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Public Statements

Jumpstart Our Business Startups Act

Floor Speech

Location: Washington, DC


Mr. COONS. Mr. President, I am glad this Chamber is focused on job creation, on access to capital, on ways we can help strengthen the speed and growth of high promise, startup companies. I am grateful for the input and leadership of the Senator from Louisiana, for her hard work in trying to make sure we pay attention to the matter that is before this body and making sure we strike the right balance between continuing to ensure investor protection, while also providing relief from regulations that may hold the promise of accelerating capital formation and job growth in this country.

When I go home to Delaware every night and when I attend events across our State every weekend, I most frequently hear from those deeply affected by our two long recessions, from which we are still growing and recovering, families who are still dealing with unemployment, with loss of their homes or with the threat to loss of their life savings, businesses that are facing a credit crunch and struggling to expand or to retain their employment.

Americans, I have heard over and over, and Delawareans want us to come together and find solutions in this body. The good news is that today, in a rare bipartisan spirit, that is exactly what we are doing. I am glad we are taking up two different versions of this legislation to create a positive climate for capital formation for early stage companies that have enormous potential to grow, one of which has passed overwhelmingly in the House--and I understand has earned the public support of President Obama--but the other of which, as we have heard a number of Democratic Senators speak to today, tries to mirror those same core provisions but insists on investor protection and on ensuring that we do not overreach in opening markets in ways we may regret later.

Sometimes, as the Chair knows all too well, this body deliberates overly long. In fact, in my first year and a half here, I have been struck at just how long we deliberate before acting and on how many measures have sat on the floor without action that should have been taken up promptly and quickly.

In this case, I am concerned about the opposite; that we are rushing through a measure that deserves some careful consideration and review. In any event, making progress in access to capital for entrepreneurs and startup businesses is something on which I hope we can all agree. In both the versions of the bill that we will consider later today or tomorrow, there are great ideas. I continue to believe that ensuring investor protection, market transparency, and the vibrancy of our capital markets through preventing fraud and ensuring clarity about what investors are getting is a fundamental principle that all of us should share.

But without the right time to consider this legislation, I am worried about the potential, the potential risks for investors, the potential burden it may place on business. I am worried about a proposal around beneficial ownership in one proposal, and I am worried about concerns that may overly open the market to fraudsters and those who would scam investors on the Internet.

There is much to like about these proposals, though, and let me dedicate the remainder of my time to focusing on two of them. Two of the strongest proposals we will consider today or tomorrow address a critical need for our business community, which is access to capital. Capital is what allows businesses to invest in new technology, new facilities, new workers, and in growth. Credit has, as we all know, been far too hard to come by in the last 2 years. But we can and should take action to make it more available to small business owners with high growth potential.

One option, as we have heard a number of Senators address, is to continue to expand the opportunity for financing from the Export-Import Bank. The other is to make somewhat easier the pathway to initial public offerings. Today's legislation would ease both processes. That is the right kind of positive movement that will help create opportunity all over the United States and for companies in my home State of Delaware.

First, if I can, the Export-Import Bank has long established its record of promoting exports and job growth. It has provided essential capital to help manufacturers and small businesses all over the country export more American-made goods. The reauthorization measure we take up, hopefully later today, has passed unanimously out of the Senate Banking Committee and has already enjoyed broad bipartisan support.

Last year, financing from the Ex-Im Bank supported hundreds of jobs in my home State and thousands more across the country. The bank supported one dozen companies in Delaware. For example, one, Air Liquide, has a proprietary MEDAL membrane, a selectively permeable membrane that turns landfill gas into usable energy; one example of many innovative, local Delaware companies creating high-quality jobs in our communities and able to sell these products by export through Ex-Im Bank financing.

Equally important, the Ex-Im Bank has not added a single cent to the deficit. It works to give American businesses a fair share in the global market. If American businesses and workers are going to be competitive, we have to ensure they have the support they need, otherwise they will continue to lose out.

China already provides three to four times as much export financing as we do to help their exporters. Our companies, our manufacturers, our communities, simply ask for a level playing field. In my view, reauthorizing the Ex-Im Bank is especially vital to these companies and our manufacturing sector. Given the realities of the global economy, it is not enough for American companies to just make great products. They also have to be able to sell them to the burgeoning global middle class.

As we all know, 95 percent of current and future customers and consumers live outside the United States. Reaching these consumers who are hungry for American products is essential to the steady growth of businesses of all types. Boosting American exports will be central to creating the kind of growth that will continue to sustain this ongoing economic recovery and allow our businesses to hire new workers.

Financing from Ex-Im can come in at a critical time for businesses in need of capital, but it does not meet the needs of every company. For some other early stage companies, Delaware businesses in particular, when they are in need of capital, one solution is to move toward an initial public offering by becoming a publicly traded company.

Today's legislation also includes an onramp to ease the path to an IPO. By reducing the regulatory burden on highly innovative companies poised for significant growth, we can encourage job creation on a great scale. At the moment, we are simply not seeing the rate of IPOs in our economy that we need to be helpful, and 92 percent of the jobs a company typically creates over its entire life cycle come after it goes public. In the 1990s, nearly half of all global IPOs happened in the United States. Today, that number is less than 10 percent.

There are many reasons companies choose not to go public. But one of them that I have recited repeatedly in Delaware and in Washington is regulatory compliance under Sarbanes-Oxley section 404(b). That is a mouthful, but it essentially requires some auditing, some disclosures, some pre-IPO work, which while the spirit of the law is, in my view, the right one--ensuring transparency and investor protection is the right direction--this particular section has proven, in practice, to be overly burdensome to businesses with potential to be the greatest job creators.

After hearing about this issue many times, I got together last fall with my colleague Senator Rubio to craft a solution. We found bipartisan agreement on this and six other issues, which we included in our joint legislation, the so-called AGREE Act, which we introduced last November.

That legislation was chock-full of job-creating potential proposals designed to spur ideas and encourage more of our colleagues to come together on this sort of bipartisan jobs legislation we can and should move to.

In the case of encouraging IPOs, that is exactly what has happened. Senators Schumer and Toomey have also picked up this particular proposal and moved further along with it. Then, on the House side, my longtime friend and fellow Delawarean Congressman Carney worked with his Republican colleague Congressman Fincher to write and pass legislation on this exact issue which has now come to us as part of this bipartisan jobs package, H.R. 3606.

I wish to specifically congratulate Congressman Carney, who with this bill became the first freshman Democrat in the House to pass a major piece of legislation. But as we heard Senator Landrieu speak to just a few minutes ago and as several Senators have stood on this floor and raised today and last week, the question we have to ask is: In providing this relief from Sarbanes-Oxley 404(b), what is the appropriate level? What is the appropriate duration? Where do we strike the right balance between investor protection and accelerating capital formation and job growth?

Is it at $250 million, as we proposed in the AGREE Act, $350 million as the democratic alternative proposes that is on the floor today or $1 billion? That is what is provided in the bill that came over from the House. In my view and the view of many Democratic Senators, we need to take the time to debate this, discuss it, and ensure we are striking the balance.

It is worth a few more hours of our time to get this matter right. Creating a favorable environment for businesses to create jobs can and should be our top priority in Washington. Since I arrived a year and a half ago, that has not always been the case. But today it can and should be the primary focus of our work. There is no reason we have to rush to pass this today. We can and should take some time to deliberate, to work through the appropriate process. It is my hope we will reauthorize and extend the reach of the Export-Import Bank and that we will move to a consensus, bipartisan bill that will strengthen access to capital for entrepreneurs and for early stage companies and that will show all the people of the United States that the House, the Senate, and the President can and will stand together on the side of job creators in this economy.

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