BREAK IN TRANSCRIPT
Mr. McHENRY. Mr. Speaker, I rise today in support of the Fix Crowdfunding Act.
Mr. Speaker, these days, small businesses are struggling to find the financing investment that they need to start up and to grow. That affects jobs. It certainly does.
Recently in my district, we have read reports that smaller counties in America, which used to lead the Nation in the growth of new businesses, now have actually lost more businesses than they have created.
The reason why the ranking member and I are actually able to work together on an important piece of legislation like this in a very logjammed discussion point about appropriate regulation--a lot of stuff gets locked up in partisan debate--what unites our conversation is a rural issue and an urban issue, and it is about capital deserts in America.
Now, everybody talks about food deserts. If you think about this, if you are not close to a grocery store, then you can't get fresh fruit, fresh vegetables, and you can't get foodstuffs for your family.
But we have capital deserts in America. Capital deserts are about those areas that are not Boston, Austin, and Silicon Valley. It is the rest of America that is struggling to get the capital they need so they can start a business, so they can grow a business.
I am not talking about the next Google or Facebook--maybe it is. I am talking about a lawn service. I am talking about a coffee shop. I am talking about a baker who wants to sell her goods on a wider scale so that she can provide for her family. Those are the concerns that are real and that we can address in a real way before Congress today-- tonight--in this vote.
Investment crowdfunding is one way we can reverse this disturbing trend. What this bill does is allow us to expand what you are able to do through investment crowdfunding.
Five years ago in the JOBS Act, we had a revolutionary change to the way we allowed individuals to invest a little bit of money in their fellow men. It allowed men or women in local communities to invest in a local coffee shop. You didn't have to be a wealthy investor to get these great opportunities. You could be the average, everyday investor like me or like many of my constituents.
But in the JOBS Act and in the investment crowdfunding part of that bill that I wrote 5 years ago, out of that, the Securities and Exchange Commission wrote four regulations, and they created a couple of major challenges as a result of that. One is the 12(g) problem. Let me explain this.
What the 12(g) problem is is that, in essence, you are subjecting very low fundraising to very expensive regulatory disclosures. That is a problem. It is a problem because it is costly. It is economically costly and restricts economic opportunity. We fixed that in the Fix Crowdfunding Act.
Another significant problem for crowdfunding is that under SEC rules, single-purpose funds are not permitted. Let me explain this. Single- purpose funds are like this: you have somebody who has a fiduciary responsibility, meaning that I am going to look out for your best interests on this investment and we are able to create a fund in order to pool those resources, that investor acumen, if you will, and work together with them. So it allows unsophisticated people to get sophisticated advice if we allow special purpose vehicles.
So these two very important provisions, understood at a very simple level, if we fix these things we will provide more economic opportunity, we will have better investor advice, and we will be able to expand and make real the utility of crowdfunding.
The essence of this is that we believe in the capacity of individual Americans to make decisions for themselves and to take a little bit of risk for themselves. It is a powerful thing. It is a powerful, meaningful step forward.
Now, it doesn't solve the greater debate that we are having here in Washington on so many challenging issues of policy where perhaps the left and the right don't see eye to eye. But on this, we came together and we were able to create a small opening of economic opportunity and try to get those resources out into the community. It is a meaningful step forward.
I thank the ranking member of the Financial Services Committee. I thank Ranking Member Waters for her active engagement on this. She helped improve our original bill that came through the Financial Services Committee 5 years ago, and she has helped work through this compromise before us on the House floor tonight.
While we may not agree on so many other issues of policy, we have worked together on two substantive areas of policy here in recent weeks. I think that is a hopeful sign. I think it is a positive sign.
What we are doing here today will expand that opportunity for millions of Americans to have that little bit of investment that they would like to make in their fellow man and their fellow woman to create new jobs to provide new economic opportunity.
Ladies and gentlemen, I ask and encourage your support for the Fix Crowdfunding Act, and I urge an ``aye'' vote.
BREAK IN TRANSCRIPT