Patrick McHenry

Mr. McHENRY

Mr. McHENRY. Thank you, Madam Chair. I appreciate the more conciliatory tone in today's debate. It's fantastic, Madam Chair, to have the ranking member back in debating form today and permitted to debate on the House floor. This amendment is about investors, incubators, and start-ups. We've got wide endorsements from 155 folks from across America--both investor level, we have incubators, we have online platforms and forums that have endorsed this, including the founder of AOL, Steve Case, the founder of Netscape, Marc Andreessen, who is also a renowned investor in Silicon Valley. This is a great amendment that clarifies something that's very important for us to update in securities laws. I certainly appreciate the support across the aisle for this important issue as well. I'm glad it can be passed with bipartisan support. With that, I ask my colleagues to vote ``yes.'' I yield back the balance of my time.

Mr. McHENRY

Mr. McHENRY. Madam Chairman, I want to thank my colleague, Mr. Hensarling, for his leadership on the Financial Services Committee, and I want to thank my colleague, Mr. Fincher, for offering the legislation before us today. The American people understand that entrepreneurship is at a record low, that it's actually at a 17-year low in the United States. We know that small businesses create the majority of new jobs in our country and have done so for generations. We also know that we have record unemployment. We've had 8 percent unemployment for a record 36 months at that very high level. It's not acceptable. We have to do something. Now, we cannot fix everything in one piece of legislation. This idea that you can have just simply a large bill that fixes all the problems in the world simply is not in accordance with American history or what the American people want and desire. But we also know, and the American people understand, especially small business folks and entrepreneurs understand, that red tape gets in the way of job creation. We saw with the Dodd-Frank Act that it restricts lending and makes it more costly to get lending. If you talk to small business folks, their one biggest complaint is a restriction on access to capital. That's on the debt side. We also see that we have regulations and laws written in 1933 and 1934 in an era when the telephone was the new technology of the day. We need to update those regulations. That is at the heart of what this JOBS Act does. It doesn't simply say about debt fundraising; it says on the equity side that you can go around the red tape and actually allow the average, everyday investor access to the capital markets and the new, great ideas of the future. This is what the legislation is about. I urge my colleagues to vote for it, and I ask my colleagues to move forward on this, especially in the Senate.

Mr. McHENRY

Mr. McHENRY. I want to thank my colleague, Mr. Sessions, for his leadership on the Rules Committee and otherwise in this House. I also want to commend Mr. Fincher from Tennessee for offering this legislation. It's a very important bill. Mr. Speaker, I rise today to support and speak in favor of the JOBS Act. What this legislation does is address a key concern that I hear from my constituents in western North Carolina. We know that entrepreneurship here in the United States is at a 17- year low. We also realize that the rest of the world has caught up to us in terms of their capital markets and business formation. We also know that small businesses create the majority of new jobs in the United States. So it's very important for us, in light of the new regulatory changes that have happened in the last couple of years here in Washington--the advent of Dodd-Frank that increases the cost of lending and makes it less available for small businesses, the CARD Act that makes credit cards less available to the average person who tries to start their business, like my father did, on his credit card. We also realize that the regulatory changes, the more, higher red tape that we have here in Washington makes it more expensive to do business here in the United States. These are major concerns. These are major concerns for my constituents in western North Carolina. I want to commend Mr. Fincher for offering the JOBS Act. We've got some very important pieces of information and policy changes in this bill. If you look at the 1990s, we had 530 IPOs, on average, every year. We had fewer than 65 in the year 2009. We realize that going public is not the avenue for every business, though the dream of many small business folks. So an important component of the JOBS Act is a piece of legislation we passed that I authored here in the House, with the help of my colleague from New York (Mrs. Maloney), the crowdfunding act, which allows small businesses to access the capital markets to sell equity, rather than ask for debt, sell equity in their great start-up or new idea. Crowdfunding takes the best of microfinance and crowdsourcing and uses the power of the Internet for small businesses to have offerings in their company. Now, it could be used for a tech company, certainly, to raise up to $2 million, but it could be used for a coffee shop in Hickory or in Asheville in western North Carolina to raise $50,000 and sell equity in their business. These regulatory changes are very important. We have regulations and laws on the books--the 1933 Securities Act, the 1934 Securities and Exchange Act--that really were the reaction to the problems and challenges of their day. They put in restrictions in terms of advertising about your security. Well, that was a problem when the telephone was the new technology of the day. But we have the power of the Internet, and people are more informed today than they were 100 years ago about investing. So we're changing these regulatory structures so that small businesses can get the capital they need to grow and expand. That's what this is all about. It doesn't fix every problem that we face today, but this is a bipartisan bill. It's a good idea. The President has spoken in favor of many of the components of this legislation, and we hope, not to simply pass it out of the House on a bipartisan basis, but to ensure that we pass it through the Senate and the President signs it. These are good ideas that can have an impact and help us grow and create jobs. It helps entrepreneurs. It helps small businesses. Those folks are the lifeblood of economic growth, and that's what we need to be focused on. I urge the adoption of the rule, and ask my colleagues to vote for passage.

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, on rollcall No. 79, I was unavoidably detained. Had I been present, I would have voted ``aye.'' Personal Explanation

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, I ask unanimous consent that the gentleman from Wisconsin (Mr. Ryan) be authorized to insert extraneous material in the Record.

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, I ask unanimous consent that the Committee on the Budget have until 3 p.m. on Monday, January 30, 2012, to file reports on the following measures: H.R. 3582, H.R. 3578, and H.R. 3581.

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, I ask unanimous consent that when the House adjourns today, it adjourn to meet at 11 a.m. on Friday, January 27, 2012, and further when the House adjourns on that day, it adjourn to meet at noon on Tuesday, January 31, 2012, for morning-hour debate and 2 p.m. for legislative business.

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, I rise today to congratulate my good friend, Chris Carney, on taking the oath of office to the State Senate in North Carolina. Chris has served as a town commissioner for the last number of years. I was able to work with him on that board. He developed a reputation as a thoughtful leader, someone who listened to his constituents and actually tried to craft solutions. He'll take that same mentality to the State Senate in North Carolina. So today I rise to congratulate Chris Carney. His community is proud of him, and I'm proud to call him a friend. I know his wife and his three children are very excited about the role he is about to undertake. Congratulations, Chris.

Mr. McHENRY

Mr. McHENRY. I thank my colleague for yielding, and I am in favor of the underlying bill and the rule. When I talk to small business owners in my district in western North Carolina, I hear very clearly that regulations and regulatory uncertainty is in fact costing jobs. It's costing our economy, and it's making sure that unemployment remains high, which is an absurd policy coming out of Washington. Well, I know from my small business owners that regulations cost jobs. Even the Small Business Administration here in Washington, D.C., says that Federal regulations cost $1.75 trillion per year. That costs our economy, and that is a major impact on our job creators. We know that regulations cost jobs. Now, some politicians in Washington that don't understand business think that their regulations create jobs. Well, they're right; they create Federal jobs. They create more government employees. They create more people creating more paperwork for those who are trying to move our economy forward. We need to relieve our small businesses of this regulatory hurdle and the challenges that they face. The Obama administration admitted 1 year ago at this time that they had over 4,000 regulations that they were trying to put in place actively. Over 200 of these regulations cost $100 million or more on the economy, seven of which will cost $1 billion, a negative impact of $1 billion. These regulations, even the Obama administration admits, cost the economy money. And if they cost the economy money, they're costing jobs. This is the wrong approach, this regulatory approach. What we need to say is, if politicians in Washington think these regulations are in fact good, they need to proactively vote on them. When I go home and talk to small business owners, they wonder how these regulations actually go into place. It's faceless bureaucrats working behind desks in Washington that put them in place. Their elected officials here in Washington may be able to go home and say they're against them, but they've never had to cast a vote. What the REINS Act does is say that the elected officials that come to Washington to represent their folks at home need to proactively put their stamp of approval or disapproval on these regulations. That way we can get this economy going again. That's what we need to be about. I hope that we can have bipartisan support on this very important piece of legislation, the REINS Act. I urge my colleagues to vote for it.

Mr. McHENRY

Mr. McHENRY. Mr. Speaker, I withdraw my point of order.

Mr. McHENRY. Mr. Speaker, I reserve a point of order.

Mr. McHENRY

Mr. McHENRY. I thank my colleague Mr. Perlmutter for working diligently with us on this language. He raised significant concerns. The language that we have that the gentleman was integral in crafting actually is perhaps part of the reason why the President supports the legislation. And I appreciate Mr. Perlmutter's working diligently on this. I would remind my colleagues that in our legislative hearing on this bill, the Democrat witness before the committee said that crowdfunding will not work but for this exemption from individual State registration. It is a very key part of this process. When it costs $150 to register a security in Connecticut, and all you're trying to do is raise $150 from Connecticut, you net zero. And beyond that, asking a lawyer to file the paperwork. What we want to do is preserve that anti- fraud bit that the States do very well at, and we have done that with this language. I thank my colleague for yielding.

Mr. McHENRY. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks on H.R. 2930 and to insert extraneous material thereon.

Mr. McHENRY. I'd be happy to let my colleague--

Mr. McHENRY. I'd be happy to yield to my colleague from North Carolina.

Mr. McHENRY. I am not opposed to this legislation. I thank my colleague for offering it.

Mr. McHENRY. Madam Chair, I claim time in opposition.

Mr. McHENRY. I thank my colleague from Colorado for offering this amendment, and I thank my colleague for working diligently across the aisle. This was an idea that he had in the full committee markup. We worked diligently to get that done at full committee markup. It was not able to be done, but the language we have here today is a very good amendment. The amendment ensures that the States' securities regulators have the means to police fraud, deceit, misrepresentation, and other unlawful behavior to protect investors. Since States' securities regulators already have the resources and expertise, much more so than the SEC, to examine unlawful behavior at a micro-level, it is essential that this legislation recognize and authorize them to continue to fight unlawful conduct. The powers of State securities regulators for crowdfunding are no different from what that which they have for any covered security.

Mr. McHENRY. Will the gentleman yield?

Mr. McHENRY. Madam Chair, I yield myself the balance of my time. I certainly appreciate my colleague's intent, but I'm simply uncomfortable with requiring facilitators or these intermediaries that we create in this legislation of what is an exempt offering under securities law to actually link to the SEC's Web site. It gives the stamp of approval of sorts, it seems to me, of this exempt offering. It actually might create more confusion, not necessarily by the gentleman's intent, but by the design of the legislation before us, by the legislative text that we have here in this amendment. Unfortunately, that is not helpful. Actually, it would be hurtful to this matter, and that's why I have to oppose it. Now, I am hopeful that when this legislation is signed into law by the President that the Securities and Exchange Commission Office of Education and Investor Advocacy would create an investor alert, which is their standard process, regarding crowdfunding investments like the SEC did with the microcap stock, a guide to investors, which is available on the SEC's existing Web site. And that's the concern here. We want to make sure that this is done appropriately. We currently are operating in securities law that originated over 75 years ago, or roughly 75 years ago. So we want to make sure we get this right. Unfortunately, this amendment is ill- crafted, and that's why we have to oppose it. I yield back the balance of my time.

Mr. McHENRY. May I inquire of the Chair the remaining time on both sides.

Mr. McHENRY. The legislative text on line 4 specifies, establish a Web site.

Mr. McHENRY. Will the gentleman yield?

Mr. McHENRY. Reclaiming my time, we did not see this legislative text until it was filed with the Rules Committee. We worked to try to accommodate the Member with text that could be acceptable. Unfortunately, the construct of this is simply not acceptable and we couldn't come to reasonable accommodation on language that would be workable. Look, the SEC is certainly overburdened. We all know that. I mean, they're working very hard. They currently have two Web sites right now. What this amendment would do is force them to have a third Web site. Furthermore, in the discussion of this amendment, my colleague describes this as a public offering. The crowdfunding legislation described here is an exempt offering, very different in nature than a public offering, and is exempt from the SEC regs. On page 6 of the legislation, subsection (a)(1), it mandates that individuals, intermediaries in this process, would have to add a warning to investors, including the intermediary's Web site, of the speculative nature generally applicable to investments in startups, emerging businesses, and small issuers, including risks in the secondary market related to illiquidity. (2) warns investors that they are subject to the restrictions on sales requirements described under subsection (e). Additionally, (6) requires each potential investor to answer questions demonstrating competency in: (A) recognition of the level of risk generally applicable to investments in startups, emerging businesses, and small issuers; (B) risk of illiquidity; and (C) such other areas as the Commission may determine appropriate. This part of the legislation, my staff as well as the staff of the Financial Services Committee, Democrats and Republicans, as well as the staff of Mrs. Maloney and Ms. Waters crafted this language in a very balanced way. We've included those concerns. Unfortunately, the language before us today is deeply flawed, and with the nature of securities laws as they are in this country--and in the world, for that matter--we want to make sure that it has the appropriate balance, that it has been thoroughly vetted through counsel and actually has agreement. That is why this amendment is deeply flawed and I oppose it. I reserve the balance of my time.

Mr. McHENRY. Unfortunately, I have to oppose this amendment. I ask my colleague from Georgia if he consulted, in the construct of this language, with the SEC staff. I yield to the gentleman.