, embezzlement, or other kinds of misdeeds. Democrats successfully added a provision to disqualify bad actors, individuals that have been convicted of either State or Federal securities law violations or other financial law violations. Democrats also requested, and the gentleman from North Carolina and the Republicans agreed, to create a regulatory framework for the crowdfunding Web sites that would provide additional disclosures, safeguards, and protections for investors who wanted to buy into one of these investments.

We recently had a financial crisis that we're still continuing to dig our way out of. There were Ponzi schemes. Everybody is aware of the Madoff Ponzi scheme and others. We need to have protections for investors as businesses seek to form and develop capital. We thank the gentleman from North Carolina in working with us to place some of those investor protections into this bill.

We know there will be a number of amendments that are proposed that will continue to strengthen those investor protections. We thank the gentleman from North Carolina for bringing this bill forward.

I reserve the balance of my time.

Madam Chair, I yield myself such time as I may consume.

For the record, H.R. 2930 creates a new exemption from registration under the Securities Act of 1933 for what we call ``crowdfunding'' securities. I think the record should have a definition. Crowdfunding refers to a technique for raising money over the Internet in relatively small amounts from a large number of people. And that's the exemption that's being sought pursuant to this bill, a different way to raise money. Would the gentleman agree?

I yield to my friend from North Carolina.

I thank my friend.

One other new term in the bill that we ought to have some discussion about is ``intermediary.'' Intermediary in the bill is more or less a custodian of funds. Am I correct or not?

I yield to my friend.

To the degree that the intermediary exists in this, they will be subject to the enforcement principles as we go through the amendments.

With that, I yield 3 minutes to my other friend from North Carolina (Mr. Miller).

The answer is yes, if my friend from New Jersey is yielding to me for a second.

I will reserve my comments for my time.

I would like to ask the Chair what time each side has remaining.

I yield myself such time as I may consume.

The gentleman from New Jersey just brought something up. My friend from North Carolina is correct, and I misstated it. The intermediary is more or less the platform, the conduit. But one of its responsibilities, and this is found in 4A, section 10, is to outsource the cash management responsibilities to qualified third-party custodians such as broker-dealers or insured depository institutions, which was a concern that we were all--we all had during the committee hearing is, ``Okay. Who's holding the money? Can they be trusted? Will they release the money at the right time?'' which was what the gentleman from New Jersey was just talking about.

So I thank my friend from North Carolina for reminding me of that section. Again, it's another piece of investor protection and a good idea that helps with capital formation. Again, we're trying to blend these two concepts.

I would like to yield 3 minutes to the gentleman from Texas (Mr. Al Green).

I yield 3 minutes to the Congresswoman from New York (Mrs. Maloney).

I yield 1 additional minute to the gentlelady.

Madam Chair, I yield myself such time as I may consume.

I would like to thank my friend from North Carolina for bringing this bill forward.

It is a good idea. It allows for investments to be made in smaller amounts by more people using mass kinds of solicitations through the Internet, through some other vehicle that we may not know of at this point. And that is a good step. And as we've gone through the process, we've built it into a better bill by adding in investor protections because this is something where people could be misled. There could be misrepresentations, and there has to be some penalty for that. As the amendment process goes forward today, we will build those amendments into this.

Now, having said all of that, having listened to the description of the bill

that preceded us about making it easier to sell securities, sell investments, sell deals to accredited investors, that's a nice step, too. Again, we need to have investor protection restrictions in there just to make sure people don't get defrauded. We just suffered through that in 2008 with the likes of Madoff and Stanford and a number of other fraudsters, con artists. We want to minimize that if we can as we try to make capital available to businesses to grow.

Now, let's not make any mistake here. These are nice steps, but they're not going to put a lot of people back to work.

My friend, Mr. McHenry, described the President speaking in this very Chamber about this bill, but what he was really talking about was the American Jobs Act. And the American Jobs Act is what this body needs to pass as well. We need to keep teachers on the job. We need to keep firefighters on the job. We need to put construction workers back on the job.

There were complaints about the United States Senate slowing things down, blocking things. Well, today, the United States Senate, the Republicans in the United States Senate, blocked rebuilding the infrastructure of this country--the roads, the bridges, the energy system, the sewer systems, the basic things that this country needs which would put thousands and thousands of construction workers back on the job.

So it would be jobs today, investments for a long time for this country.

We need to keep those teachers on the job. We need to put our veterans, as they come home from Iraq and from Afghanistan, we need to make sure they have a job. That's part of the Jobs Act. That's what needs to be done today. This is a good step in capital formation. But it isn't putting people to work right away. That's what this Nation needs.

This Jobs Act that the President proposed when he talked about crowdfunding, as we have been in this bill, what he was here for was to get the Jobs Act, to get these tax credits passed that would help our veterans get to work, to get our infrastructure rebuilt, to rebuild our schools and to keep teachers on the job. That's what this Nation needs. That's what this Nation wants. That's what our people expect.

So I thank my friend from North Carolina for bringing this bill forward. It's a good idea. He's been willing to work with us to make it a better idea, and we thank him. We also ask him and his colleagues on the Republican side of the aisle to pass this Jobs Act today. America needs it today.

With that, I yield back the balance of my time.

I claim time in opposition, although I am not opposed to the amendment.

I want my friend from New York to catch her breath. That's why I'm going to claim time in opposition. But I also do have a question.

In 2008 when the stock market crashed, when we saw home prices drop like a rock, when people lost their jobs, we experienced over a several month period deflation--not inflation; deflation. Under the amendments, both the preceding one as well as the amendment by my friend from Arizona, when I look at it, I think, if the price goes down, this could also shrink.

I yield to my friend North Carolina.

Reclaiming my time, I thank my friend from North Carolina. We have no opposition to this amendment. We urge its adoption.

I yield back the balance of my time.

I thank the gentlelady.

I would just say to my friend from North Carolina, I appreciate the fact that this is new, but I think when we are dealing with these small investments and lots of people, just as with a charity, you'd like to know that most of it's going to the charity and not to the solicitation effort. That is why I would say this is important, so you know that it's getting to your investment and not to the sale effort. So I would support her amendment.

I have an amendment at the desk.

Madam Chair, I yield myself such time as I may consume.

This is the amendment we've been visiting about over the course of this bill. And what it does, the structure of the bill is such that it solicits, an issuer can solicit small investments via the Internet or some other mass type of media, and that solicitation then, a notification is made to the Securities and Exchange Commission. Once that notification is made, then notice of the solicitation on the Internet, this crowdfunding so to speak, is then given to each State so that the State regulators, the State enforcement authorities, are given notice of this solicitation, of this crowdfunding request for sale of securities.

The amendment that Mr. McHenry and I have prepared makes sure that when the States get this notice, they can use their police powers, their enforcement authority, to make sure that the issuer, or anyone involved with the solicitation, anyone involved with this crowdfunding which is being used across the Internet, can then, the laws can be enforced to stop any kinds of fraud, defalcation of funds, embezzlement, misrepresentation, any kinds of bad acts related to the solicitation under the crowdfunding.

This applies to both the issuer and the intermediaries. Anybody holding the funds will still be subject to the police powers of the State. So we maintain the States' rights for police power.