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Public Statements

Letting the Entrepreneurial Spirit Take Hold

Floor Speech

Location: Washington, DC

Mr. McHENRY. Mr. Speaker, today I want to talk about something that is very important, a great opportunity for this Congress to lift the red tape from Washington and allow the entrepreneurial spirit of America to take hold.

We know that, 3 years into an economic recovery, America's labor and capital markets continue with unprecedented challenges. Entrepreneurship is at a 17-year low. Deeply troubling, as we know, is that 40 million jobs since 1980 have been created by small businesses or start-ups. What is interesting about this is that those are the folks that are likely to fail when you create a small business. But still, we have netted 40 million new jobs out of this one sector over the last 30 years

Fixing this mess that we've seen in this recent downturn won't happen overnight, and there is no silver bullet for fixing it; but we have to recognize that America has seen the world catch up, catch up to what once was the most vibrant capital market on the planet here in the United States. The world has caught up because they see what that does in terms of job creation. They have caught up in terms of regulation, and they allow capital to flow more easily in other jurisdictions around the world.

We also know, according to the World Bank, that the Doing Business report found that the U.S. fell from third to 13th in the ease of starting new businesses. It's fallen that quickly just in the last 5 years. And because of Dodd-Frank, credit is less available and more costly than it was before. We have restricted the opportunity for businesses to get the lending that they need.

At the same time, we haven't updated our securities regulations in the United States in 80 years. There has been no significant rewrite since the Securities Act of 1933 and the Securities and Exchange Act of 1934. They put in place restrictions that were right at the time. You had this new technology called the telephone. You had folks hawking securities on street corners in New York, and so they wrote regulations at the time that were applicable to the time.

We know that the Internet is a fully mature ecosystem now. We know that billions of dollars are transacted just on eBay alone. People have an online reputation with social networks that they can utilize. We want to take that power and actually allow businesses to use that power of the Internet and social networks. That's why I filed, and this House passed, the Entrepreneur Access to Capital Act that provides those updates, so you can actually have crowdfunding.

What is crowdfunding? crowdfunding is the best of microfinancing and crowdsourcing. You use a wide network of individuals and you can raise capital for your new business, your start-up, or your small business. We passed that and sent it to the Senate.

The Senate didn't do anything, they didn't act, so we repackaged the bill and put it within the JOBS Act. This House passed it with an overwhelming majority of nearly 400 votes. We sent it to the Senate and the Senate changed a few small provisions and is sending it back this week. We hope to pass that bill this week and send it to the President's desk.

What the legislation for crowdfunding does is remove that restriction on communicating, which the Securities Act of 1933 puts in place, and lifts the cap on investors that the Securities Exchange Act of 1934 provides for.

So, crowdfunding is a great opportunity for small businesses to raise equity. Unfortunately, the Senate decided to amend a few small provisions within this crowdfunding act that we were able to pass here in the House, I believe a few misguided, ill-informed provisions: one, expanding liability provisions for issuances of crowdfunding securities, and, number 2, banning general solicitation, which means that a company can't put up on their Facebook or post on their Twitter account, they can't tweet the fact that they're trying to raise capital. I think those restrictions are flawed and misguided, and I would ask the Senate to come around to fixing these provisions.

I think it's very important the House pass the JOBS Act this week so we can make capital formation more democratic, more in touch with the market as it is today. And so I ask my colleagues to vote for the JOBS Act, and I ask the President to sign this bill so that we can help capital formation in the United States and get people working again.

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