Encouraging Employee Ownership Act of 2015

Floor Speech

BREAK IN TRANSCRIPT

Mr. HURT of Virginia. Mr. Chairman, I thank the chairman of the Financial Services Committee for his leadership in moving this legislation to the floor.

I rise today in support of this bill, the Capital Markets Improvement Act.

As I travel across Virginia's Fifth District, the number one issue facing the families I represent is the desperate need for job creation.

Making sure that hardworking Virginians and Americans have adequate access to capital markets is imperative to job creation and to sustained economic growth for our great Nation.

This is why it is so important that the Financial Services Committee and the House of Representatives continue to push legislation that will make it easier for our businesses, for our farmers, and for families to be successful.

Indeed, every provision within this bill today we are considering has received bipartisan support, and each title of this bill is critical to enhancing access to capital and ensuring that the U.S. capital markets remain the most vibrant in the world.

Within this Capital Markets Improvement Act, I am pleased that two provisions that I have sponsored have been included, the Small Company Disclosure Simplification Act and the Streamlining Excessive and Costly Regulations Review Act.

The first provision is contained in title IV. The Small Company Disclosure Simplification Act addresses a 2009 mandate from the SEC which required the use of eXtensible Business Reporting Language, or XBRL, for public companies.

While the SEC's rule is well-intended, this requirement has become another example of a regulation where the costs often outweigh the potential benefits.

These companies spend thousands of dollars and more complying with the regulation, yet there is little evidence that investors actually use XBRL, leading one to question its real-world benefits.

The provision before us today is a measured step that would offer small companies relief from the burdens of XBRL. Title IV provides a voluntary--let me say that again--a voluntary exemption for emerging growth companies and smaller public companies from the SEC's requirements to file their financial statements via XBRL in addition to their regular filings with the SEC.

It is important to note that nothing in this bill precludes companies from utilizing XBRL for their filings with the SEC. The exemption is completely optional and allows smaller companies to assess whether the costs incurred for compliance are outweighed by any benefits using this technology.

During our committee's hearing on this issue, one company reported that it spent $50,000 on complying with XBRL. That is a real cost to a small company, especially when that cost does not yield a significant benefit.

I am not suggesting that every firm pays this much, but certainly we can agree that, when filing fees are this high, we should ensure that the requirements result in a benefit to investors and to those public companies being regulated.

It is also very important to note that, with this legislation, all public companies will continue to file quarterly and annual statements with the SEC.

Furthermore, this bill will not kill the implementation of XBRL or structured data at the SEC. It is merely providing a temporary and voluntarily exemption for smaller companies so that they may better utilize their capital.

It is about choice and ensuring that these companies can use their capital to create jobs instead of using it to comply with unnecessary red tape.

This bill has previously received strong bipartisan support in the Financial Services Committee and on the floor of this House when this measure was part of the Promoting Job Creation and Reducing Small Business Burdens Act.

Similarly, during the last Congress, this measure was also approved with a strong bipartisan vote in the House. I ask that my colleagues once again support this commonsense legislation today.

In addition to the disclosure simplification issues, we have also sponsored title V of this Capital Markets Improvement Act. This is a bipartisan bill that I crafted with my colleague, Ms. Kyrsten Sinema of Arizona.

The Streamlining Excessive and Costly Regulations Review Act is about accountable and representative government and making sure that the SEC is taking an ongoing retrospective look at its regulation.

This legislation would simply require the SEC to review its major rules and regulations on a regular basis to determine whether they are still effective or outdated or whether they need to be changed in some regard. In fact, other prudential regulators, such as the FDIC, the OCC, and the Federal Reserve, are already doing this.

During the mid-1990s, the Economic Growth and Regulatory Paperwork Reduction Act, or EGRPRA, required these entities to conduct a retrospective review of all of their regulations to determine if they were still effective and, subsequently, report their findings to Congress.

Because the House Banking Committee at the time did not have jurisdiction over the SEC, the SEC was left out of this process.

Title V would simply require the SEC to retrospectively review its regulations with the goal of ensuring that they are effective and up to date. It would enable the SEC to operate in the most effective manner possible. It would afford the SEC the autonomy and flexibility to make this mandate effective.

President Obama himself endorsed this idea in multiple 2011 executive orders, and the other prudential regulators are already operating under a similar review process. This legislation simply puts the SEC on the same playing field as the other regulators.

Moreover, this bill provides Congress with the insight it needs to hold the Commission accountable, and the legislation adheres to the requirements of the Administrative Procedure Act.

All said, the structure and the process of title V will provide industry, the SEC, and Congress, with the structure and time necessary to ensure that this retrospective review process is effective.

I ask my colleagues to join me in supporting this title so that we can continue to improve the SEC's regulatory regime.

In closing, let me again thank the committee chairman, Chairman Hensarling, and Chairman Garrett, who is our Capital Markets and Government Sponsored Enterprises Subcommittee chair, for making these two provisions a part of this act. I urge my colleagues to vote ``yes'' on this good bill.

BREAK IN TRANSCRIPT

Source