Patrick McHenryChairman

Washington, March 14, 2011 -

Capital Markets Subcommittee Chairman Scott Garrett announced the Subcommittee will hold a legislative hearing on proposals that promote job creation on Wednesday, March 16 at 2 p.m. in room 2128 Rayburn.  

Subcommittee Chairman Garrett said, “Far too much of the Dodd-Frank Act was passed for political purposes, without giving enough thought to what the consequences would be for job creation and the health of our capital markets.  This hearing will provide an opportunity to discuss several proposals that address some of the Act’s damaging provisions, along with a proposal that will ease the burden on smaller companies as they explore the option of going public.”

Financial Services Committee Chairman Spencer Bachus said, “Provisions in the Dodd-Frank Act not only significantly raise the cost of doing business in America but also send jobs overseas. At a time when the nation’s unemployment rate remains near 9 percent, that’s unacceptable.  The proposals that will be discussed during this hearing will create new jobs and grow our economy.”

During the hearing, the Subcommittee will examine five discussion drafts that are designed to create jobs, reduce economic uncertainty, promote capital formation, and help make America’s capital markets more competitive.  The five bills are:

·         The Asset-Backed Market Stabilization Act. The Dodd-Frank Act included a liability provision for credit rating agencies if their ratings were determined to be inaccurate. Within days of the Dodd-Frank Act becoming law, this liability provision temporarily shut down the asset-backed securities market, forcing the Securities and Exchange Commission (SEC) to step in and issue a temporary no-action letter on July 22, 2010. On November 23, 2010, the SEC issued a permanent no-action letter. The Asset-Backed Market Stabilization Act provides certainty to the issuers of asset-backed securities by repealing the liability provision. The draft legislation will be sponsored by Representative Steve Stivers.

 

·         The Small Company Capital Formation Act. The Small Company Capital Formation Act encourages small companies to access the capital markets — allowing them to invest and hire employees. The legislation increases the offering threshold for companies exempted from SEC registration under SEC Regulation A from $5 million — the threshold set in the early 1990s — to $50 million. The SEC has the authority to raise this threshold but has not done so for  almost two decades. The draft legislation will be sponsored by Representative David Schweikert.

 

·         The Small Business Capital Access and Job Preservation Act. The Financial Services Committee has received testimony regarding the role private equity firms play in preserving existing jobs and creating new ones by providing capital to struggling and growing companies.  The Dodd-Frank Act requires most advisers to private investment funds to register with the SEC, including advisers to private equity funds. The Small Business Capital Access and Job Preservation Act exempts advisers to private equity funds from the registration requirements. The draft legislation will be sponsored by Representative Robert Hurt.

·         The Business Risk Mitigation and Price Stabilization Act. The Dodd-Frank Act requires derivatives transactions to be cleared through a registered clearing house, and exempts swaps and security based swaps from this clearing requirement if one of the counterparties is not a financial entity. The Business Risk Mitigation and Price Stabilization Act would ensure businesses that use derivatives to effectively hedge legitimate business risk do not fall under the clearing requirements. The draft legislation will be sponsored by Representative Michael Grimm.

·         The Burdensome Data Collection Relief Act. A provision added to the Dodd-Frank Act without any debate requires publicly traded companies to disclose their median annual total compensation of all employees. Two months after the Dodd-Frank Act was signed into law, the Financial Services Committee received testimony about the enormous burden and complexity this provision poses to publicly traded companies, with very little, if any, corresponding benefit to investors. The Burdensome Data Collection Relief Act would repeal this provision of the Dodd-Frank Act. The draft legislation will be sponsored by Representative Nan Hayworth.

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