CQ TODAY ONLINE NEWS
March 13, 2012 – 3:55 p.m.
Senate to Vote on House IPO Bill
By Ben Weyl, CQ Staff
Senate Democrats have scrapped plans to take up their own legislation to ease securities regulations for smaller companies, an unexpectedly swift submission to House Republicans in the debate over how best to spur job growth in a period of persistently high unemployment.
Senate Majority Leader
The Nevada Democrat said Tuesday the Senate would vote on the House bill (
The House last week passed the bill, intended to ease access to capital for small businesses and allow them to more easily launch initial public offerings, with broad bipartisan support, and President Obama has said he would sign it into law.
“We have no problem with the IPO bill we got from the House,” Reid said. “How could we? It got 390 votes in the House. The president of the United States supports it. We support it. We want to get this done, and we’ll do it just as quickly as we can.”
Senate Democrats had been expected to roll out their version of the bill this week.
Now Democrats are changing course. Reid said the lopsided House vote “was fairly very significant in my thought process.” Indeed, Reid may have found it difficult to modify the legislation in a way to appease liberals without losing the support of Republicans.
The majority leader also did not have an alternative bill ready. Although the Senate Banking, Housing and Urban Affairs panel held numerous hearings on the issue, most recently on March 6, it did not mark up any legislation.
It is unclear when the Senate will take up the bill. Republicans are pushing for consideration after passage of a surface transportation bill (
Package of Proposals
The House package combined several proposals focused on smaller businesses. One bill (
The package also includes provisions to create a transitional category for some small and medium-sized companies. Called an “on ramp,” the classification would phase in new regulatory requirements for qualifying companies to help reduce the costs of selling shares to the public. Schumer has been a prominent supporter of such a proposal, which he said would spur companies to go public and gain greater access to capital investment.
Senate to Vote on House IPO Bill
But even as lawmakers have rushed to support the bill, consumer advocates, securities experts and former regulators have raised concerns, including questions over provisions they said would leave inadequate protections for individual investors.
“The proposed legislation is a dangerous and risky experiment with the U.S. capital markets, and the savings of over 100 million Americans who depend on those markets,” Lynn E. Turner, a former chief accountant at the Securities Exchange Commission testified this month.
Turner expressed doubts the legislation would spur job growth or IPOs, noting the number of initial public offerings tends to track closely with the strength of the economy rather than regulatory burdens.
Columbia University Law professor John Coffee has warned similar crowdfunding proposals could lead to the “re-emergence of boiler shops across the country.”
Critics of the bill have some support in the Senate. The House bill “ is fundamentally flawed when it comes to protecting consumers and the middle class,” said Chip Unruh, press secretary for Sen.
But with the unemployment rate still higher than 8 percent and the November elections drawing closer, lawmakers are eager for an accomplishment they can boast of as a “jobs” bill.
“It’s important to begin debating these bills because they will create jobs and strengthen our small businesses,” said Sen.
It is unclear what kind of amendment process will take place, but Reid has already said he would push for a reauthorization of the Export-Import Bank with a higher lending limit.
Established in 1945, the bank is designed to help finance the purchase of U.S.-made goods overseas when private loans are unavailable or unaffordable, often due to political or economic risks in certain overseas markets. The Ex-Im Bank provides direct loans to foreign buyers, as well as loan guarantees to other lenders and credit insurance to companies.
The bank is expected to hit its $100 billion lending cap by the end of this month, and the administration and business groups such as the U.S. Chamber of Commerce are pushing lawmakers to lift the cap in addition to reauthorizing the agency before its charter expires in late May.
Opposing such a move are conservative groups such as the Club for Growth, which views the bank as a distortion of the free market.