Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. Mr. Chair, I yield myself 10 seconds to remind my friends who have spoken that title I of this bill passed 45-15, with Democratic support; title II, 48-9, with Democratic support; title III, in the last Congress, passed the floor 420-0; title IV, 44-11, with Democratic support; title V, 41-16, with Democratic support. So perhaps they should discuss these attacks amongst themselves first. I yield 6 minutes to the gentleman from Virginia (Mr. Hurt), one of the prime sponsors and author of title IV and title V.

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and submit extraneous materials on the bill, H.R. 1675, to direct the Securities and Exchange Commission to revise its rules so as to increase the threshold amount for requiring issuers to provide certain disclosures relating to compensatory benefit plans.

Mr. HENSARLING. I yield to the gentleman from California.

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from Michigan (Mr. Huizenga), the chairman of the Monetary Policy and Trade Subcommittee of the Financial Services Committee and the author of title III of this act.

Mr. HENSARLING. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise in strong support of H.R. 1675, the Encouraging Employee Ownership Act. I do this because, as you know, Mr. Chairman, regrettably, we saw that in the last quarter this economy grew at a paltry seven-tenths of 1 percent. On an annualized basis, this economy is limping along at roughly half the normal growth rate. That means that this economy is not working for working families, who under 8 years of Obamanomics have found themselves with smaller paychecks and smaller bank accounts and greater anxiety about how are they going to make their mortgage payments, how are they going to make their car payments, are they going to be able to save enough to send somebody to college. This economy is still underperforming for American families. So it is critical that we help our small businesses, which are truly the job engine in our economy, Mr. Chairman, as you well know. I want to commend the sponsors of the five bills that make up H.R. 1675, Representatives Hultgren, Hill, Huizenga, and Hurt. Their work has resulted in a bipartisan bill that we think will help create a healthier economy. Again, we know that 60 percent of the Nation's new jobs over the past couple decades have come from our small businesses. If we are going to have a healthier economy that offers more opportunity, we have to offer more opportunities for small business growth and small business startups. We have to ensure that they have capital and the credit they need to grow. You can't have capitalism without capital, Mr. Chairman. Yet, we have heard from countless witnesses in our committee--from community banks to credit unions, the primary source of small business loans--that they are drowning, drowning in a sea of complex, complicated, expensive regulations, many of them emanating from the Dodd-Frank Act, which is causing a huge burden on the economy and working families. The same is true of many of our burdensome security regulations as well. Many of them are well intentioned, but, Mr. Chairman, they were written with our largest public companies in mind, but they end up hurting our smaller companies. It is time that we help level that playing field for small businesses with smarter regulations that will still maintain our fair and efficient markets, protect investors, but allow small competitors the chance to succeed. We make some progress today on this bipartisan bill, H.R. 1675. Now, it is a modest bill, Mr. Chairman. It is only 20 pages long-- anybody can read it--but it provides many overdue improvements that will help spur capital formation, and the legislation gives companies options and choices on how to best attract investment and capital. In a free society, isn't that where we should be? It updates rules to allow small businesses to better compensate their employees with ownership in the business. Let them have a piece of the American Dream. In so doing, it strengthens provisions enacted into law in the bipartisan JOBS Act and the FAST Act to give employees a greater opportunity to share in the success of their employer. It codifies no action relief issued by the SEC to remove regulatory burdens for individuals who assist with the transfer of ownership of small- and mid-sized privately held companies. It will provide investors with more research on exchange-traded funds, or ETFs, by extending a liability safe harbor consistent with other securities offerings. It provides a voluntary, Mr. Chairman--I repeat voluntary--exemption from reporting in XBRL data format for emerging growth companies and smaller public companies, the cost and use of which have continually been questioned in our committee. The committee received testimony from a biotechnology executive who said that outreach to his analyst investors yielded a consensus response that they weren't even aware of XBRL, but the witness went on to say that his company is having to spend $50,000 annually in compliance costs that obviously could have been better spent in productivity and job creation. Finally, it requires the SEC to conduct a retrospective review every 10 years to update or eliminate outdated, unnecessary, and duplicative regulations. This is also known, Mr. Chairman, as common sense. The administration claims that this provision is duplicative because the SEC is already encouraged to review their regulations. Well, encouragement doesn't quite get the job done. We need to ensure that these regulations are looked at and at least looked at on an every- decade basis. You will hear some say that, well, the SEC's resources are stretched too thin. I am happy to go back and amend Dodd-Frank so that they have more resources to devote to capital formation. By the way, they just got a big, fat raise in the latest omnibus. Mr. Chairman, I don't think that argument holds much water. By enacting H.R. 1675, we are going to ease the burdens on small businesses and job creators. Isn't that what we ought to be about? We will help foster capital formation so that Americans can go back to work, have better careers, pay their mortgages, pay their healthcare premiums, and ultimately give their families a better life. I urge my colleagues to join me in supporting H.R. 1675. Mr. Chairman, I reserve the balance of my time.

Mr. HENSARLING. Mr. Chairman, I yield 4 minutes to the gentleman from Illinois (Mr. Hultgren), a workhorse on our committee and the chief sponsor of H.R. 1675, to bring more jobs to the American people.

Mr. HENSARLING. Mr. Chairman, I do appreciate the gentleman from California's amendment. I think there are a lot of well-thought ideas here. I appreciate the sentiment by which he approached the amendment. I do believe, though, that, in this particular case, this amendment goes a little bit too far in the wrong direction and ultimately can prove to hurt a number of small businesses and economic growth. Number one, a lot of what the gentleman is trying to achieve I think has already been achieved in the amendment by the gentleman from Michigan that we just approved on voice vote here on the floor. I would also add that, with the amendment from the gentleman from Michigan, who has the underlying title of this bill, the language now is identical to the bipartisan Senate language. We know how difficult it is to get laws passed. I think it is important, where we can, to align the language with the other side of the Capitol. I think this could ease passage of a bill which is bipartisan, again, on both ends of the Capitol. Again, I appreciate what the gentleman from California is trying to do, but I think that the gentleman from Michigan strikes the appropriate balance.

Mr. HENSARLING. Mr. Chairman, reclaiming my time. I appreciate the gentleman's pushback, but I am still not going to quite see things his way. I believe that the gentleman from Michigan strikes the proper balance here, particularly at a time when, again, our working families are struggling and this economy is limping along. We had a fourth-quarter GDP report where this economy was barely on life support systems. We have to jump-start our small businesses. We have to jump-start capital formation. The gentleman from Michigan has the right balance. I reserve the balance of my time.

Mr. HENSARLING. Mr. Chairman, I yield the balance of my time to the gentleman from Michigan (Mr. Huizenga).

Mr. HENSARLING. Mr. Chairman, I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr. Royce), a valued member of the Financial Services Committee and chairman of the House Foreign Affairs Committee.

Mr. HENSARLING. Mr. Chairman, how much time is remaining on each side?

Mr. HENSARLING. Mr. Chairman, I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, I claim the time in opposition.

Mr. HENSARLING. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from New Jersey (Mr. Garrett), the chairman of the Capital Markets and Government Sponsored Enterprises Subcommittee.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I rise in opposition to the motion.

Mr. HENSARLING. Mr. Speaker, on that I demand the yeas and nays.

Mr. HENSARLING. Mr. Speaker, that was a heartbreaking story, and I have no doubt that it is true. But I would urge the gentlewoman to perhaps actually read the bill. Unlike ObamaCare and unlike Dodd-Frank, perhaps if the gentlewoman actually read the bill, which is 20 pages, not 2,000 pages, she would understand that H.R. 1675 has nothing to do with her story. Fraud is illegal. I repeat: Fraud is illegal. If one is convicted of a felony under the Securities and Exchange Act of 1934, there is a statutory prohibition from doing what she has described. Mr. Speaker, at best, this is a duplicative amendment, it is a superfluous amendment, and it takes away from the fact that under 8 years of Obamanomics this economy is not working for working people. It is time to help our small businesses, it is time to help our growth companies, it is time to put America back to work, and it is time to reject the motion to recommit. I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, every working American knows this economy stinks. There are no two ways about it. We have got to jump-start our small businesses and our emerging growth companies. Entrepreneurship is at a generational low. Let's do something to actually help our small businesses raise capital. You can't have capitalism without capital. The gentleman from Virginia, the author of title IV, provides a very simple optional exemption from the XBRL data filing requirement. It has nothing to do with the content of disclosure, Mr. Chairman. All it has to do with is the format--a format that is very expensive for a number of our emerging growth companies, some of whom testified that a lot of investors don't even use it. So what we are essentially hearing from the author of the amendment and others is a rough translation that this is in the small business' best interest because they will need it to attract investors. Well, why don't we let them make that decision? This is almost the analog of ObamaCare: the American people were too stupid to know what kind of health care they needed. If XBRL works for these small companies, they will use it. If it doesn't, then they will opt out of it. It is optional for emerging growth companies and smaller public companies. It is temporary. It is a huge burden on these companies at a time when we just had one of the worst quarters of economic growth we have seen in years and when the economy continues to lag at roughly half of its historic economic growth. At some point, I would hope the other side of the aisle would end the war on small businesses and emerging growth companies. We need title IV. I yield the balance of my time to the gentleman from Virginia (Mr. Hurt), the author of title IV of H.R. 1675.

Mr. HENSARLING. Mr. Chairman, I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, I yield back the balance of the time.

Mr. HENSARLING. Mr. Chairman, I claim the time in opposition.

Mr. HENSARLING. Mr. Chairman, I reserve the balance of my time.

Mr. HENSARLING. Mr. Chairman, I claim the time in gentle opposition.

Mr. HENSARLING. Mr. Chairman, I say I rise in gentle opposition--I do not say that tongue in cheek--because the gentleman from California is highly respected as a Member of this body. His opinions are respected as an entrepreneur and as a small-business individual. His acumen is respected as an investor, and so it is not a pleasant experience to oppose one of his amendments. I appreciate the sentiment with which he offers it. I would just remind all that title IV of the bill provides an optional exemption from the XBRL data filing requirements for emerging growth and smaller public companies for a limited period of time. I think there is an open question. One thing that the gentleman didn't get the benefit of was hearing all the testimony that we had within our committee. There was a lot of testimony about just how costly this is to a number of these companies. Now, if the investing public demands it, then smaller companies will do it. For example, there was a Sarbanes-Oxley exemption for some smaller companies and only roughly half of them took it because for certain smaller companies what they found out was, well, the investors demanded it. I would say, again, why don't we let the free market determine this. We are not talking about the types of information that are provided in disclosure. We are talking about the format. We are talking about the format of disclosure. We have heard testimony from a company that is spending over $50,000 annually on XBRL compliance and, at least in their case, they can't find people who follow their company who are actually using it, so that is $50,000 a year that could go into R&D, that could go into productivity enhancement, that could go into hiring more individuals. I am not saying that XBRL is unimportant, but I think to some extent that at least for the smaller companies, and particularly at this time in our country's economic history, where we came off of an incredibly horrendous quarter, and we know that after 8 years of Obamanomics, we are limping along at half of our average economic growth, I think we want to err on the side of our small businesses, of our entrepreneurial ventures, of our small business startups, so I appreciate the value that XBRL provides to a lot of companies, a lot of investors, but I think if they demand it enough, we will provide it. Mr. Chairman, I reserve the balance of my time.