Posted by on August 20, 2012
By Rep. Blaine Luetkemeyer
I was more than a little annoyed recently during a committee hearing with a government official who seemed intent on defending an agency created by the troubling Dodd-Frank Act that is more interested in navel gazing than helping our nation’s small businesses.
During the hearing, a leading deputy at the Consumer Financial Protection Bureau (CFBP), created by Dodd-Frank, was unable to justify exactly what this so-called consumer protection agency has actually achieved on behalf of consumers. After two years, the official provided me with vague answers as to the group’s actual accomplishments.
The situation was even more exasperating for me because, in the two years since the passage of Dodd-Frank, I have heard over and over again from citizens and business owners who are frustrated with the legislation. Dodd-Frank was supposed to address the causes of the 2008 financial crisis that rippled through every part of our economy. Instead, we have a 884- page law that doesn’t address the root causes of the crisis – for example, it never even mentions Fannie Mae and Freddie Mac – but is making life a lot more difficult for Main Street by drowning our small business owners under 400 new rules and mandates and restricting access to credit.
Clearly, this bill has done more to harm Main Street than fix Wall Street and the CFPB is one of those glaring reasons why. Designed to implement and enforce financial consumer law to ensure all consumers have access to consumer financial products and that services are fair, transparent and competitive, the CFPB cannot show that it actually has done any of that. In fact, it is making credit harder to come by, which makes it harder for businesses to expand, grow, and hire. CFPB also specifically places consumer protection ahead of safety and soundness of financial institutions. I am all for strong consumer protections, but as a former bank regulator for our state, I know firsthand that putting safety and soundness of the banks and credit unions that hold your deposits behind other priorities is the wrong way to go.
With unemployment still at an astounding 8.2 percent, it is even more important than ever that Congress repeal job-killing parts of Dodd-Frank that will help to create a sense of certainty again. I believe that the CFPB is part of the problem, not the solution, when it comes to creating an environment in which our small businesses can succeed.
In my opinion, Dodd-Frank is proving to be yet another example of onerous and costly rules on folks and burdening small businesses with unnecessary mandates that hinder our nation’s number one job creators from creating much-needed jobs.
Posted by on August 16, 2012
By Rep. Robert Hurt
At a time when uncertainty from Washington has led us to nearly three-and-a-half years of more than 8 percent unemployment nationally, folks in Washington, D.C., are still calling for higher taxes and a bigger federal government that will only lead to more uncertainty.
Just this past week, I traveled along Route 40, stopping in Kenbridge, Victoria, Keysville, Charlotte Court House, Phenix, Brookneal, Gretna, Penhook and Rocky Mount. Having met with local business owners, local officials and families along the way, I can tell you that the private sector is not doing fine in Virginia’s 5th District. The resounding message they delivered was that over-regulation and big government policies that have been put forth in Washington, D.C., are strangling their businesses and harming their communities.
We just learned recently that the national unemployment rate is on the rise, and that can certainly be felt in a very real way in Virginia’s 5th District. All along Route 40, local business owners relayed to me their concerns with the size of the federal government and their fear that it is on a path to only continue growing larger and larger. They are already tied down with federal regulations, and now they have watched as the president and the Senate, in the past month, have called for higher taxes.
On top of the president’s health care taxes, high fuel prices and mountains of new regulations in the past three years, the threat of higher taxes on Dec. 31, 2012, has renewed fears for our small business owners in the 5th District and across the country. One local business owner in Danville recently told me, “This business climate creates the question whether it is worthwhile to take business risks, if the rewards of profit must be handed to the federal government instead of reinvested in my business and staff.” And this sums up the sentiment of most that I talk to – instead of creating jobs, our small business owners are left with thinner and thinner margins as the government continues to take more and more.
But the House has acted to address the tax hike and to improve the economic environment. Just last month, we voted to prevent tax increases for all Americans. And since January 2011, we have been hard at work rolling back unnecessary regulations.
Part of that effort includes a bill that I introduced, the Preserving Rural Resources Act, which passed through committee and can now be considered by the full House of Representatives. This legislation will curb burdensome regulations on our local farmers, saving them thousands of dollars and allowing them to create the jobs our communities need. You can read more about this legislation at hurt.house.gov.
As the House continues its work on reducing uncertainty and making it easier for our small businesses and family farmers to succeed, it is my hope that the Senate and the president will listen to the will of the American people like those that I spoke with along Route 40 this past week. They should heed their calls and join with us in advancing pro-growth policies, like the Preserving Rural Resources Act and like extending tax cuts for all Americans, so we can reignite our private sector, renew this downtrodden economy and get Central and Southside Virginians back to work.
Posted by on August 13, 2012
One of the most significant accomplishments of the Financial Services Committee during the 112th Congress is passage of the JOBS Act. The Jumpstart Our Business Startups Act (JOBS Act) removes government barriers to job creation and economic activity. The JOBS Act, comprised of six bills that originated in and were originally approved by the Committee, is designed to help startups and entrepreneurs get off the ground, access capital and create jobs. These initiatives all received strong bipartisan support in Congress and from the President’s Jobs Council and the business community.
The JOBS Act Will Help Get Americans Back To Work. House Republicans have consistently offered solutions to create an environment that promotes job creation and allows our small businesses to grow. Republicans are focused on eliminating government barriers to an economic recovery. The JOBS Act will jumpstart our economy and restore opportunities for America’s primary job creators: our small businesses, startups and entrepreneurs.
Posted by on July 27, 2012
Rep. Barney Frank, Ranking Member of the Financial Services Committee, on Thursday responded to criticism that regulators have completed “less than half” of the 400 new regulations in the Dodd-Frank Act by blaming House Republicans for cutting the budgets of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
“It is true that when the Republicans took over the House, they cut the funding for two of the most important agencies that got new responsibilities.”
-- Rep. Frank, CNBC’s “Closing Bell”
Here are the facts about funding:
*Source: Congressional Research Service
Posted by on July 24, 2012
Sen. Kaufman: From “Aye” on Dodd-Frank to “Will Not Protect Us” in Just 2 Years
For someone who voted for the Dodd-Frank Act, former Senator Ted Kaufman (D-Del.) sure doesn’t have many nice things to say about the massive 2,300-page law.
Marking the two-year anniversary of President Obama’s signing of the Dodd-Frank Act, Senator Kaufman used a guest column in The Hill to level strong criticisms against the law.
As to whether Dodd-Frank ended “too big to fail” (a claim made repeatedly by many supporters of the law), Senator Kaufman is direct in his assessment: Absolutely not.
He writes: “So are our largest banks still too big to fail? Of course they are.”
Not only did Dodd-Frank fail to end “too big to fail,” Senator Kaufman notes that the nation’s five largest banks are bigger today than they were when the financial crisis began.
Senator Kaufman is also dismissive of the much-hyped “living wills” that Dodd-Frank requires of large institutions and that are supposed to spell out how they would be wound down in a crisis. These “would be of little use in the real world.”
In the final analysis, after enshrining “too big to fail” and future bailouts into law, and after “leav[ing] the details” to regulators who “aren’t good at writing both the laws and the regulations,” Senator Kaufman concludes:
“It is clear to me that Dodd-Frank, however good its intentions, has not and will not protect us against another meltdown.”
If that’s the case, then what was the point?
Posted by on July 06, 2012
With this month marking the second anniversary of passage of the Dodd-Frank Act, the Financial Services Committee is focusing attention throughout July on the burdens this law’s 2,300 pages and more than 400 new rules layer on American companies, financial markets and consumers.
Supporters of Dodd-Frank sold it to the public as “tough Wall Street reform,” but in reality its red tape hurts businesses and small town banks far from Wall Street that had nothing to do with the 2008 financial crisis.
Small town banks like Gothenburg State Bank in Gothenburg, Nebraska. This bank is 1,362 miles from Wall Street. But listen to what its chairman and president, Matthew H. Williams, said in testimony to the Committee about the pressures resulting from the “hundreds of new regulations” of Dodd-Frank:
“These pressures are slowly but surely strangling the traditional community banks, and handicapping their ability to meet the credit needs of their communities.”Stay tuned throughout July for more information from the Committee on the consequences of Dodd-Frank…
Posted by on June 27, 2012
The JOBS Act, passed by Congress and signed by the President earlier this year, reduces government barriers to entrepreneurship, innovation and capital formation. It combines six separate proposals that originated in the Financial Services Committee into one bill. These six proposals were part of the Committee’s plan announced in January 2011 to help small companies gain greater access to the capital that is necessary for them to grow and hire workers.
One of those six proposals, the Small Company Capital Formation Act sponsored by Rep. David Schweikert, makes it easier for small companies to raise capital and test the waters for a future initial public offering (IPO). It does this by raising the offering threshold for companies exempted from registration with the Securities and Exchange Commission under Regulation A from $5 million to $50 million. Raising the offering threshold helps small companies gain access to capital markets without the costs and delays associated with the full-scale securities registration process.
While that may sound complex, the result “will be a game changer” for small businesses trying to raise capital, according to a recent column in the Washington Post.
“What this means to small businesses across the country is that they will be able to access needed capital without having to conduct an IPO or complying with the significant restrictions on resale. In addition…there will be a larger pool of potential investors, many of whom will now be less hesitant to invest in smaller offerings.”
BACKGROUND AND NEED FOR LEGISLATION
Section 3 of the Securities Act of 1933 authorizes the Securities and Exchange Commission to exempt small securities offerings from registration. Under Section 3, the SEC promulgated Regulation A, which exempts public offerings of less than $5 million in any 12-month period. The SEC set the threshold at $5 million in 1992, where it had remained until passage of the JOBS Act.
Congress originally authorized the SEC to set the Section 3 threshold at $100,000. It has raised the limit several times since: to $300,000 in 1945; to $500,000 in 1972; to $1,500,000 in 1978; and to $2,000,000, also in 1978. Before 1980, each time that Congress raised the statutory limit, the SEC promptly exercised its authority and raised the Regulation A threshold. Congress established the current level of $5,000,000 in 1980, but the SEC waited 12 years, until 1992, before raising the Regulation A threshold to the statutory limit authorized by Congress.
Since the SEC set the Regulation A threshold at $5 million in 1992, issuers and market participants have pointed out that the offering threshold has been too low to justify the costs of going public under Regulation A. In addition, inflation, which has risen approximately 165% since 1980, when Congress gave the SEC the authority to set the Regulation A offering threshold, has further exacerbated the imbalance between costs and benefits. Between 1995 and 2004, companies have used Regulation A only 78 times; in 2010, only three times. The low number of Regulation A filings—each for the maximum amount of $5 million—demonstrated that a revision to Regulation A was necessary. To increase the use of Regulation A offerings and help make capital available to small companies, Rep. Schweikert introduced the Small Company Capital Formation Act, which increases the offering threshold to $50 million.
After its approval by the Financial Services Committee on June 22, 2011, the House voted 421-1 for the Small Company Capital Formation Act on November 2. It was later incorporated into the JOBS Act along with five other bills from the Committee, which became law on April 5, 2012.
Small businesses are critical to job growth in the United States. Information released in January 2011 from the Small Business Administration states that 65 percent of all net new jobs created in the United States during the previous 17 years came from small businesses. Amending Regulation A to make it viable for small companies to access capital will permit greater investment in these companies, resulting in economic growth and more jobs. By reducing the regulatory burden and expense of raising capital from the investing public, Regulation A reform will boost the flow of capital to small businesses and fuel America’s most vigorous job-creation machine.
Posted by on April 30, 2012
The bipartisan JOBS Act arrives just in time to help small, community banks as they are “struggling to stay profitable in a period of low interest rates, stagnant lending and rising compliance costs from other new regulations,” the Wall Street Journal reports.
The JOBS (Jumpstart Our Business Startups) Act originated in the Financial Services Committee and is the culmination of an initiative started by Chairman Spencer Bachus last year to promote small business capital formation.
The Wall Street Journal article takes particular note of one provision of the JOBS Act that raises the number of shareholders at which small banks must register with the SEC from 500 shareholders to 2,000.
The change frees up small banks to raise capital by attracting new investors without taking on the red tape burdens that come with mandatory SEC registration and reporting. Filing quarterly and annual financial reports alone with the SEC can cost small banks as much as $200,000 a year.
This Wall Street Journal report follows:
Small Banks Get a Freer Hand
By ROBIN SIDEL
Jim Stein no longer has to worry when one of his shareholders dies or gets divorced.
As chief executive of Bank of Houston, Mr. Stein used to fret about tripping a regulation that required the community bank to register with the Securities and Exchange Commission if it has more than 500 shareholders. The bank, a unit of BOH Holdings Inc., carefully maintained its shareholder count at 350 because it wanted to avoid the cost and hassle of registering. But the level was always at risk of rising.
"One shareholder could turn into four through unexpected consequences," Mr. Stein said.
Now, Mr. Stein and other small-bank CEOs can stop counting shareholders as closely and turning potential investors away at the door. The JOBS Act signed into law this month includes a provision that raises the number of shareholders at which small banks must register with the SEC to 2,000. The JOBS Act aims to increase jobs by reducing regulations on companies.
The change means that small banks are free to raise capital by attracting new investors without taking on regulatory burdens that are associated with the SEC filings. It also could breathe some new life into bank mergers and acquisitions, which last year stood at the second-lowest level since 1980.
"This will create opportunities for us that didn't exist before," said Mr. Stein. The 7-year-old bank, which has six branches, wants to expand in the Houston area and potentially find a merger partner.
The new rule comes at a time when community institutions are struggling to stay profitable in a period of low interest rates, stagnant lending and rising compliance costs from other new regulations. Returns on assets at institutions with $1 billion or less in assets was a third less than the industry average in 2011, according to the Federal Deposit Insurance Corp.
The move potentially could affect hundreds of community banks around the country. Just 16% of the nation's roughly 7,400 banks and thrifts are publicly traded, according to research firm SNL Financial. Many of those are thinly traded, but most are required to file quarterly and annual financial reports with the securities agency.
The JOBS Act also makes it easier for small banks to deregister with the SEC, permitting them to do so with 1,200 shareholders, compared with the current threshold of 300.
Many banks aren't likely to raise their shareholder base; community banks are often closely held among a small group, especially those that are family-run institutions. Some, however, are eager to attract more capital and investors, especially if they can now avoid the expense, which could be as much as $200,000 a year, of filing quarterly and annual financial reports with the SEC.
Maintaining the shareholder numbers game has been tough for Roland Williams, who monitors the 492 holders at Post Oak Bank in Houston. As chief executive of the seven-branch bank, a unit of Post Oak Bancshares Inc., he already had resigned himself to breaking through 500 shareholders this year because the bank is planning to raise up to $20 million of capital.
"You just can't have enough capital," he said.
The new rule isn't expected to threaten the safety and soundness of the community-bank industry; banks of all sizes must regularly file financial data with the FDIC and submit to examinations from national and state regulators.
Industry consultants say the raising of the 500-shareholder rule could fuel new life in the strapped sector by giving banks flexibility to build new branches or pursue growth through mergers and acquisitions. Some industry observers have long said that the U.S. banking system would be more efficient with fewer institutions even though the number of commercial banks and thrifts already has dropped 60% since 1985.
Several bank executives said the 500-shareholder barrier prevented them from pursuing mergers because they didn't want to issue new shares.
The 500-shareholder bar "has been something on the mind of every board in every merger discussion," said Curtis Carpenter, managing director at Sheshunoff & Co., an Austin, Texas, investment firm that focuses on the banking industry.
The new threshold also is likely to trigger a wave of community-bank stock offerings, according to Mindi McClure, managing principal at Bear Cos., an investment firm in Arlington, Va., that specializes in community banks.
"Having an additional way for banks to get more shareholders is a real positive," she said.
Jack Hartings, chief executive at Peoples Bank Co. in Coldwater, Ohio, already had warned his 465 shareholders that the bank might have to pursue a reverse stock split in order to avoid tripping the 500-shareholder barrier. Mr. Hartings, whose bank is a unit of Peoples Holding Co., also dissuaded potential investors from buying stock, telling them, "We appreciate your confidence in the bank, but right now we are not seeking new shareholders."
Mr. Hartings said the bank has no immediate plans to expand its shareholder base as a result of the law even though "everyone likes to own a piece of a company that they see in town."
"We have willing buyers, but not many willing sellers," he said.
Posted by on March 21, 2012
Not to be missed is Wednesday’s Chicago Tribune editorial on the JOBS Act, a package of six bills from the Financial Services Committee that will promote innovation, economic growth and jobs.
The JOBS Act – short for Jumpstart Our Business Startups – is a “rare example of bipartisanship” in today’s Washington, the newspaper writes, that would cut red tape for small businesses and emerging growth companies.
Even though the JOBS Act passed the House of Representatives on March 8 by a vote of 390-23 and has the backing of President Obama, some Democrats in the Senate are intent on delaying action or killing it outright.
The Tribune asks: “Would the Senate really bury a jobs-creation bill that had such broad support in the House? We sure hope not.”
Small business owners, entrepreneurs – and millions of out-of-work Americans – hope not, too.
The editorial comes just two days after more than 5,000 entrepreneurs, investors and job-creators publicly called on the Senate to pass the JOBS Act without delay and without weakening amendments.
“Kauffman Foundation studies show that all net new job growth in the past decade has come from companies that are less than 5 years old. This act will encourage the creation and growth of these young companies by providing them with new sources of capital.”
Their letter continues: “These measures will also ease some of the regulations that slow the growth of these young companies and impede them from creating new jobs in the U.S.”
The six bills that make up the JOBS Act originated and were first considered and approved by the Financial Services Committee over the course of the past year. The measures include strong investor protections while removing unnecessary and outdated government barriers that hinder the ability of small companies to access the financing they need to start up, expand and create jobs.
Instead of trying to throw up roadblocks to passage of this much-needed bill, the Senate should listen to these 5,000+ job-creators and pass the JOBS Act immediately.
Posted by on March 06, 2012
What happens when you don’t pay your mortgage? Apparently, nothing for a long time due, in part, to government programs and policies that can drag out the foreclosure process for years. The result is a growing backlog of foreclosures and a weak-to-nonexistent recovery in home prices.
That’s what readers of the Washington Post learned over the weekend in a story about a Maryland couple who have lived in a $1.3 million dollar mansion for five years but have never once made a mortgage payment on the custom-built, 4,900 square foot, five bedroom “manse along the Potomac River” described in the story as “a showstopper”. The owners have been able to keep it for so long by repeatedly filing for bankruptcy and by “exploiting changes” in laws designed to help delinquent homeowners avoid foreclosure, according to the Post.
While no one would defend the practices of some lenders, this story is an example of how the foreclosure process has become broken and is sometimes abused by those who are determined to drag out the process. And the Administration’s ever-shifting strategies and massive spending of taxpayer dollars on foreclosure mitigation programs have impeded, rather than promoted, a housing recovery.
NOT GOING FAST!
This custom-built, “showstopper” $1.3 million mansion features 5 BRs, incredible views of the Potomac River, Palladian windows, “magnificent sunroom” and a dining room chandelier from Europe. And you can live in it for FREE for at least 5 years thanks to the broken foreclosure process! Read the Washington Post for details.