Reopening American Capital Markets to Emerging Growth Companies Act of 2011

Mr. Chairman, I yield myself 3 minutes.

Mr. Chairman, it is clear that jobs and the economy are issue number one for our constituents. Many of them don't see the recovery. Even though professional economists may see it, it is clearly the slowest and weakest recovery in the postwar era. We still have now 3 full years of 8-plus percent unemployment, half of our population now being classified as either low income or in poverty. Again, our constituents are demanding jobs.

Public policy makes a difference. Republicans have many disagreements with our President over public policy. We disagree with the $11 trillion of additional debt that he has put into his budget. We disagree with the $1.9 trillion in new job-killing tax increases he wants to impose, much of it on small businesses. We disagree--we believe the Keystone pipeline, with its 20,000 shovel-ready jobs, should be approved. We believe these policies harm job growth and the economy.

But, Mr. Chairman, we have a rare occasion today, and that is there is something that we do agree on. We have found an opportunity to work on a bipartisan basis, on common ground, with the President of the United States. The President said:

It is time to cut away the redtape that prevents too many rapidly growing start-up companies from raising capital and going public.

House Republicans agree, and thus we are happy to bring to the floor, on a bipartisan basis, the JOBS Act.

The President has issued his Statement of Administration Policy endorsing this legislation. Again, a rare occurrence, and I believe it's something that our constituents would like to see us do. They want to see us stand on principle, but they also want to see us compromise on policies to advance those principles. And so this is a bill that will give these emerging growth companies--again, perhaps the future Googles, perhaps the future Apples, the future Home Depots and the future Starbucks--that opportunity to begin to access equity capital where the hurdles, the redtape, and the cost burdens have been too high.

We know that, of many of the root causes of the economic debacle we had, clearly this was an economy that was overleveraged. So we in the Congress need to do whatever we can to enable the start-up companies, the job engines of America, to be able to access the equity markets, not just the debt markets. So this is a bill most of which has been previously approved by large majorities either in the Financial Services Committee or on the floor.

I want to thank the gentleman from Tennessee (Mr. Fincher) for his leadership, Chairman Bachus, Leader Cantor, and the ranking member, Mr. Frank from Massachusetts. The American people want to see jobs, hope, and opportunity. So let's pass the JOBS Act, and let's pass it now.

I reserve the balance of my time.

Mr. Chairman, I now would like to yield 2 minutes to the gentleman from Arizona (Mr. Quayle).

Madam Chairman, I yield myself 10 seconds to say that the American people care about jobs and economic growth, not a John Grisham novel of intrigue. Either the gentleman, the ranking member, likes the policy--in which case, he can vote for it. If he doesn't like the policy, he can vote against it. The President of the United States apparently supports it.

At this time, I yield 3 minutes to the gentleman from Tennessee (Mr. Fincher), the author of the JOBS Act.

I yield myself 10 seconds just to say that President Reagan once said there's no limit to what the American people can achieve if they don't mind who gets the credit. We seem to hear the ranking member say, if I and my friends can't take credit, we're going to pick up our toys and go home. All of us can take credit if we will support the JOBS Act.

I yield 2 minutes to the gentlewoman from Illinois (Mrs. Biggert), the chair of the Housing and Insurance Subcommittee.

Madam Chair, I ask that the gentleman's words be taken down.

I yield myself 10 seconds just to say the gentlelady alluded to the gentleman from Massachusetts for bringing something to our attention. What he brought to our attention is that he violated House rules and is prohibited from speaking the rest of the day when the rest of the Chamber wishes to promote jobs for the American people.

At this time, I am happy to yield 2 minutes to the gentleman from Illinois (Mr. Dold).

I yield myself 10 seconds simply to respond to my friend that we have tried the President's jobs bill, the stimulus, the health care package, Dodd-Frank; and yet we still have the highest duration of 8 percent-plus unemployment since the Great Depression. Here's at least a bipartisan bill we can work on, and I look forward to that today.

At this point, I will yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), the chairman of the Capital Markets Subcommittee.

Madam Chair, I now yield 2 minutes to the gentleman from Virginia (Mr. Hurt).

Madam Chairman, at this time, I am happy to yield 2 minutes to the vice chairman of the Capital Markets Subcommittee, one of the prime authors of this bill, the gentleman from Arizona (Mr. Schweikert).

Madam Chair, I yield the gentleman an additional 1 minute.

I yield myself as much time as I may consume.

Madam Chair, again, jobs and growing the economy is what our constituents care about. Again, we are unfortunately and regrettably in the midst of the slowest and weakest recovery in the postwar era. And, in fact, many of my constituents, they don't feel the recovery. They don't see it. They still know many of their friends, neighbors, and family members remain unemployed. That's why the number one priority of House Republicans has been to grow this economy and create more jobs. That is why House Republicans have a plan for America's job creators.

Now, Madam Chair, it's very difficult, very difficult, to find common ground in this institution, as we all know. Regrettably, the vast majority of these bills are stacked up like cordwood in the United States Senate. They won't take them up. We've tried many of the President's ideas. For 2 years we tried every single one of his ideas. We tried the stimulus program, which helped stimulate the national debt to the level it is today. We tried the President's health care plan that we were told would help grow jobs and the economy. Dodd-Frank, our financial institutions--the big get bigger, the small get smaller, and the taxpayer gets poorer.

We disagreed with those policies, and so we have tried to find common ground. We heard the distinguished minority whip lament that the bill didn't do more. This is the common ground we can find with our friends on the other side of the aisle. It's important. It's not as important as repealing the President's health care program, which is absolutely strangling our small businesses. It's not as important as turning back so much of the red tape that impacts every single small business in America by enacting the REINS Act to ensure that Congress, not the unelected bureaucracy, controls whether or not we impose job-killing regulations on our small business enterprises. But it's still an important bill nonetheless. It's a bill that will allow these emerging growth companies, again, perhaps the Googles of tomorrow and the Apples of tomorrow, to be able to access vital equity capital. And so it's an important piece of legislation. I wish it did more.

I wish my friends from the other side of the aisle would acknowledge that we have tried many of their partisan ideas, and they haven't worked. But here's at least a bipartisan idea where we have worked with the President. We have his support right here--right here--Madam Chair, where the President of the United States supports this legislation. So I'm happy that at least one portion of the House Republican plan for America's job creators stands a very good chance of being turned into law and that the American people will see that we continue to work to find that common ground.

So I'm happy, again, to be able to encourage my colleagues to support this today. I look forward to the day that the President can sign this into law.

At this time, Madam Chair, I would like to yield 2 minutes to the gentleman from North Carolina (Mr. McHenry).

Mr. Chairman, might I inquire how much time I have remaining.

In that case, Mr. Chairman, I'm happy to yield exactly that 1 minute to the prime author of the JOBS Act, the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I ask unanimous consent to claim the time in opposition to the amendment; although I'm not opposed to the amendment.

I want to commend, again, the gentleman from Tennessee and the gentleman from Delaware for this amendment that I believe helps improve the underlying amendment with some technical corrections. I would urge all Members to adopt it.

Mr. Chairman, I yield back the balance of my time.

I ask unanimous consent, Mr. Chairman, to claim the time in opposition, although I'm not opposed to the amendment.

Mr. Chairman, I would like to encourage the House to support the amendment from the gentleman from North Carolina. I believe it to be very straightforward, very simple, very common sense to ensure that there is an inflation adjustment that is applied to the underlying bill.

I think that it's helpful. I urge, again, all Members to adopt it.

I reserve the balance of my time.

Mr. Chair, I claim the time in opposition.

I yield myself as much time as I may consume.

Mr. Chairman, again, the people of America care about jobs, they care about economic growth. Although we've had some recent improvement in our monthly unemployment figures, when we add in those who are working part-time who would prefer to be working full-time, and when we add in those who, frankly, have just given up and left the labor force, we know that the true unemployment rate in America is closer to 15.3 percent.

We know that the job engine of America is small business. And every big business had to start out as a small business.

I respect the gentleman's contribution to the bill. And this is about line drawing. I understand that. I respect his opinion. I know the professional background from which he has come. But I feel like his amendment would take this bill in the complete opposite direction of where we need to take this policy for emerging growth companies.

He used the example of Spirit Airlines. I don't have the figure at my fingertips, but I believe their market cap was in excess of what is provided for in the underlying bill, so I believe, again, they would not have qualified for the exemption in the first place.

But we want to provide this on-ramp for emerging growth companies, so, again, we can find tomorrow's Google, we can find tomorrow's Apple. And yes, this is drawing some lines in the sand, but it's clearly not a line that seems to be of great concern to the President.

We all know that the White House issues the Statement of Administration Policy, and when they have concerns about provisions in a piece of legislation, they have never been shy or reticent to share that with us. As I read the Statement of Administration Policy, the President doesn't seem to have a problem with where that line has been drawn.

I would also point out that the companion legislation on the Senate side, S. 1933, introduced by Senator Schumer of New York, Democrat, also has a gross revenue test of $1 billion. And so it appears that the President supports this. Senator Schumer supports this. This is bipartisan support for this $1 billion figure. I think at this particular time in our Nation's history the American people demand we err on the side of creating jobs and economic growth.

So, again, I respect the gentleman for his amendment, but I would urge that it be rejected.

I reserve the balance of my time.

I continue to reserve the balance of my time.

If the time of the gentleman from Connecticut has expired, in that case, Mr. Chairman, I will yield the remainder of the time to the gentleman from Tennessee (Mr. Fincher).

I claim time in opposition.

I'm not, frankly, certain I'm in opposition to the gentlelady's amendment, and I appreciate her bringing it to the floor.

If she would yield for a question, I'm just trying to understand the purpose of her amendment, and what is the deficiency in the underlying bill that she seeks to address with this amendment would be that question.

I would be happy to yield to the gentlelady.

I'm inquiring as to the perceived deficiency in the underlying bill that you seek to address with your amendment, and I would be happy to yield to my friend from Texas.

I have one other question for the gentlelady.

On the 3-year period, I'm just curious as to the thought or purpose behind that particular selection of a 3-year period.

I'd be once again be happy to yield to my friend, the gentlelady from Texas.

I thank the gentlelady for her responses.

I reserve the balance of my time.

Is the gentlelady yielding?

Yes, the gentlelady was very perceptive in her hearing. I was contemplating the answers that the gentlelady gave. At this time, I do not intend to oppose the amendment.

I rise in opposition to the amendment.

Mr. Chairman, again, when we add in those who want full-time work and yet have part-time work, those who have given up and have left the labor force, those who have been unemployed for weeks and months on end, we know that the true unemployment rate in America is, regrettably, close to 15.3 percent.

Jobs is the number one concern, jobs and the economic growth of the American people, and it has to be our number one concern as well. And as ever well-intentioned as the gentleman

from Minnesota's amendment is, it is not one particular regulatory burden; it is the cumulative impact of them all that is inhibiting job growth in America today.

Anytime I talk to small business people in the Fifth District of Texas, which I have the honor and privilege of representing, and whether I'm talking to small business people or, frankly, to Fortune 50 CEOs, this is what they tell me: it is the government red tape. Now, it doesn't mean all regulation is bad, but we have to look at the cumulative impact, particularly in the midst of what our constituents view as a crisis.

John Mackey, cofounder and CEO of Whole Foods Market:

In some cases, regulations have gone too far, and it really

makes it difficult for small businesses. There's too much

bureaucracy and red tape. Taxes on businesses are very high.

So we're not creating the enabling conditions that allow

businesses to get started.

Again, on a bipartisan piece of legislation that is supported by the President of the United States, most of the provisions have been overwhelmingly supported either on the House floor or in the Financial Services Committee. Regrettably, the gentleman from Minnesota's amendment takes a huge step backwards and makes it more difficult for these emerging growth companies to get started.

Now, I understand his particular concern on Say on Pay, but I would note that emerging growth companies still have to disclose their executive compensation arrangements to shareholders in their SEC filings in the same way that the SEC requires for smaller reporting companies. How many votes do you want to compel shareholders to take, particularly on emerging growth companies?

We could require votes on patent filings. We could require votes on the retention of the accounting firm. Maybe we could require it on the acquisition of real estate. Perhaps shareholders should be compelled to vote to ratify any particular union contract. Maybe we should compel a vote on the IT system. We could go to the ridiculous. Maybe we have to have shareholder votes to choose between Coke and Pepsi in the break room, or as to whether or not the coffee is organically grown or not organically grown. What is the company logo?

At some point, it begs the question: Are we here to stand up for shareholder value or for somebody's subjective, personal values, which I respect, but which, again, can harm emerging growth companies as they're trying to grow jobs and the economy.

I reserve the balance of my time.

Mr. Chairman, how much time remains on both sides, please?

Mr. Chairman, I yield the balance of my time to the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, every single regulation imposes some type of financial burden on a company that cannot be used to create a job.

If this was a concern, why don't we find it listed in the Statement of Administration Policy. It's not a concern of the President. Let's work together and pass this bill.

I yield back the balance of my time.

Mr. Chairman, I rise to claim time in opposition to the amendment.

Mr. Chairman, we've had a vigorous debate over some amendments that were accepted, others that we thought were unwise. Frankly, this one, Mr. Chairman, we believe would simply gut the entire bill. You know, Mr. Chairman, you cannot sue your way into job growth. You are not going to be able to sue your way into economic growth.

This amendment takes us a huge, huge step in the opposite direction. The practical impact of the amendment from the gentlelady from California is to essentially squash any of the reporting that would take place on these emerging growth companies for imposing the prospectus level of liability imputed to the communications of the research reports.

I mean, in order to get onto this IPO on-ramp in order for the small growth companies to access our equity market, there has to be the research which is published. Without it, without it, the accredited investors will probably never know of the existence of the companies in the first place. I would point out that many of the concerns should have already been addressed.

Number one, all these emerging growth companies are still liable for the Global Research Analyst Settlement of 2003, which established a comprehensive set of rules that sever the link between investment banking and research activities, section 501 of Sarbanes-Oxley, which requires the research analysts and broker-dealers to disclose all potential conflicts of interest, Regulation AC, stock exchange-listing standards, FINRA codes of conduct, and the list goes on and on and on.

And so again, Mr. Chairman, to add yet another level of liability, one that we are told would simply have an incredibly dampening impact on the existence of these research reports, for all intents and purposes this would simply gut the bill. I suppose it would be an early evening in the House if we accepted it, but everything that Members of both sides of the aisle have worked for would be for naught.

Again, if this was a concern of the administration, why wasn't it listed in their Statement of Administration Policy where they always list their concern?

The President would like to see this passed. We would like to see it passed. There is bipartisan support in the Senate.

I would urge a strong rejection of this amendment, and I reserve the balance of my time.

Mr. Chair, I continue to reserve the balance of my time.

May I inquire of the Chair how much time I have remaining.

In that case, I will yield 1 minute to the gentleman from Arizona (Mr. Schweikert).

I yield the balance of my time to the gentleman from New Jersey (Mr. Garrett), the chairman of the Capital Markets Subcommittee.

I rise to claim time in opposition.

I yield 1\1/2\ minutes to the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, I yield 1 minute to the gentleman from New Jersey, the chairman of the Capital Markets Subcommittee, Mr. Garrett.

I yield the gentleman 30 additional seconds.

Mr. Chairman, how much time do I have remaining?

At this time, I will yield 1\1/2\ minutes to the gentleman from Arizona (Mr. Schweikert).

I yield myself the balance of the time.

I would just say to my friend, the gentlelady from Texas will have to settle for batting .500, as I supported her earlier amendment, but I have to rise in opposition to this one. The very purpose of an accredited investor is to

identify the class of individuals who have greater capacity to handle risk, do not require the enhanced protections. Her amendment would unnecessarily restrict capital formation and consequently job growth. I urge its rejection, and I yield back the balance of my time.

Mr. Chairman, I rise to claim the time in opposition.

Mr. Chairman, I have some good news for the gentleman from Virginia. The very issue that he cares to study has already been studied. In January of 2011, Democrat CFTC Commissioner Michael Dunn said:

To date, CFTC staff has been unable to find any reliable

economic analysis to support either the contention that

excessive speculation is affecting the markets we regulate or

that position limits will prevent excessive speculation. With

such a lack of concrete economic evidence, my fear is that,

at best, position limits are a cure for a disease that does

not exist or at worst a placebo for one that does.

A similar study has been conducted by the Federal Trade Commission.

Mr. Chairman, if we're going to be in the business of conducting studies, perhaps we should study why this administration has had over 3 years to study the Keystone pipeline and still refuses to allow more energy to come to America for Americans. Now, apparently, in a reversal, the President has decided that if the energy can hitchhike from

Canada successfully to the Red River, the northern border of Texas, he'll allow it to get to the refineries on the gulf coast. Otherwise, no energy.

Shouldn't, on the road to American energy independence, we ought to at least go through the road of North American energy independence. These are 20,000 shovel-ready jobs--and I know the administration gets confused at what is a shovel-ready job--but 20,000 shovel ready jobs, and yet it's rejected by this administration. Why? Well, because this is an administration that has essentially declared war on carbon-based industry, thus is trying to increase prices of energy for small businesses, for struggling American families, for hardworking taxpayers. Please don't take my word for it; take the word of the Secretary of Energy, Steven Chu: ``Somehow we have to figure out how to boost the price of gasoline to the levels of Europe.''

Well, again, I've got good news for the administration: they're doing a wonderful job. They have us on the road to increasing energy levels to the price of Europe, and the consequent unemployment that goes with it, and the consequence of having the fewest business start-ups in almost two complete decades. So, the matter that the gentleman cares to study has already been studied. It has already been studied.

I also recall a time when these people were called investors, and we actually welcomed them into the market. I suspect that it is fear of this administration's energy policies that is causing these prices to skyrocket even further. As bad as they are today, people know they're going to be even worse.

So I would urge a rejection of this amendment that takes this bill in the complete opposite direction that it needs to be going.

I reserve the balance of my time.

In that case, I yield 1 minute to the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, I yield myself the balance of my time.

Regrettably, the ranking member is not here because he chose to violate House rules, and his speaking privileges were denied for the rest of the day. But during our committee markup, he said:

First of all, studies are not done for free by the SEC.

Given the current decision to restrict SEC funding, I will be

much more careful about burdening them with studies which

will inevitably come at the expense of more important duties.

One more reason to oppose the gentleman's amendment.

Mr. Chairman, I yield back the balance of my time.

Madam President, I thank Senator Reed and Senator Levin who have helped to lead this effort to make a bill that is coming over from the House much better and much safer for investors, as well as to generate opportunities for more capital to flow to some of the good and solid ideas that are out there in our marketplace to create jobs.

I am pleased to join these two Senators and about a dozen to date and potentially dozens more of our colleagues as people learn the differences--and they are substantial--between the House version of what they call an IPO bill and the Senate version we have worked on very diligently and carefully over the last 48 hours.

The three of us are prepared to vote against the House bill as it stands now. The only hope of getting our support, and many others here, is to try to amend the House bill. That is what our efforts are.

We are not trying to say no to everything that is in the House bill because there are some excellent ideas. Even the President himself and the White House and some of the Democrats voted for that bill because there are some good ideas in the bill, and some ideas that have come from some of the brightest entrepreneurs in our country. We are not trying to say no to those ideas. We are trying to say yes to those ideas, but do it in a way that protects investors--older investors, younger investors, sophisticated investors, and your average sort of nonsophisticated investors because the Internet has opened a whole new opportunity.

When these security laws were written 40 years ago, 50 years ago, 60 years ago and amended, the Internet wasn't what it is today. So that is why this crowdfunding bill--which is, in essence, a way for the Internet to be used to raise capital that is illegal generally today, and there are very specific rules about how people can raise capital for their businesses. Some of those regulations are too onerous; some of them are right on. But this whole idea of, oh, my goodness, now the Internet is here--look what opportunities could be. We can get our ideas to the marketplace without having to go through middlemen. We have a great idea, a wonderful patent. We want to be able to raise money. We are very excited about this. But there is a right way to do this and there is a wrong way to do this.

With the House bill, we know that we are on a little bit of rocky ground when they don't really have a name for it. They have called it everything from an IPO bill to a jobs bill to a capital expansion bill. What I am calling it today--and I will have a poster made over the weekend--is an ill-advised political opportunity bill. That is what IPO stands for, in my mind.

It is ill-advised because the safeguards that are required to make sure these new ideas happen the way they should are absent from their legislation. That is why, when I found out, surprisingly, that the Senate of the United States was getting ready to take that bill and just adopt it whole hog, I said: Absolutely not. We have to slow this down, try to amend it--not kill it but amend it. The reason is because there are very respected groups out there that started sending letter after letter after letter to the Senate urging us to do just that.

This isn't about a conservative-liberal fight. This is about the right regulations that are necessary before we take a good idea and mess it up. Crowdfunding is a good idea. It is an exciting idea. There are great entrepreneurs out there. The Internet could be a very powerful tool. But everyone knows if you enter into new territory without caution and care, you can fall off a cliff that you didn't even know was there. That is exactly what the House bill is going to do.

If you don't want to take my word for it, let's talk about what AARP says about it. This is the first letter. I am going to put a dozen letters into the Record in the next 10 minutes to try to get the attention of the people on the other side of the aisle. This is all an attempt to get their attention over the weekend, and I hope the press will write about these letters so when they come back on Monday they can say: Oh, my gosh. We have a good bill that came from the House, but there are some real flaws and we should fix it before we create another Wall Street debacle or before we see people ripped off again like we just went through in the last 6 years.

How short is our memory about investors getting stripped, going bankrupt because of exactly the same thing: just not being careful, not having the right rules in place, not having the right enforcements in place. This was like yesterday. That is why when the leadership said we were just going to take up the House bill, I said: Wait a minute. No, no, no.

This is what the AARP said, Joyce Rogers:

I am writing to reiterate our opposition to the lack of

investor protections in H.R. 3606--

Again, the House-passed, ill-advised political opportunity bill. That is what I am calling it. That is what it is--

that soon will be considered on the floor of the Senate

floor. AARP's primary concern is that this legislation

undermines vital investor protections and threatens market

integrity.

So AARP doesn't urge the Senate to kill the bill.

AARP urges the Senate to take a more balanced approach,

recognizing both an interest in facilitating access to

capital for new and small businesses and in preserving

essential regulations. . . . We believe the amendment to be

offered by Senators Reed, Landrieu and Levin, moves closer to

achieving this balance and deserves your support.

It goes on to say that sometimes the people who are taken advantage of are the elderly. So wake up, Senators from Florida. Wake up, Senators from Michigan. Wake up, Senators who have big senior populations. The AARP is against the House bill, the ill-advised political opportunity bill.

North American Securities Administrators Association--they sent a letter yesterday, from Jack Herstein. It is seven pages long. They go into great detail:

On behalf of the North American Securities Administrators

Association--

I don't think this is a liberal think tank. I think this is a very well respected, not a leftwing, regulate-everything-that-moves kind of group. I think that is correct. He says:

I am writing to express concerns regarding several

provisions, most notably our strong concern with the

extraordinary step of pre-empting state law for

``crowdfunding'', contained in [the ill-advised political

opportunity bill which was passed by the House.]

State securities regulators support efforts by Congress to

ensure that laws facilitating the raising of capital are

modern and efficient, and that Americans are encouraged to

raise money to invest in the economy. However, it is critical

that in doing so, Congress not discard basic investor

protections.

I am going to submit this letter, without objection, I hope, to the Record.

This is from the Council of Institutional Investors, ``a nonprofit, nonpartisan association of public, corporate and union pension plans.'' Let me repeat, not just union pension plans but public and corporate pension plans. They are writing with questions about the House ill- advised political opportunity bill, and it goes into great detail. I am putting this into the record hoping people will actually read the Congressional Record.

Another letter to Speaker Boehner and Nancy Pelosi. This was delivered to the House. It may be a little different from the one to the Senate, so I would like to put that into the Record. These are very important letters received just recently. That is why I am asking people to wake up, pay attention.

Securities and Exchange Commission, March 13. This is to Chairman Johnson and Ranking Member Shelby basically saying:

Last week, the House of Representatives passed H.R. 3606. .

. . As the Senate prepares to debate many of the capital

formation initiatives addressed by H.R. 3606, I want to share

with you some of my concerns on some important aspects of

this significant legislation.

That is by Mary Schapiro, Chairman, outlining a dozen of her concerns because, of course, she thinks there is going to be a debate. She would expect a debate on a bill of this nature and magnitude and diversion from the ordinary. But we were not going to have a debate. We were just going to be told to take the House bill or leave it until a few of us said: No, slow this train down. This is no way to run a railroad.

We are not trying to kill the bill. We are not trying to delay. We are trying to have at least a 2- or 3-day debate on an important piece of legislation that, if it is not done right, is going to absolutely ruin the best chance we have had in decades to actually get capital into the hands of businesses.

Everyone here should now know me well enough as chair of the Small Business Committee to know I have spent literally nights, days, and weekends on the floor of this Senate trying to figure out ways to get capital into the hands of small businesses. Why would I stand here and try to stop that? I have spent my whole time as the Senate chairman of the Small Business Committee trying to do that. But, again, there is a right way to do that and a wrong way.

If we take the wrong path and fall off of a cliff, we are going to ruin the chance we have with this new Internet tool, this very exciting opportunity, and we are going to ruin our chance to get this done.

Who is going to suffer? The same people who suffer all the time, the small businesses and the exciting opportunities and entrepreneurs who need our help.

Any bill that is a major bill can stand the scrutiny of time before the public, and amendment. If it cannot stand that scrutiny, then I suggest there is something terribly flawed with it. That is what we are trying to provide, scrutiny.

This letter comes from the AFL CIO, from Jeff Hauser, an e-mail:

America needs jobs. Yet Congress cannot enact such basic

legislation as the reauthorization of the surface

transportation bill--

Which we passed, but it has not been completed. He goes on to say:

Workers' retirement savings will be in greater risk of

fraud and speculation if securities market deregulation once

again is railroaded through Congress. Once again our economy

will be at risk from the folly of policy makers promoting

financial bubbles and ignoring the needs of the real economy.

The AFL CIO calls on Congress to set aside the politics of

the 1 percent, the old game of special favors for Wall

Street.

They are very strong in their language, probably a lot stronger than these other organizations. But I think they have reason to be. Many of their members were taken to the cleaners by scams on Wall Street. They have yet to recover. Their 401s have yet to recover. Even yesterday, or last week, in the paper I saw one of the big companies that failed. I think it was MF Global. Did you all see that in the newspaper? They failed. Of course, it was a terrible debacle. Lots of people lost money. But the CEO is walking away with a $7 million bonus.

People who work hard all day have a very hard time understanding how we in the Congress can allow the CEO to walk away with a bonus of $7 million when he bankrupted thousands of people. That is a good question. Are we going to do that again with this House bill? I hope not.

Let's put the AFL CIO on record saying slow down.

This is the next message I want to put in from the secretaries of state--and I want to read off who they are: the secretary from Missouri, Robin Carnahan; the secretary from Massachusetts, William Falvin; the secretary from New Hampshire, William Gardner; the secretary from Mississippi--I believe is a Republican--Delbert Hosemann; the secretary from North Carolina, secretary of state Elaine Marshall; the secretary from Nevada, Ross Miller; the secretary of state from Indiana, Charles White; and the secretary of state from Illinois, Jesse White.

Jesse White says the same thing: Beware of the House bill. It is flawed. It has some good ideas in it, but those flaws need to be corrected.

That is what the Reed-Landrieu-Levin et al amendment does. We are not trying to kill these wonderful, exciting ideas. We are trying to fix it so it is better. I hope our Members on the other side will join us in doing that, and I would like to submit this to the Record.

There are two more. Actually, I am sorry, four more--we have so many. The next one is from my office of financial institutions from Baton Rouge, my commissioner, banking commissioner, who wrote me. He is generally in favor of some of the things in the House bill. But he said:

I am writing to urge you to oppose the preemption of

Louisiana law to protect investors.

I would like to put that into the Record.

The American Sustainable Business Council. It is signed by David Levine. Again, I don't believe this is a left-leaning group. I think it is a pretty centrist organization. They urge us to take a hard look at the House bill.

Finally, Madam President, I want to have printed in the Record--this is when I got nervous: when I started receiving letters in my office from crowdfunders themselves against the House bill. The people who gave the idea to start up crowdfunding have now said the House bill is flawed. Here is what they say:

I write in favor of the bipartisan compromise CROWDFUNDING

Act proposed recently by Senators Merkley, S. Brown, Bennet

and Landrieu.

That is the crowdfunding act that is in this substitute.

Yesterday evening's introduction--

This was last week--

of the first bi-partisan Senate crowdfunding bill is a big

step forward in our fight to get equity crowdfunding passed

through Congress. I have been to Washington, DC 7 times since

mid-November, discussing [this legislation]. The offices of

the Senators on the Banking Committee have been very

receptive to input from the entrepreneurial community and

have adopted many of our suggestions.

But they go on to say:

This latest bill . . . is important because, unlike

previous bills, for the first time we have a Senate bill with

bipartisan sponsorship, a balance of state oversight and

federal uniformity, industry standard investor protections,

and workable funding caps. This bill has a legitimate chance

at quieting those who were previously trumping up fears of

fraud [and] bad actors. . . . To date the main issues the

opposition raised were regarding fraud and state oversight.

What they are saying is we are the ones who helped invent this concept. We don't think the House bill is where it should be. We are supporting the Merkley-Bennet approach, which is in this bill.

Launcht, we hear you, and we are trying to respond.

Finally, Motaavi--again, a crowdfunder advocate. People, very entrepreneurial, coming up with these ideas saying the same thing.

I ask unanimous consent to have those letters printed in the Record.

Again to recap so people can see on this chart, AARP has written us against the House bill. Consumer Federation of America-- against the House bill. The AFL CIO--against the House bill. Yes, those are some of the left leaning organizations.

But we also have centrist and right leaning organizations. I am talking about the former Securities and Exchange Commissioners' Chief Accountant, this is what they say

There are always paths to improvement for any complex

system, the American Stock Exchange included. But how quickly

these Congressmen seem to have forgotten why many such

regulations were enacted in the first place. Last month

marked the 10-year anniversary of the collapse of Enron.

It has not been 10 years and we are going back to where we were when Enron took money out of the pockets of thousands of people in America. Why are we doing that

Regulations that prevent capital multiplying companies that

want to go public from doing so are bad. Ones that prevent

capital destroying ones from becoming public nuisances are

good. No job creation will be generated through the process

of socializing capital destruction to the general public.

But he is saying that the House bill goes too far.

Again, Eric Schureunberg, editor of Inc.com--they are a very well respected voice in the small business community in America today. They are saying the House bill is flawed.

I know we are going to be criticized on the other side by saying it is just the same old left wing groups that want more regulation and more regulation. But that is not true. That is why I am putting all of this in the record today so people can carefully consider it tomorrow, and over the weekend on Monday, before we come back here; to look and read what is being said about the House bill and to be open and honest in our efforts to try to reform it. Again, for the record, Mary Shapiro, Chairman of the Securities and Exchange Commission, said: While I recognize that H.R. 3606--the ill-advised political opportunity bill, those are my words--is the product of a bipartisan effort designed to facilitate capital formation and include certain promising approaches, I believe there are provisions that should be added or modified to improve investor protections that are worthy of the Senate's consideration.

So that is what we have done. We took the bill from the House and looked at it very carefully and on Monday I am going to hand this out to everyone and we are sending it to everyone's offices now. It has kind of become a famous small business blue line that is very easy for everyone to understand. It shows the differences between the Senate bill and the House bill. As we can see, both bills raise the cap on regulation A offerings from $5 million to $50 million. We are happy to do that. We improve the transparency of regulation A by requiring an audited financial statement.

You don't need to have graduated from a master's program at Stanford or Harvard to understand that if you are getting ready to invest-- whether it is $1,000, $10,000 or $100,000--having an audited financial statement about the company you are getting ready to invest in would be a basic thing to do. I think we learned about this when we were in seventh or eighth grade. You don't have to go to Harvard to know this.

The audited financial statement requirement is absent from the House bill. There is no requirement in the House bill for an audited financial statement, so we put an audited financial statement in our bill. I don't think that is a radical amendment. It is a simple one; it is an important one. In the House version of this IPO on-ramp, they exempt companies up to $1 billion in annual revenue. Madam President, $1 billion is a lot of money, so everybody wake up. The House bill says if you are less than $1 billion, you basically don't have to adhere to most of the rules and regulations; you can just go on your merry way.

That sign is great--``ill-advised political opportunity.'' That is what I am calling the House bill. Let me check to see how many companies went public that were over $1 billion last year. Only 22 percent of companies that went public last year were over $1 billion. So if my math is correct, the House bill is going to eliminate 78 percent of the companies from regulation that raise money in the public. That is going too far. It is unnecessary. We bring that number down to $350 million in our bill, and the author of this provision in the Senate has signed on as a supporter, Chuck Schumer. The reason he did that is because he realizes--even as the sponsor of this on-ramp provision--that the House bill went too far. I am not going to go into all the rules and regulations, but it is not that complicated because-- 1, 2, 3, 4, 5, 6, 7, 8--there are only about eight big differences, but they are important differences.

I am going to wrap up by saying: Please study the record. Please look at it. In our Senate bill, which the Chair has been very supportive of, as has Senator Cantwell, and I wish to thank both of them publicly, as well as Senator Klobuchar--we have the Export-Import Bank in our bill, which is not in the House bill. The Chamber of Commerce has written us asking us to please support the Export-Import Bank. We also expand the SBIC, which is the small business investment program, which the President included in his State of the Union Address to authorize that program to move from $3 billion to $4 billion. Why? Because we are having such success, through the SBIC programs that exist in all our States, getting money out to Main Street, to small businesses. So that is included in our bill--and one the Chair has particularly been a lead on, and that is at no cost to the taxpayer. These things do not cost any additional money. There is the SBA 504 refinancing that is going to allow to extend for 1 year the ability of the small business loan program that has thousands of outstanding loans to extend for another year the opportunity to refinance their commercial loans.

So we have added three provisions to the House bill that make it more balanced and better for small business, and we have put a couple oversight measures into their provisions that I think--in the words of many of even the advocates of this bill--``make the bill better.''

I don't know if we will be successful, but this is worth a try because the damage that could be done in venturing out so far into a new way of financing without the proper safeguards could set us back decades. We don't want to go backward; we want to go forward. We don't want to go back to the days of Enron and Bernie Madoff. Why would Republicans, in the face of these scandals, come up with--and some Democrats voted for it. I am not quite sure how that happened, but we are going to find out. Why would they want to go back to those days? We want to go forward with the right protections.

I see my friend Senator Levin on the floor. He most certainly understands this issue in many ways better than I do on the technical side of it. He has helped write this bill. I am hoping he will give an even better explanation than I have been able to give, but I think I have covered it pretty broadly, and he can go into a lot more detail about the possibility of fraud in here if it is not locked down.

I am going to end with a word to my community banks because I have tried to become a champion for them. I think they can appreciate it. I am not

100 percent sure. I believe in community banks. The Independent Community Bankers of America sent a letter supporting the House bill. I am going to call them over the weekend and talk with them specifically about my concerns and ask them to reconsider their position. I think our compromise is very good for our community bankers. I don't know whether they will. I know they want to get rid of some of the onerous requirements that were placed on them in the Sarbanes-Oxley legislation, and I appreciate it. I helped sponsor some of the amendments on their behalf.

But I think this House bill is going too far. I am going to reach out to them. We will see what their view is. I do respect the views of my community bankers. We are going to have a lot more to talk about next week.

Again, I thank Senator Levin and Senator Reed for joining with me and Senator Jack Reed for leading this effort to help put a bill before the Senate that is quite balanced and provides the investor protections and also opens some exciting opportunities for capital to create new businesses in America that are the backbone of our extraordinary--and not to be matched--entrepreneurship spirit in the world. We honor that, but we want to do it in the right way.

I yield the floor.

Madam President, before the Senator from Louisiana leaves the floor, let me thank her for her leadership in this area and the passion she has brought to it. This is a train which has moved with great speed from the House of Representatives--much too great a speed-- and her ability, just by the expression of her will and her determination to bring this to a point where we can debate it at least over a few days and the weekend, is critically important, I believe, to future of investors in this country.

There is no State that has suffered more from the job losses of the great recession than my State of Michigan. We don't have to ask a Michigander twice if he or she believes Congress should take action to increase the speed of the jobs recovery. So I am ready to consider any legislation that promises more opportunity for the workers of this country, but unfortunately the legislation the House has sent to us, which is promoted as a job creation bill, is no such thing. In the name of job creation, the House bill would severely weaken investor and taxpayer protections in our securities laws.

In the name of putting Americans to work, the House bill would hand a series of special favors to influential special interest groups. It also reflects a disturbing failure to learn the lessons of the recent and all-too-painful past. It defies belief that after the worst financial crisis in generations, a crisis brought on by the failure to effectively police our financial markets, Congress would consider removing vital obstacles to fraud and abuse. The House bill would take a series of steps that would undermine the integrity of our financial markets. We should not go down that road. We need not go down that road. In working with Senator Jack Reed, Senator Landrieu and Senator Sherrod Brown and others, I participated in an effort to make some changes in that bill that would give small, innovative companies more tools to access the capital they need. We want to do that. We all want to do that. But we do that in our bill without putting the stability of our economy and the interest of American investors and taxpayers at risk.

I wish to lay out some of the problems with the House bill and how our Reed-Landrieu-Levin amendment would address those problems. The House bill would lower barriers to fraud that are now present in the so-called regulation A stock offerings. These are offerings that are exempt from the SEC registration requirements. The House bill would expose retail investors--those with no expertise and no resources--to assess the risks of participating in the unregulated market to massive potential fraud and abuse.

The bill does not even require that companies making offerings under regulation A provide audited financial statements. The regulation A process is appropriate for very small companies, but the House bill provides few meaningful limits to its use. Instead, it would allow larger companies to avoid meaningful oversight year after year.

I have worked with colleagues to fix this problem by ensuring that these offerings are limited, so they are only used once every 3 years-- that is one of the changes we would make--and that investors in the offerings get an accurate picture of the company's finances by requiring audited financial statements.

In the name of giving smaller companies greater access to the initial public offering market, the House bill would create a new class of corporation called an emerging growth company and would strip from investors in such companies more than a dozen important investor protections. Some of the protections involve transparency. The House bill would weaken corporate governance provisions we enacted less than 2 years ago in the Dodd-Frank Act, including disclosures on executive pay. The House bill would exempt these companies from having to comply with changes to accounting standards. It would repeal the protections we put in place after the dot-com bubble burst. These protections require financial firms to separate research analysts who advise clients on whether to invest in initial public offerings from the sales teams of those same companies.

There is supposed to be a wall between those two parts of any company so the sales teams don't take advantage of what the research teams are telling their customers. There are too many opportunities for conflicts of interest and front-running and other things if we allow that wall to be breached.

The House bill provides that companies with up to $1 billion in annual revenue would not have to get an outside auditor to check their internal controls. So what happens if one of these companies is cooking the books? Who is going to catch it? We learned with Enron and WorldCom why we need meaningful checks on how companies prepare their financial statements. The vast majority of financial restatements, which are corrections to bad information given to the investing public, are made by medium and small companies. Investors in these companies should have the confidence that the financial statements on which they base their decisions are accurate.

Now, those provisions in the House bill are bad enough given the chronic problem in financial markets with poor and misleading financial disclosure but, to make matters worse, the bill would open this collection of loopholes with companies of up to $1 billion in annual revenues. That is a level which would include well over 80 percent of all IPOs. So over 80 percent of all the IPOs that will be issued would then be exempt from the protections under the House bill.

Financial regulators, associations of individual investors, many of the largest pension funds in this country, securities experts, and the chamber of commerce have raised alarm bells about that $1 billion threshold as well as the many problems that would follow from the House bill.

Just this week, the SEC took a series of enforcement actions against fraudsters seeking to victimize investors in pre-IPO offerings. One SEC official noted, ``The newly emerging secondary market for pre-IPO stock presents risks for even savvy investors.'' The House bill threatens to bring the same level of risk and instability that plagues pre-IPO trading to the IPO market itself--changes that, rather than building support for IPOs, might actually make the IPO market so risky that it ends up dampening investor interest.

The amendment some of us have been working on, which is the Reed- Landrieu-Levin, et al., amendment, accepts the premise that some small, newly public companies could benefit from somewhat relaxed requirements as they adjust to the public marketplace. But our amendment would limit these benefits to smaller companies--those with under $350 million in annual revenue--and our amendment would not exempt these companies from many of the critical investor protections. For example, we would not remove protections designed to protect the integrity of the research that is available to investors, nor would we exempt them from any new accounting

rules, nor would we exempt them from requirements regarding important executive pay disclosures and shareholder input on executive pay packages. Our amendment would provide flexibility for smaller, newly public companies to adjust to the public markets, but we would leave in place the investor protections that ensure our public markets remain the best in the world.

The House bill would also allow companies or fraudsters posing as legitimate companies to solicit investors directly through the Internet. This is one of the really big issues we are going to address next week. As written, the House bill would offer investors almost no protection from fraudulent schemes and fake investment opportunities. Although these Web sites that are often called intermediaries or funding portals are the only entities capable of making sure that a company seeking to sell its stock on its site is real, the House exempts them--exempts the intermediaries and the funding portals--from any real regulation or liability. The same is true with the issuing company. That is why labor groups, seniors organizations, regulators, and security experts all warn us that this measure is an open invitation to fraud. One group calls it the ``boiler room legalization act.''

So we have many problems with these provisions in the House bill, but we also believe the so-called crowdfunding, in which small startups can access pools of capital from small investors, usually over the Internet, has the potential to provide opportunity for truly small businesses to get additional capital they need to grow. This can be done legitimately. That is why we build on the work of Senators Merkley and Bennet to create a platform for raising money through the Internet. But we make sure, as they do, that it has the necessary investor and consumer protections. In fact, legitimate crowdfunding sites have made it clear to us that they, like us, are concerned about the House bill. So we have legitimate crowdfunding interest groups that want to make sure the protections are there for the investors, speaking out against some of the excessive provisions in the House bill. They want the additional protections we provide. So our amendment makes sure that funding portals are subject to meaningful regulation and that the companies that use them to raise capital are also subject to meaningful regulation.

Our amendment would, unlike the House bill, require comprehensive disclosures to investors about the company and the risks of such investments. If this new way of investing in small companies is to succeed, then investor protections such as the ones embodied in the Merkley-Bennet provisions, which we have included in our amendment, are vital to giving investors the confidence to participate.

The House bill also attempts to remove regulations on so-called private offerings. By allowing issuers of private offerings to market their stock to the general public--whether it is on billboards and the Internet, in visits to retirement homes or late-night television ads-- that provision in the House bill would dangerously lower our defenses against frauds. We have seen this movie before. In the 1990s regulators lowered the barriers to general solicitation for private offerings and within years reversed their error because of widespread fraud and abuse.

Some have complained that the existing restrictions on solicitation for private offerings are too narrow and impede businesses' access to capital. That seems unlikely given the nearly $1 trillion a year in private offering activity. But if there are yet more worthy investments that are going unfunded because of unneeded investor protections, the SEC regulations should be updated for the Internet age.

The Reed-Landrieu-Levin amendment would direct the SEC to revise its rules to allow companies to offer and sell shares to a credited investor, but it then directs the SEC to make sure those who offer or sell these securities take reasonable steps to verify that the purchasers are actually accredited investors. It requires the SEC to revise its rules to make sure these sales tactics are appropriate. There are not going to be, under our language, billboards or cold calls to senior living centers. I wish I could say the same about the House bill.

There is little evidence that the reduced investor protections and invitations to fraud in the House bill will make any meaningful contribution to job growth. We do not have one study on any one of the provisions in the House bill establishing that even one job would be created. If such a study existed, I am sure we would have seen it. The simple reality is that repealing Federal securities laws--and that is clearly the intent of the House bill--does not create jobs. In fact, the former Chief Accountant to the SEC was quoted recently as saying that this JOBS bill was no jobs bill at all. He said: ``This would be better known as the bucket-shop and penny-stock fraud reauthorization act of 2012.''

Taken together, these and other provisions in the House bill send a false message: that in order to grow the economy, we must subject our citizens to more fraud, we must put pension funds and church endowments at greater risk of fleecing, we must create more threats to the financial stability of American families.

The America that I know and that I believe in is capable of growing our economy without these unnecessary risks. Indeed, it is fraud and financial abuse that have repeatedly brought our economy to its knees. We opened the door to fraud and abuse in the savings and loan industry and precipitated a crisis that destroyed 750 financial institutions when we did that. We cut the number of new homes built in this country by nearly half and devastated entire communities. We dropped the barriers to fraud through financial statements and in swaps markets, opening the door to the predations of the so-called ``smartest guys in the room''--those are the criminal executives of Enron. We lowered the barriers to heedless risk and conflicts of interest in the financial system, thereby paving the road to the greatest financial crisis since the 1930s.

Over the last 10 years, on a bipartisan basis, my Permanent Subcommittee on Investigations has held hearing after hearing and issued report after report on the Enron crisis, on accounting and securities frauds, and on the more recent subprime mortgage crisis. Our investigation has exposed how some American corporations, and their accountants and banks, were willing to dupe investors and, even after their wrongdoing came to light, walk away with huge paychecks while workers, investors, and the American economy at large paid the price.

Enron was the seventh largest U.S. corporation before its crash bankrupted employees, pensions, and investors. It lied about its earnings and did so with the help of accountants and banks. Goldman Sachs sold securities through public and private offerings that did not fully inform investors about what they were buying. The wrongdoing our subcommittee has uncovered over the years is as powerful a reminder as we can get that investors deserve protection against abuses when they invest their hard-earned dollars in U.S. capital markets.

There is a rising wave of concern among market experts that the effect of the House legislation might be precisely the opposite of its supporters' stated intent and that instead of boosting the ability of companies to find capital so they can grow, these changes would hurt the market for investing in new companies by making that market too risky. If we remove meaningful transparency and safeguards against fraud, SEC Chairman Schapiro wrote just a few days ago that ``investors will lose confidence in our markets and capital formation will ultimately be made more difficult and expensive.''

The question for the champions of lower regulatory barriers is this: Did those rollbacks of regulatory protections help our economy grow? Did those rollbacks which we saw so many of and which I have just outlined create jobs? Ask a family who was wiped out in the financial crisis. Ask an investor who lost everything to Enron. Ask one of the many 8.6 million American workers who lost their jobs in a financial crisis created on Wall Street, one we have yet to fully overcome.

In November of 1999 this body debated another piece of financial legislation, one that supporters claimed would lead to boundless new economic opportunities for our country. The bill we were debating repealed the Glass-Steagall Act. It lowered barriers to

concentration in the financial industry. It removed the wall that had separated investment banking from commercial banking since the aftermath of the Great Depression.

Senator Byron Dorgan came to this floor and he issued a warning: ``It may be that I am hopelessly old-fashioned, but I just do not think we should ignore the lessons learned in the 1930s . . . I also think that we will, in 10 year's time, look back and say: We should not have done that because we forgot the lessons of the past.''

Well, that was 1999. Ten years after Senator Dorgan's remarks, almost to the day that he predicted, America's economy hit rock bottom, with the lowest mark of employment during the great recession. Well, old- fashioned sounds pretty good these days. I hope to be as old-fashioned as Senator Dorgan, who warned us that lowering the barriers that protect us from financial catastrophe can only destroy jobs--not create jobs, destroy jobs.

I hope the Senate will turn away from the House bill that threatens more fraud, more abuse, and renewed crisis. I hope the Senate will embrace reforms that are present in our substitute amendment that give our innovative companies the chance to compete without endangering investor confidence or the stability of our economy.

Madam President, I yield the floor, and I note the absence of a quorum.

Mr. President, the House of Representatives has just passed H.R. 3606, which is styled as a capital formation bill, but it is fundamentally flawed. As more and more people have looked closely at the bill, they have found more and more problems with it--problems that could roll back key consumer protections and dramatically decrease the transparency of our capital markets.

One of the fundamental misconceptions in this bill is that we can have robust capital formation without good

investor protections. My view is we can't have one without the other; that the strength of our market is the reliance investors have that they will have the right information and know enough about the entity they are investing in to make judicious, sound economic judgments. The Cantor bill would roll back many investor protections, would deny investors critical information that is essential to making sound judgments, and would ultimately not lead to the proposed goal of the bill--providing more access to capital, particularly for small, emerging companies.

Serious concerns have been raised about the Cantor bill by current and former regulators in the last 2 weeks: Mary Shapiro, Chairman of the Securities and Exchange Commission; the North American Securities Administrators Association; Arthur Levitt, former Chairman of the SEC and head of AMEX; and Lynn Turner, former chief economist of the SEC.

Some of the largest pension plans in the entire country have been weighing in through the Council of Institutional Investors, and these are the entities most people want to have invest in their companies as long-term investors. They have real concerns about the House action.

We have been getting phone calls and letters from a diverse array of consumer groups, such as the AARP, the Consumer Federation of America, the AFL CIO, and SAFER, the Economists' Committee for Stable, Accountable, Fair, and Efficient Financial Reform.

Academic experts, such as Professor John Coffee of Columbia University School of Law, for one, have called the Cantor bill the ``Boiler Room Preservation Act'' because it will mean more pump-and- dump schemes, where people are pressured to invest in highly risky firms and products. Two other noted securities experts from Harvard University Law School and Business School, respectively, John Coates and Robert Pozen, have said the bill does more than, in their words, ``trim regulatory fat; parts of it cut into muscle.'' We need to slow down this process and get it right. H.R. 3606 can be improved and should be improved. That is why I--together with Senators Mary Landrieu, Carl Levin, Sherrod Brown, Jeff Merkley, Daniel Akaka, Sheldon Whitehouse, Al Franken, Tom Harkin, and Dick Durbin--am introducing a substitute amendment to this bill today. We hope our legislation can serve as a base bill for the Senate to discuss and amend as we move forward.

What are some of the most serious flaws we are trying to address in the Cantor bill? First and foremost, this bill is unlikely to create jobs, despite the title the House has bestowed upon it. In fact, it may actually have the opposite effect. By weakening investor confidence, it could actually decrease the number of IPOs and lead to fewer investments in our capital markets.

Currently, our markets are considered the most transparent and liquid in the world, which has been one of its great strengths--the confidence that when an investor puts money into an American financial product and American market, he or she has detailed information about the current status and the prospects of that investment. Under the Cantor bill, our markets would become less transparent and more opaque. Fewer protections will be provided to investors. This could actually lead to fewer investors investing in the United States, since we are in a global economy or increasing competition with capital markets in London, Paris, Hong Kong, and Singapore--to name just a few.

Again, one of the great hallmarks of our markets, starting in 1933 with the securities legislation of the New Deal, was the feeling that investors would be protected, that there would be standards in place, information would be made available to them, and they could have confidence--as much confidence as they could get--in their investments. If we undermine that confidence, eventually we will undermine both our appetite and capacity to invest.

The Cantor bill has more problems. It tries to create a way that crowdfunding can be used to raise money for small enterprises, but it does this with very few protections for investors and would allow unregulated Web sites to peddle stock to ordinary investors without any meaningful oversight or liability.

Crowdfunding is a very interesting new approach to raising capital. Our colleagues, Senators Merkley and Bennet have spent a lot of time developing very positive legislation which balances improving small business access to capital, by tapping into social networks and small investors but, at the same time, gives those investors adequate protections. The House has not taken this approach. They have legislation that could, indeed, create a situation where crowdfunding is plagued by fraud, by manipulation, and by people who simply want to make a quick buck and move on, hoping they will just disappear into the Internet.

The Craigslist or eBay model may work to enable people to sell unwanted clothing, bikes, and other goods, but it certainly doesn't work for a financial security that requires a much more careful analysis than simply kicking the tires. People with more credit card debt than savings will be tempted to put their money into these mass- marketed, get rich schemes--money which they can't afford, in many cases. As the economy continues to grow, stocks will rise--we have seen some interesting and very positive developments on Wall Street over the last several weeks--but this ride up could be accompanied by bubbles with these types of crowdfunding schemes, where people are putting money in for a quick return based on, perhaps, the success of one or two companies but not having the information, not having the appropriate controls on the intermediaries so they can make a sound, valid investment.

There is another aspect of the House legislation, in addition to this crowdfunding approach, which is the House IPO on-ramp provisions. An IPO, of course, is an initial public offering. This approach, to try to streamline access to the public markets for emerging companies, has great merit. But once again, what has happened in the House bill is they have done this at the expense of necessary protections for investors.

Relaxing standards for very large, new public companies, when no evidence supports the idea those standards stand in the way of these IPOs and much evidence suggests the standards prevent serious accounting problems, is not the way to go. The basic essence of their approach--this on-ramp approach--is a very large company, with up to $1 billion in revenue, for a period of 5 years or so, can avoid some of the now standard requirements for public companies. This is not an targeted approach for small companies. Companies with $1 billion of revenue are substantial economic enterprises. The protections that have been put in place over the years not only protect the investors but also ensure appropriate audit procedures are in place. Ensuring appropriate managerial behavior for a company of that size should not be indefinitely waived or waived for a period of 5 years.

We could literally roll back the clock to pre-Enron, pre-WorldCom, where because of creative accounting, because of the lack of adequate audit procedures within the company, real abuses occurred. The result was Enron collapsed and their shareholders were left with virtually nothing. One of the more tragic ironies is that many of their shareholders were their employees who had their entire pensions invested in the company, particularly in the case of Enron. Ultimately, the pain to these people, caused by the lack of good standards--which have since been put in place--was significant. If we proceed on this, we might, once again, have a situation where we are repeating industry--and a history we have seen already.

Again, as the economy rebounds, as stocks rise, I think there will be a variable increase in new public offerings--IPOs. If we look at the data, the number of IPOs goes up and down. But the most significant factor is simply economic activity. As economic activity goes up, new companies have opportunities, IPOs go up. In this boom, there could be the temptation for these companies, given these new, very relaxed standards, to ignore the problem because they do not have to disclose them adequately or to deliberately mislead investors because there is no real check on what is being said. The relaxed standards in the House bill could allow companies to engage in deception, to raise and waste more investment money more quickly.

There is a way we can dial back this excessive legislation in a way that will provide capital formation but will also provide protections for investors, and I hope we can proceed in that manner. Increasing IPOs is a valuable goal, but it should be done much more cautiously, in my estimation, with reforms focused on much smaller companies than those with $1 billion in annual revenue, as is indicated in the Cantor bill.

During the course of three hearings in the Senate Banking Committee on these issues, it has become even more clear there are problems with the way shareholders are being counted. This is another aspect of the House bill that is problematic. They have indicated they would like to move beyond a number--500--which requires a company register under the 1934 Securities and Exchange Act with the SEC. This trigger is something that should be considered in terms of present-day standards. The House bill raises this trigger point to 2,000 very quickly, without dealing with the so-called beneficial owners problem. If the provision in the House bill was in force in the past, two-thirds of current public companies would not have been required to register under the 1934 Act. Let me say that again.

If you reach a certain number of shareholders, you are required to register and begin to give those shareholders required information on a quarterly basis. You are required to file other forms. You are required to be subject to other rules and regulations of the SEC.

If this new House standard of 2,000 shareholders was in place, two- thirds of current public companies would not have to register with the '34 Act. They would be operating in the dark. They would be operating with whatever minimal information they might be required to divulge to their shareholders under State corporate law or, in some cases, State securities law. That is an astounding number of companies.

Most investors take for granted that when you reach a critical size in the number of shareholders, et cetera, that you will begin to report. Again, these reports are the lifeblood of the investing community because they rely upon them for their information about what is going on in the company, and they rely upon them for the standards that company has to follow.

Over time, most investors as a result of registration under the '34 Act are entitled to receive regular disclosures. Again, these provisions raising up the level to 2,000 shareholders would undermine the other stated goal of the Cantor bill, to make it easier for companies to go public and easier to disclose information. In fact, some would describe this as sort of a bipolar piece of legislation.

On the one hand, they want to relax the standards for going public, and on the other hand they want to relax the standards and allow more companies to go private. I think we have to be careful in each instance to ensure that investors are protected, as well as capital formation is enhanced.

The House bill will eliminate an SEC rule on general solicitation, allowing companies to advertise risky, less regulated, unregistered private offerings to the public using, for example, billboards along highways, cold calls to senior living centers, or other mass marketing methods. It also will tear down protections that were put in place after the late 1990s Internet stock bubble burst that prevented conflicts of interest from tainting the quality of research about companies.

What we found in the wake of the dot-com bubble--with many protections in place that would be taken out by this legislation--was there were analysts who were touting companies at the same time other parts of their business were trying to sell those companies' shares. This conflict of interest with someone you hope is giving an objective opinion would be encouraged, not discouraged, under the House bill.

The Cantor bill would allow extremely large corporations to avoid SEC oversight. It also would allow banks, with even hundreds of billions of dollars in assets, to deregister and stop being subject to SEC oversight and critical investor protections.

Finally, the Cantor bill actually doesn't include provisions that are more likely to create jobs for Americans. For example, the House bill does not include reauthorization of the Ex-Im Bank. Time is of the essence, by the way, to get this Ex-Im Bank reauthorized. The bank's temporary extension expires at the end of May and is close to exceeding its operating level of $100 million by the end of this month.

Renewing the Ex-Im Bank's charter with increased lending authority is practically the only way of countering the predatory financing practices of other trading nations. We spend a lot of time on this floor pointing the finger at companies that are using their sovereign institutions to undermine American jobs, to get them overseas. Yet one of the major institutions in our country that helps American products to be sold overseas is literally in danger of going out of business. That is something that will, in fact, enhance job creations, and it is not in the House bill. In fact, it has been suggested that Ex-Im Bank activities supports almost 300,000 jobs in the United States each year.

It also doesn't include two other programs that would result in the creation of more jobs, and these two programs are particularly the result of the hard and aggressive and thoughtful work of Senators Landrieu and Snowe. One program expands the capacity of the Small Business Investment Company program, SBIC. They have proposed legislation that would allow another $1 billion in equity-like financing for smaller, fast-growing firms. The other program would extend for 1 year the SBA's 504 refi loan program to help firms refinance commercial real estate into long-term, fixed-rate loans.

These modifications have created and saved hundreds of thousands of American jobs at no cost to the taxpayers. These are tried and true ways to increase jobs in America without running the risk of undermining the information that investors need to make sound choices about where to invest their dollars.

It is very tempting to suggest we simply have to cut a couple of regulations and jobs will expand. That was the theme that was rampant here during the Bush administration and, for a while, frankly, it looked like it was working. But then, with the sudden and colossal collapse, we knew that was not the path to long-term sustained job creation. Sound investment based on adequate information in companies that produce jobs in the United States is the way to proceed.

We need to listen to those individuals charged with the supervision of our capital markets, the SEC, and now we have both the current chairman and a former chairman saying the legislation the House proposed is a threat to all investors in this country. The stakes are high if we get some of these things wrong. We have been trying to focus on these issues intensely for the last few months to bring legislation to the floor that will balance capital formation with investor protections. You can't get one at the expense of the other. You have to have both.

So I encourage all my colleagues to take a close look at the Reed- Landrieu-Levin substitute. I believe it is a substantial improvement to the House bill. My colleague from Louisiana will speak and, once again, I must commend her passion for protecting investors, particularly small investors, and her passion for creating jobs through the SBA and other organizations as remarkable, commendable, and indeed exceptional.

Madam President, I yield the floor.

I have an amendment at the desk.

Let me acknowledge, first of all, the combined efforts that have generated this approach to putting Americans back to work. Let me acknowledge the manager that is on the floor, Congresswoman Waters, for her enormous leadership on many of these issues, as well as the ranking member of the full committee; Mr. Frank, who certainly has served and exercised his willingness to deal with questions of these markets; and, of course, my friend from Texas who is managing this and is, again, I hope working with us in a bipartisan way on some very serious matters.

Again, let me emphasize that the most effective way to reduce our deficit is to put Americans back to work. My amendment in this legislation deals with acknowledging that the emerging companies under this legislation--provides for 5 years from the date of the EGC's initial public offering; 2, the date an EGC has $1 billion in annual growth; and then the date the EGC becomes ``a large accelerated filer,'' which is defined by the Securities and Exchange; a number of provisions to, in essence, help small businesses. This is an important principle. But my amendment adds a requirement that a company would not be considered an emerging growth company, an EGC, if it has issued more than $1 billion in nonconvertible debt over the prior 3 years.

Let me suggest that we are doing better than many of us might think. Many aspects of this bill, for example, will help community banks, which will help other small businesses. But if we look to the economy as we speak, the private sector unemployment has grown for 23 straight months, the economy has grown for 10 straight quarters, overall business investment is going up, corporate profits are up, as are investments in equipment and software, and exports have been a source of growth.

But emerging growth of small businesses needs the extra push, because when you think of the backbone of America, you think of small businesses. As a matter of fact, it is not uncommon for a company to be financed with debt as opposed to equity, and that while $1 billion is not what it used to be, it is still a pretty substantial sum of money.

So what I am saying is I want to help small businesses, but I also want to ensure that we do not expand this legislation where it is not actually helping those smaller emergent growth companies that truly are in need. For years, both Wall Street and big banks lacked the requisite government and oversight

accountability, and I believe that it is important to ensure continued oversight but continued help for these particular companies.

With that, I'd ask my colleagues to support this amendment, and I reserve the balance of my time.

I thank the gentleman.

I like the concept of emerging growth, and I think the concept is to build these businesses up, to give them greater opportunities. What I am suggesting is that, the amendment suggests that if you have issued more than a billion dollars, you have grown sufficiently to have an additional standard or a different standard. This particular amendment suggests that we have a framework for emerging growth.

I'd tell my good friend, it is not 3 years.

I thought that was an appropriate framework for a billion dollars. If you spread it out over a period of time, that's $300 million to $400 million a year.

Let me just say that I think the concept is so important, to my friend from Texas, that a friendly modification would be welcomed in the timeframe. But I think the billion dollars is an appropriate standard, if you will, for trying to ensure that we really do boost and give latitude to emerging growth companies.

Let me just conclude my remarks, and if I might, let me yield to the gentleman, because I did not hear him clearly. Let me yield to the gentleman from Texas.

I'd like to raise the question, I did not hear your support or opposition to this initiative.

I'm hoping for a good bipartisan effort here, but I am yielding to the gentleman.

The gentleman is very kind.

So let me just say, as my leader on the floor was trying to get an inquiry about it--and you always take a gift quickly and you say ``thank you''--I think that this will add to the confidence of this legislation.

And as I indicated, though this is not specifically to this point, I want to make sure that we're helping community banks provide more lending and access to small businesses. I want to make sure that we, under the definition of this bill, help emerging growth companies, as well, be stronger and, as well, to be part of the creation of jobs putting Americans back to work.

With that, I ask my colleagues to support the Jackson Lee amendment.

Mr. Chair, I rise today to offer my amendment No. 4 to H.R. 3606 ``The Reopening American Capital Markets to Emerging Growth Companies Act of 2011.'' My amendment would create a five-year ``on-ramp'' for smaller companies to comply with certain provisions of Sarbanes-Oxley and Dodd-Frank.

In the bill, Emerging Growth Companies are exempted from certain regulatory requirements until the earliest of three dates: (1) five years from the date of the EGC's initial public offering; (2) the date an EGC has $1 billion in annual gross revenue; or (3) the date an EGC becomes a ``large accelerated filer, which is defined by the Securities and Exchange Commission (SEC) as a company that has a worldwide public float of $700 million or more.

H.R. 3606 thus provides temporary regulatory relief to small companies, which encourages them to go public, yet ensures their eventual compliance with regulatory requirements as they grow larger.

I agree in principle that it is important to modernize and improve the ability of a company to raise capital in today's environment, but I am concerned H.R. 3606 goes beyond what is necessary at the expense of protecting the investor.

My amendment adds a requirement that a company would NOT be considered an ``emerging growth company'' (EGC) if it has issued more than $1 billion in non-convertible debt over the prior three years.

As a matter of fact, it is not uncommon for a company to be financed with debt as opposed to equity, and that while $1 billion dollars is not what it used to be---it is still a pretty substantial sum of money. Frankly, Mr. Chair, a company that size needs to have some oversight to protect the public.

For years, both Wall Street and big banks lacked the requisite government oversight and accountability. Relying on Wall Street and big banks to police themselves resulted in the worst financial crisis since the Great Depression, the loss of 8 million jobs, failed businesses, a drop in housing prices, and wiped out personal savings.

We must restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them. We must create a sound foundation to grow the economy and create jobs.

To wit--this debt financing might be tax deductible, whereas the equity financing typically is not--which gives debt financing a distinct advantage.

H.R. 3606 encourages emerging growth companies (EGCs) to access the public capital markets by temporarily exempting EGCs from some registration procedures, prohibitions on initial public offering (IPO) communications, and independent audits of internal controls over financial reporting, among other exemptions.

I encourage my colleagues to vote for this amendment to H.R. 3606 that adds a requirement that a company not be considered to be as an ``emerging growth company,'' if it has issued more than $1 billion in non-convertible debt over the prior three years.

Mr. Chair, let's continue to protect the investing public.

I yield back the balance of my time.

Mr. Chairman, I have an amendment at the desk.

I thank the chairman very much.

I started my earlier discussion with a previous amendment by suggesting that our underlying premise or the goal should be to reduce the deficit and to put America back to work. This concept of emerging growth opportunities or emerging growth companies is, in fact, I believe, a viable step of doing so.

I do want to remind my colleagues again that overall business investment is growing, corporate profits are up, as are investments in equipment and software. Exports have been a source of strength. We're working very hard to ensure that we reinvigorate manufacturing. We want to make it in America. We want to bring companies back home, and certainly we want to encourage investment. Private sector employment has grown for 23 months, and the economy has grown for 10 straight quarters.

My amendment is to discuss the fine distinctions between those who are very sophisticated and those who are not. My amendment narrows the permissible exemption to allow oral or written communications with potential investors who are qualified institutional investors, but it omits accredited investors from this exemption in the name of investor protection. That is simply to say that we know that the accredited investors are less, if you will, able with the information that they have to compete with what we have classified as qualified institutional investors.

The idea of this amendment is to ensure that an accredited investor would not be considered a qualified investor and therefore be taken advantage of. Under the bill, the commonly known test-the-waters provision would amend the Securities Act of 1933 to expand the range of permissible prefiling communication to sophisticated institutional investors to allow emerging growth companies to determine whether qualified institutional or accredited investors might have an interest in a contemplated securities offering.

Mine is an amendment simply being concerned about the accredited investors and whether or not there is the equal playing field alongside of the qualified institutional investors, which you would expect would have far more sophistication in making determinations about investments. It is simply an effort to provide extra protection for those who will now be out in the marketplace under these emerging growth concepts.

I ask my colleagues to support this amendment, and I reserve the balance of my time.

Mr. Chairman, who has the right to close?

Mr. Chairman, let me just maintain that this is a simple premise of protecting the less sophisticated investor, and I have no desire to not see jobs being created or the opportunity for emerging growth entities to have access to opportunities for investment. It is quite clear that qualified institutional investors are far more sophisticated than the accredited investors' status, and so I can't get clearer than that, trying to make sure that we protect those.

And as we noted for the Democrats who served on the Financial Services Committee, they made certain statements, if you would, to ensure that we have the greatest amount of protection for those who we want to see having greater opportunities.

So with that, Mr. Chairman, I happily yield back my time and ask my colleagues to support this very simple amendment that seeks to protect accredited investors.

Mr. Chair, I rise today to offer my amendment # 7 to H.R. 3606 ``The Reopening American Capital Markets to Emerging Growth Companies Act of 2011.'' This amendment strikes language in the bill that allows an emerging growth company or its underwriter to communicate with ``institutions that are accredited investors.''

H.R. 3606 would exempt certain regulatory requirements until the earliest of three dates: (1) five years from the date of the EGC's initial public offering; (2) the date an EGC has $1 billion in annual gross revenue; or (3) the date an EGC becomes a ``large accelerated filer, which is defined by the Securities and Exchange Commission (SEC) as a company that has a worldwide public float of $700 million or more.

The bill thus provides temporary regulatory relief to small companies, which encourages them to go public, yet ensures their eventual compliance with regulatory requirements as they grow larger.

My amendment narrows the permissible exemption to allow oral or written communications with potential investors who are ``qualified institutional investors,'' but omits ``accredited investors from this exemption, in the name of investor protection.''

For example, this amendment would ensure that an accredited investor would not be considered a qualified institutional investor and therefore would not be able to engage in certain types of investments.

Under the bill, the commonly known ``test the waters provision,'' would amend the Securities Act of 1933 to expand the range of permissible pre-filing communications to sophisticated institutional investors to allow Emerging Growth Companies (EGCs) to determine whether qualified institutional or accredited investors might have an interest in a contemplated securities offering.

I believe that while many Accredited Investors are sophisticated and prosperous, and meet the brokerage firm requirements for alternative investments.

My amendment is merely a continuation of the investor protection theme of Dodd-Frank. Specifically, investors that lack the necessary capital to absorb the losses that can arise when investing in an Emerging Growth Company.

Moreover, I would note that many qualified institutional investors have a minimum of $1 billion to invest, which simply may not be the case with accredited investors. My sentiments are similar to those expressed by my Democratic colleagues on the Financial Services Committee: that they and Republicans share the desire to create an accessible, robust and efficient capital market for the benefit of small businesses and investors, alike.

I too, expect that as H.R. 3606 moves forward, further refinements will be adopted to ensure that investor protections are not sacrificed.

Again, as my Democratic colleagues on the Financial Services Committee stated:

H.R. 3606 encourages emerging growth companies (EGCs) to

access the public capital markets by temporarily exempting

EGCs from some registration procedures, prohibitions on

initial public offering (IPO) communications, and independent

audits of internal controls over financial reporting, among

other exemptions.

Democrats agree in principle that it is important to

modernize and improve the ability of a company to raise

capital in today's environment, but are concerned H.R. 3606

goes beyond what is necessary at the expense of protecting

the investor.

I encourage my colleagues to vote for this consumer and investor- friendly amendment.

Let me say to my good friend from Texas, I'm going to look forward to working with him on the previous amendment that simply was misconstrued, and we certainly want to respect those who have a million dollars outside their window, but we also want to ensure that we have protection for those less sophisticated investors.

The amendment that I have before me, likewise, has an intent to allow the SEC not to be plagued by frivolous filings. But I want to work with the committee going forward, and so I will not pursue this amendment. And, Mr. Chairman, I'm going to ask unanimous consent to withdraw this amendment No. 8 at this time.

I will conclude by saying I like batting .500, and I will continue to work with this committee on these important issues.