We have this small window of opportunity to make Crowdfund Investing law over the next several weeks [...] The Senate has been sitting idly even though a few Senators have tried to push Crowdfunding forward [S.1719 from Scott Brown (R-MA) and S.1970 from Jeff Merkley (D-OR)]. However both Senate Majority Leader Reid (D-NV) and Banking Committee Chairman Johnson (D-SD) refuse to bring it to vote. Until now.
2 days ago, the House took 6 of the Capital Formation bills that passed with almost unanimous bipartisan support (including our Crowdfunding bill), packaged them together into one (called the JOBS Act) and passed it again with overwhelming bipartisan support. The President came out and endorsed this Republican-led initiative and now they are calling the Senate's bluff. Either sit and do nothing and come election-time Americans will know that the Senate is the cause of the gridlock in DC or bring the bill (or their own version of the bill) to the floor to vote and act on our country's behalf.
When the JOBS Act was introduced, Senate Majority Leader Harry Reid (D-NV) said, "I look forward to moving these measures and our economy forward with the help of my Republican colleagues."
Among CF advocates, it is hoped but not necessarily assumed that Reid and Senate Banking Committee Chair Tim Johnson (D-SD) want meaningful and well-designed reform, as opposed to nominal and symbolic pseudo-reform
. Some see a message in the fact that Johnson didn't show up to the committee's March 6th hearing on capital formation
, which he was scheduled to open-- he reported a prior commitment with the Energy Committee, which he is a member of. Meanwhile, reports are that state regulators and others are spending a lot of time and money trying to scare Congress away from passing a crowdfunding exemption, or at least to have it watered down to ineffectiveness.
Here's a sneaky example
: On March 5th, a couple of days before the House vote on JOBS Act, two organizations called the Consumer Federation of America
and Americans for Financial Reform
sent a letter
to all members of the House strongly opposing the act. I'm including the letter below because I think it's worth parsing. At the top of the letter, it says, "We are writing on behalf of the Consumer Federation of America and Americans for Financial Reform (“AFR”) to express our strong opposition to this ill-conceived legislation." Then, if you skip down to the end of the letter, there's a long list of what appear to be signatories, including Common Cause, Consumers Union, CREDO Mobile, Move On, and many of the big labor unions and PIRGs. It looks like everyone opposes the JOBS Act.
But read the fine print above the "signatures" and you see that they actually aren't signatures at all -- it's just a list of "partners of Americans for Financial Reform," but "Not all of these organizations work on all of the issues covered by the coalition or have signed on to every statement." Meanwhile, the only two real signatures on the letter are the Consumer Federation of America and Americans for Financial Reform themselves. These two organizations wrote this letter "on behalf of" themselves (and no one else), which seems like a strange way to word things, and then listed all of their partners, signature style, at the end of the letter. The only explanation I can think of is that this letter was intentionally crafted to mislead people who might just read the first paragraph, and then skip down to the end to see who signed it. Is this tactic common in DC? Do the neutrality-defending lawyers at the Consumers Union (for example) know that their organization's name is being used in this way?
Harry Alford, President & CEO, National Black Chamber of Commerce
Kristie Arslan, President & CEO, National Association for the Self-Employed
Roger Campos, President & CEO, Minority Business Roundtable
Allen Gutierrez, National Executive Director, The Latino Coalition
Barbara Kasoff, President & CEO, Women Impacting Public Policy (WIPP)
Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council
Todd McCracken, President, National Small Business Association
So now we're all wondering what's going to happen in the Senate. It no longer looks like the CF exemption and its JOBS Act kin will die there, and hopefully it will find a champion in the Senate-- ideally a Democrat, but Jeff Merkley's bill in its current form is brain-dead and embarrassing. It doesn't require an open means of communication among investors and offerors, which is essential to crowdfunding, and it does not not preempt state law, so it would basically have no effect. What it authorizes is already legal, the one exception being that it allows for the creation of web-based intermediaries. The tables are seemingly turned on this issue, with the Senate Dems starting out by working to preserve the 1%'s monopoly on independent investment opportunities.
Fortunately there's work going on to improve the proposal from the Democratic side in the Senate. Michael Bennet (D-CO) is now collaborating on a new or significantly revised crowdfunding bill -- see his tweet from yesterday
: "Crowdfunding passed the House 390-23 & I’m pushing it in the Senate. RT if you think letting small biz raise start-up $ online is smart." Woodie has been working with the Merkley and Bennet offices and says that they understand that Merkley's original bill is too restrictive for CF to flourish under.
We have a small window of opportunity now, as Woodie says. Here's how you can help:
- Call Harry Reid and Tim Johnson's offices to express your support for a meaningful crowdfunding exemption:
Harry Reid (D-NV), Senate Majority Leader: (202) 224-3542
Tim Johnson (D-SD), Senate Banking Committee Chair: (202) 224-5842
- Tell the Senate to Legalize Crowdfunded Securities with a Full-page Ad in Politico - this campaign is even more important now, after last week's news, and there's not much time left to reach the goal. If you've read this far, you can at least cough up a measly $5.
- Register yourself on Legalizecrowdfunding.org
- Retweet Bennet's tweet - hey, it can't hurt, but I'm reluctant to list this here since I think it's only marginally helpful. Please don't consider this by itself as "doing your part."