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Capital Markets Subcommittee Approves Bills To Promote Capital Formation And Job Creation

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Location: Washington, DC

As the nation's economy continues to struggle, the Capital Markets and Government Sponsored Enterprises Subcommittee approved bills on Wednesday that will promote job creation, economic growth and capital formation. The bills now move to the full Financial Services Committee for consideration.

Subcommittee Chairman Scott Garrett said, "The subcommittee markup was a resounding success. These bills will go a long way in our ongoing efforts to promote capital formation, jumpstart the economy and encourage job creation. I appreciate the hard work each of the bill sponsors put into their legislation and look forward to working closely with them as we advance the bills through the full committee."

Financial Services Committee Chairman Spencer Bachus said, "The bills approved by the Subcommittee remove unnecessary government roadblocks that are hindering an economic recovery. In order to achieve real, long-term economic growth, Congress must get our fiscal house in order and provide certainty for our job creators, especially small businesses."

The Committee continues to go through the Dodd-Frank Act page-by-page to identify and fix its job-crushing provisions. Four of the bills approved by the Subcommittee today fix provisions in the Dodd-Frank Act that are preventing economic growth. The bills are:

The Asset-Backed Market Stabilization Act, introduced by Representative Steve Stivers, removes a provision in Dodd-Frank that temporarily shut down the asset-backed securities market. The Dodd-Frank Act included a liability provision for credit rating agencies if their ratings were determined to be inaccurate. Within days of the Dodd-Frank Act becoming law, this liability provision temporarily shut down the asset-backed securities market, forcing the Securities and Exchange Commission (SEC) to step in and issue a temporary no-action letter on July 22, 2010. On November 23, 2010, the SEC issued a permanent no-action letter. The Asset-Backed Market Stabilization Act provides certainty to the issuers of asset-backed securities by repealing the liability provision. The legislation was approved by a vote of 18 to 14.

The Small Business Capital Access and Job Preservation Act, introduced By Representative Robert Hurt, exempts advisers to private equity funds from the registration requirements under Dodd-Frank. The Financial Services Committee has received testimony regarding the role private equity firms play in preserving existing jobs and creating new ones by providing capital to struggling and growing companies. The legislation was approved by a vote of 19 to 13.

The Business Risk Mitigation and Price Stabilization Act, introduced by Representative Michael Grimm, provides a real exemption for non-financial businesses that use derivatives to manage risk. The Dodd-Frank Act requires derivatives transactions to be cleared through a registered clearing house, and exempts swaps and security based swaps from this clearing requirement if one of the counterparties is not a financial entity. The legislation was approved by a vote of 19 to 13.
The Burdensome Data Collection Relief Act, introduced by Representative Nan Hayworth, removes a provision in Dodd-Frank that was added without any debate to require publicly traded companies to disclose their median annual total compensation of all employees. Two months after the Dodd-Frank Act was signed into law, the Financial Services Committee received testimony about the enormous burden and complexity this provision poses to publicly traded companies, with very little, if any, corresponding benefit to investors. The legislation was approved by a vote of 20 to 12.

The Subcommittee also approved two additional bills focused on creating a economic climate where employers can grow and create jobs.

The United States Covered Bonds Act, introduced by Capital Markets Subcommittee Chairman Scott Garrett, would create a legislative framework to allow U.S. financial institutions to issue covered bonds, a form of debt in which specific assets -- typically loans -- are pooled for the benefit of bondholders. The legislation was approved on a voice vote.

The Small Company Capital Formation Act, introduced by Representative David Schweikert, was approved by voice vote. The legislation increases the offering threshold for companies exempted from SEC registration under SEC Regulation A from $5 million -- the threshold set in the early 1990s -- to $50 million. The SEC has the authority to raise this threshold but has not done so for almost two decades.

In addition, the Subcommittee approved the Church Plan Investment Clarification Act, introduced by Representative Judy Biggert. This bill makes a technical correction to Public Law 108-359 by amending the Securities Act of 1933 to allow church plans to invest in collective trusts. In 2003, Congress attempted to achieve this result, but omitted a necessary exemption from the Securities Act of 1933 to provide parallel treatment for church plans with exemptions in the Investment Company Act of 1940 and the Securities Exchange Act of 1934. The legislation was approved by voice vote.


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