President Barack Obama signed into law on Thursday a bipartisan bill to kick start small business growth and he promised rigorous oversight to make sure the measure does not harm investors, as critics have warned.
The bill to make it easier for small firms to raise capital and go public marked a rare accomplishment in an gridlocked Congress. Obama, his fellow Democrats and his Republican foes were all eager to show voters in an election year that they could agree on something to boost the fragile economic recovery and fight high unemployment. "For startups and small businesses, this bill is a potential game changer," Obama said at a White House signing ceremony flanked by lawmakers from both parties. "Startups and small business will now have access to a big new pool of potential investors, namely the American people." The bipartisanship on display on Thursday is unlikely to last.
Both parties are busy sharpening their election year messages and there is little left on the congressional agenda that has the support of both Republicans and Democrats. The bill, which was drafted in the Republican-controlled House of Representatives, will make it easier for companies to solicit private investors and relaxes filing requirements associated with initial public offerings. It also allows startup companies to engage in crowd funding, in which investors take small stakes in companies over the Internet.
The measure has the strong backing of business groups and entrepreneurs, particularly in the technology industry. Slava Rubin, co-founder of the crowd-funding site Indiegogo, attended the signing and said in a statement that the bill would give every American an "equal opportunity to stimulate tomorrow's new companies and job growth. "Some Democratic lawmakers, regulators and investor advocates, however, have expressed concerns the new law will roll back critical shields that protect unsophisticated investors from securities fraud. Democratic Senator Carl Levin, who sponsored a failed amendment to boost investor protections in the bill, warned the new law would open the door for more "Enron-style frauds."
"When we look back on this day, I'm afraid we will see that the misnamed JOBS Act hurt investors, made our capital markets less competitive, and ultimately cost American jobs," he said in a statement. Seeking to blunt such criticism, Obama directed his administration, including the Justice Department, to keep a close eye on the bill's effects and highlighted protections already in the legislation. "To make sure Americans don't get taken advantage of, the websites where folks will go to fund all these startups and small businesses will be subject to rigorous oversight," he said. He also said the Securities and Exchange Commission will play an important role in implementing this bill. SEC Chairman Mary Schapiro had expressed concern the original House version of the bill eroded too many critical investor protections. The Senate fixes, which she welcomed, do not address all of her issues with the legislation.