Brad Sherman

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of concurring in the Senate amendment and passing H.R. 452, the Miracle on Ice Congressional Gold Medal Act, sponsored by our friend, Pete Stauber. This bill was considered on the floor of this House, and I was pleased to manage it on the Democratic side, back on April 28. We sent an excellent bill over to the Senate, and for the first time ever, the Senate actually improved a House bill. Now, it is appropriate for us to concur in their amendment, pass the bill, and send it to the President. Today, we vote to honor the legacy of the 1980 U.S. Olympic Men's Ice Hockey Team and their victory that inspired a country at the height of the Cold War. This legislation awards three Congressional Gold Medals. Each of these gold medals will be displayed at different locations for community members and visitors to commemorate for generations to come. These locations are the Olympic Center in Lake Placid, New York; the Hockey Hall of Fame Museum in Eveleth, Minnesota; and the Olympic & Paralympic Museum in Colorado Springs. The victory we are recognizing today took place on February 22, 1980, when the U.S. hockey team heroically defeated the Soviet Union 4-3 at the Lake Placid Winter Olympic Games. The talented yet untested U.S. team was initially deemed the underdog. Many of them were young college players and had only played together for a few months. Leading up to the game, the U.S. players took part in a 7-month training program designed to confront a Soviet team considered to be the best conditioned hockey team in the world. However, through steadfast determination and grit, the U.S. team won. Even decades later, when our country is facing political division and economic difficulties, I hope these events can serve as a reminder that we can overcome great challenges. Mr. Speaker, I applaud the sponsor of this bill and urge my colleagues to support the passage of this measure. Mr. Speaker, I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, this shows what Trump had to say about crypto before he learned he could make money from it. The bills we have allow the President and the Vice President to sponsor crypto. It means they can print their electronic monopoly money. China is buying $300 million, and Abu Dhabi has agreed to buy $2 billion of Trump coin or Trump stablecoin. It allows for bailouts by the Fed. Jerome Powell won't bail out Trump coin, but the next Fed Chair will. It allows for the purchase with your U.S. tax dollars of Bitcoin or Trump coin. The third bill says that innovation is wonderful except if the U.S. Government does it. Vote ``no'' on all three bills.

Mr. SHERMAN. Mr. Speaker, today is the so-called culmination of crypto week. The AFL-CIO has sent a letter to every Member, saying that these bills are an attack on working families and that they will score your vote on these issues, and to vote ``no'' on both bills. Mr. Speaker, I ask unanimous consent to include in the Record the ALF-CIO correspondence.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, you might think it is hypocritical that they tell us that we have to have crypto because, otherwise, China will do it. Then they say: We can't have a digital dollar because China is doing it. That is not inconsistent. They are consistent. Their consistent rule is that you must do what makes profit for the crypto bros, including Donald Trump, and you must prevent them from facing any competition, even the competition called for by the U.S. Constitution. Today's bills in whole, all three of them, will create a payment system designed for tax evaders and criminals. It will provide for taxpayer bailouts, and it will allow the crypto industry to say that we have all this power in Congress. Crypto bailouts are not only allowed, but they are guaranteed. It will provide an avenue for foreign interests to provide hidden money--``cryptocurrency'' literally means hidden money--into Trump's personal pocket, and it is designed to allow taxpayer money to be used to buy bitcoin and Trump coin. Finally, it takes our freedom. It says that you can have freedom to have a digital currency only if you do it in a way that it enriches the crypto bros. There would be no choice for Americans who want a digital dollar.

Mr. SHERMAN. Mr. Speaker, I worked hard in school, but the grade I am proudest of is to be the first Member of this House to get an ``F'' from the crypto industry. Article I, Section 8, of the U.S. Constitution says that it is the Federal Government and Congress who should coin money and determine the value thereof. However, our Republican friends tell us that that means that the Federal Government should be stuck with 1776 technology while the competitors of the dollar race forward in the 21st century. The largest super-PAC expenditures in history occurred last year. The crypto industry spent more on independent expenditures--look at this. If you combine all of the expenditures from Big Oil plus Big Pharma, put them together, and multiply by five, you still don't have what the crypto industry did last year. It is not surprising that we hear words like ``freedom,'' ``innovation,'' ``choice,'' and ``competitiveness'' used to justify making money for the crypto bros, and now we have a bill designed to prevent freedom, innovation, choice, and competitiveness when it poses a risk to their profits. This bill not only prevents us from ever having a digital dollar; it prevents us from even studying a digital dollar. Now, I think Americans will always have banks, credit cards, debit cards, Zelle, Venmo, cash, money market funds, and pursuant to the bill that it looks like we are going to pass today, they will have stablecoin, a privacy device specifically designed for criminals and tax evaders. Then they will have mixers to make it impossible for even the most advanced law enforcement, even with a warrant, to find out what is happening. They have all of those choices. What is the one choice you are not allowed to have? You are not allowed to have the currency provided for in the U.S. Constitution. You are not allowed to have a digital dollar or even a study of a digital dollar. If you don't want to carry a lot of paper around, you can't have the full faith and credit of the United States. Now, we have talked about the role of the U.S. dollar, the critical role that it plays in international transactions, and why that is a major economic benefit to the United States. The crypto bros occasionally tell you out loud what they are thinking. That is they want to minimize and destroy the role of the U.S. dollar internationally. What do they do to hobble the dollar? They say the Chinese Communist Party can have a digital yuan, the bitcoin bros can have a digital currency, but America is limited to 1776 technology. Our banking system is the envy of the world because we innovate. This bill says no innovation.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, it is customary, when we consider major legislation, to give credit to those who created the bill. The ghost of Sam Bankman-Fried looms above this auditorium. He is the genius behind this GENIUS Act, and one can only hope that he is able to watch C-SPAN on a black-and-white television set in his prison cell. You don't have to be a genius to know that this bill is an attack on working families. That is why the AFL-CIO says no, and they are scoring it. They call it stablecoin. It is not stable. It is not a coin. It is a money market account that, under this law, must pay zero percent interest. Who wants to forgo a 4 percent rate of return and get a zero percent return in stablecoin? Those who are desperate for what cryptocurrency offers. Cryptocurrency literally means hidden money, and these stablecoins are exempt from the anti-money laundering provisions. Thus, it meets the needs perfectly of drug dealers, human traffickers, sanctions evaders, those who are hiding assets from their former spouses, and tax evaders. Just to be clear, the Republicans rejected unanimously in committee a provision to prevent mixers. Mixers are devices whose sole purpose is to defeat even top law enforcement efforts pursuant to a warrant, and under this bill mixers will be used to defeat law enforcement. Republicans claim to be against crime in the streets, but they are creating a device whose sole purpose is to facilitate crime in the suites. Page 43 of this bill contains a provision maintaining the eligibility of stablecoins for bailouts under a facility created under section 13(3) of the Federal Reserve Act. Now, Jerome Powell won't bail out stablecoin, but the next guy will. Stablecoin marketers are going to tell investors that if they ever have a problem they are going to get bailed out. After all, crypto has all the power in Congress because it is the number one source of super- PAC independent expenditures. Last year, crypto did more super-PAC expenditures than Big Oil and Big Pharma times five. This bill is designed to enrich President Donald Trump. Even Richard Nixon never thought of printing up baskets of Monopoly money and selling them for cash. Trump thought of it, and he is doing it electronically. Abu Dhabi has announced they are investing $2 billion in Trump stablecoin, $2 billion in Trump's hands where he has to pay nothing, zero percent, on the loan. He invests the money, makes $2 million a week, up until Abu Dhabi demands its money back, which they are never going to do as long as our foreign policy meets the needs of Abu Dhabi. Republicans rejected unanimously an amendment to prevent taxpayer money from being used to buy crypto. If you are voting for this bill, you are voting for taxpayer money to go into buying Trump coin.

Mr. SHERMAN

Mr. SHERMAN. Finally, this creates the perfect financial tool for drug dealers and for tax evaders because every time a billionaire cheats on his taxes, a member of the Freedom Caucus earns his wings.

Mr. SHERMAN. Mr. Speaker, I submitted many amendments to Rules, as did other Democrats. They made only one in order. I will not be offering it because in the absence of the other amendments, it is really not useful. This bill is an attack on working families, which is why the AFL-CIO says no, and they are scoring it. This bill prohibits Congress Members from sponsoring cryptocurrencies because of the obvious corruption and conflict of interest, but it allows the President to create electronic Monopoly money. Who is buying? Abu Dhabi is buying $2 billion of Trump stablecoin while the Chinese interests behind TikTok are buying $300 million worth of Trump coin, and that is just what we know about. There is a lot we don't know about because cryptocurrency literally means hidden money. It allows for bailouts under section 13(3) of the Federal Reserve Act. Jay Powell won't do it, but the next guy will. Congress won't stop him because crypto spends more in super-PAC than any other industry by far, five times more than the combination of Big Oil and Big Pharma. It allows for the purchase of bitcoin and Trump coin, and Trump has announced that he is going to do just that with our tax dollars going into his crypto.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, don't tell us we can't release the Epstein files because you hate Joe Biden or because you hate leftists. People on the right, people in the center, and everyone who wants to protect girls in America says to release the Epstein files now.

Mr. SHERMAN. Mr. Speaker, I worked hard in school, but the grade I am proudest of is getting the first F ever issued by the crypto industry. This rule prohibits you from considering two amendments that had total support from Democrats and total rejection from Republicans in the Financial Services Committee. The first prohibits the use of taxpayer money to buy crypto. Trump has already said he wants what he calls a strategic reserve of crypto. If you vote against this rule, you are voting to allow him to buy bitcoin or Trump coin with taxpayer money. That second amendment, also prohibited by this rule, says that taxpayer money will not be used to bail out stablecoin or other crypto assets. We have already seen dozens of scandals since Sam Bankman-Fried, but now the industry can say we have got total power in Congress. They gave us just a patina of regulation, and if there is ever a problem with your crypto assets, we will get you bailed out. This rule is incredibly hypocritical. It tells us that we are supposed to be for innovation and blockchain. Then it calls for the prohibition of the Fed having blockchain or any electronic use of the U.S. dollar. The Constitution says currency is what the U.S. Congress should control, but this bill will say that the dollar must use George Washington technology while China can have a digital yuan and the crypto bros can have hidden digital money. It is not surprising that President Trump was against crypto until he realized that he could make hundreds of millions for his campaign and billions for his family by signing up with the crypto bros. This is crypto week. It is also tax evaders month, national drug dealers' day, and human traffickers Tuesday. Vote ``no'' on this rule. Release the Epstein files. Don't try to distract us and say that the reason we can't protect girls in this country is because -- The SPEAKER pro tempore. The time of the gentleman has expired.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I have no further speakers, and I am prepared to close after hearing that the other side has no further speakers. I yield myself the balance of my time. As I have discussed, H.R. 2808 is an important positive step to strengthen data privacy for consumers and curb the harmful practice of trigger leads, protecting consumers from entities that they didn't want to do business with, never sought to do business with, finding out that they are applying for a mortgage and then harassing them with a host of texts and calls, et cetera. H.R. 2808 is supported by a wide range of groups, including the National Consumer Law Center, the National Association of Home Builders, the Independent Community Bankers of America, and America's Credit Unions. The Senate recently passed a nearly identical bill by unanimous consent. Mr. Speaker, I urge my colleagues to support this bill, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. I rise in support of H.R. 2808, the Homebuyers Privacy Protection Act, and I commend Representatives Rose and Torres for introducing it. I thank the sponsors for their good work on this bipartisan bill, and I appreciate that the House is taking action to improve data privacy, in this case with respect to the mortgage market. First, let's discuss, as I think the gentleman has, what a trigger lead is. You go to a particular lender or mortgage broker, and you apply for a mortgage. You want to deal with that mortgage broker or that financial institution. If you wanted to deal with others, you would go elsewhere. If you wanted to deal with several, you would call several. When you seek a mortgage loan, of course the mortgage lender has to look at your credit report, so they call Equifax or whoever or email Equifax and get your credit report. Then the credit bureau sells that information--which you don't want divulged and which the lender doesn't want divulged--to other financial institutions without your permission, creating a so-called trigger lead. Then, as was pointed out, you become bombarded with phone calls, text messages, and other communications from rival mortgage loan officers. They may even give you misleading or deceptive information. H.R. 2808 would curtail this abusive practice, limiting trigger lead notifications to a financial firm that a consumer already has a relationship with, like their current mortgage lender. If the consumer opts in, and you can opt in, then you can have everybody call you. Now, I want to take a moment to acknowledge the good work of our former colleague Representative Lacy Clay who helped pave the path by first introducing a bill to curb abusive trigger leads clear back in 2020. Representative Clay's original bill didn't have any exceptions at all and simply required that a consumer opt in, and if the consumer chose not to opt in, their information could not be shared with other companies when they applied for a mortgage loan. Consumer opt-in is an approach that data privacy advocates prefer and one that committee Democrats argued for last Congress when the committee considered former Chair McHenry's version of this bill. We should put consumers first, put them in the driver's seat to control the use, sharing, and selling of their data. This bill gets us almost all the way there. It does provide exceptions for those financial institutions that you already have a relationship with. We are not debating consumer privacy in a vacuum. It is unfortunate that Elon Musk and his DOGE minions have had access to data on hundreds of millions of Americans. I wish we were here on the floor preventing Mr. Musk from getting our personal health records, our consumer data, our business records, our Social Security numbers, and our tax data. After we pass this bill, I hope that the Financial Services Committee would investigate what has happened to consumer protection and what has happened to data privacy, particularly with regard to data obtained from the Consumer Financial Protection Bureau and the Treasury Department. Mr. Speaker, this bill is an important step toward protecting consumers from abuse, making sure that the fact that they applied for a mortgage with one mortgage company isn't sold against their will to every other mortgage company in the country. I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, I rise in strong support of the bill of my good friend and ranking member of the Financial Services Committee (Ms. Waters), which requires the SEC's Office of Small Business Advocate to provide educational resources and host events to promote capital-raising options for small businesses. Her bill would also require the Small Business Office to coordinate on an annual basis with State securities commissions to ensure both Federal and State regulators are working as effectively and efficiently as possible to address the needs of small businesses. Mr. Speaker, I urge my colleagues to support Ms. Waters' bill, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I yield such time as she may consume to the gentlewoman from California (Ms. Waters), the ranking member of our full committee.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, it is my understanding that the House has no further legislative business after we consider the bills that are before us today. The authors of the last two bills up for consideration are on their way, so should I speak slowly, or should we go into recess? Either way, we are not delaying the House. Mr. Speaker, I urge Members to support H.R. 1190, the Expanding Access to Capital for Rural Job Creators Act. It is a simple but important step to directing the SEC's small business advocate to include small, rural businesses in their reporting. As I have noted before, the small business advocate currently reports on the challenges faced by minority-owned, women-owned, and disaster- affected small businesses. This would add rural small businesses to the list. This is a gap we need to fix. Small businesses in rural communities face unique hurdles in accessing capital, and they deserve the same attention as the other types of businesses that the advocate focuses on. No matter where they are located and no matter who owns them, small businesses are the backbone of our economy. They should be and are a bipartisan priority, and this bill is a step in the right direction. With the understanding that we will be able to deal with the other bills that are scheduled to come before us even after a short recess, I urge a ``yes'' vote on H.R. 1190, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, may I inquire as to how much time is remaining.

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, up until now, on each of these bills, I have been speaking fast, but I know that Mr. Rose and Ms. Waters are planning to get here in just the next few minutes to speak on the next two bills. Since they are not here yet, it does the House no harm for me to speak more slowly and perhaps at greater length. Mr. Speaker, I rise in support of H.R. 1190, the Expanding Access to Capital for Rural Job Creators Act, sponsored by my colleague, the gentleman from Montana (Mr. Downing). I will point out that I am uniquely unqualified to address this bill since my entire district is in an urban area, that of the great city of Los Angeles. Yet, even I recognize the importance of getting capital to our small businesses in rural areas. I strongly support this legislation, which would require the SEC's Office of the Advocate for Small Business Capital Formation to report on capital access issues faced by small, rural businesses. Currently, the SEC small business advocate reports on small businesses that are minority owned or women owned or in disaster- stricken areas. Yet, at present, the law does not report on businesses in rural areas. The bill simply adds rural businesses to the list covered by the entities of the small business advocate and the entities that the small business advocate will report on. Small businesses, no matter where they are located or who they are owned by, are the backbone of the American economy. Helping small businesses should be about as nonpartisan as we can get here in Congress. Lawmakers and regulators should be doing everything they can to support them. Those businesses located in rural areas face unique challenges. We have had other speakers on other bills talk about how so many of our financial institutions and business investors are focused on the East Coast or the West Coast or in New York, Silicon Valley, or some of the other large cities in our country. It is important, therefore, that the small business advocate also reports on the needs of rural small businesses that are seeking to raise capital. Lawmakers and regulators should be focused on those businesses. This is common sense, and I hope my colleagues will support it. I commend the gentleman from Montana for bringing this bill to the floor, and I look forward to continuing to discuss this bill. Mr. Speaker, I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I yield myself the balance of my time. I urge my colleagues to vote ``yes'' on H.R. 3381, the Encouraging Public Offerings Act of 2025 sponsored by the chair of our subcommittee, the gentlewoman from Missouri (Mrs. Wagner), which would allow issuers to take advantage of confidential draft registration statements that are currently available only to EGCs. It also makes it easier for companies to have access to capital by giving them the ability to gauge interest from institutional investors without added regulatory requirements of registration. Mr. Speaker, I ask my colleagues to support this bill, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise today in support of H.R. 3381, the Encouraging Public Offerings Act of 2025, sponsored by the chair of the relevant subcommittee, the Capital Markets Subcommittee, that being the gentlewoman from Missouri (Mrs. Wagner). I commend her for her bill and her work in general on these issues. This bill codifies an SEC rule that allows any issuer to submit a confidential draft of the registration statement for review by the SEC staff. In doing so, it allows companies seeking to access public markets more time to carefully draft their registration statements under SEC's guidance without needing to worry about the contents of their registration statement being made public before they have had a chance to cross all their t's and dot all their i's. Mrs. Wagner's bill also codifies a 2019 SEC rulemaking that allows any issuer to test the waters before going public, which would allow any issuer to gauge institutional investor interest in their offering without first needing to file a registration statement with the SEC. Overall, this makes it easier for companies to access our capital markets and to go public. I urge my colleagues to support this bill. I think it is important that we encourage companies to go public both so that they can get the capital they need to expand their business and so that any person has a chance to invest in these businesses and diversify their own portfolio. Mr. Speaker, I urge my colleagues to vote ``yes'' on this bill, and I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I yield myself the balance of my time. I commend the gentleman from Iowa (Mr. Nunn) on this bill. I urge my colleagues to support the ELEVATE Act of 2025, which would streamline accounting disclosure requirements and auditing requirements for emerging growth companies, also known as EGCs, so those EGCs only need to provide 2 years of audited financial statements across the board. Like other bills that Democrats and Republicans have come to bipartisan agreement on, this bill balances the concern of those trying to raise capital while also maintaining disclosures and financial transparency that benefit and protect investors and thereby protect our capital markets, which so many speakers have pointed out are the envy of the world. Mr. Speaker, I ask my colleagues to vote ``yes'' on this bill, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. This bill illustrates what I said earlier today, that the most fascinating issues are those that involve accounting and auditing. Mr. Speaker, I rise in support of H.R. 3301, the ELEVATE Act of 2025, sponsored by the gentlewoman from Iowa (Mr. Nunn). Emerging growth companies, also known as EGCs, are a special type of public company that we created during the bipartisan JOBS Act of 2012. Unlike full-fledged public companies, EGCs only need to provide 2 years of audited financials when they conduct their initial public offering, also known as an IPO. Despite this special 2-year accommodation, there are some instances where an EGC, emerging growth company, is still required to provide 3 years of financials, still required under present law. One such instance is when the EGC conducts a spinoff, which is a transaction in which one company creates a new, independent company by selling new shares of its existing business. So the one company becomes two separate companies through a spinoff transaction. Mr. Nunn's bill reduces this obligation for EGC spinoffs to 2 years. That is only 2 years of audited financials, keeping in line with what is required when the EGC itself goes public. In doing so, this bill streamlines the financial disclosure obligations for emerging growth companies across the board making it easier for them to raise capital from the public. Mr. Speaker, I urge my colleagues to vote ``yes'' on this important bill, and I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I have no speakers on my side, and I yield myself the balance of my time. Mr. Speaker, I rise in support of Chairman Hill's bill, H.R. 3394. This bill will improve the definition of ``accredited investor.'' Mr. Speaker, I urge a ``yes'' vote, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I want to commend the gentlewoman from Missouri for all of her work chairing the Subcommittee on Capital Markets, but, particularly, for the hearings that we have had on this bill. I look forward to working with her on this subcommittee for many years to come. Mr. Speaker, I rise in support of H.R. 3394, the Fair Investment Opportunities for Professional Experts Act, offered by my friend and Financial Services Committee chair, French Hill. This bill is the first step in what I hope will be an effort to reform the definition of ``accredited investor.'' This bill moves us to add to that definition by noting that certain experience, licenses, and education can, indeed, make one an accredited investor. At the same time, I will point out that our definition of ``accredited investor'' was, I think, wrongfully decided that we should just focus on whoever is rich, then defined people as rich based on 1983 numbers. While $1 million may have made you rich then, Mr. Speaker, it does not mean that you are rich today. I rise in support of this bill. The accredited investor framework has long protected the general public from investing in high-risk, illiquid private securities. Unlike our public capital markets, in the private capital markets, companies don't provide anywhere near the same financial and other disclosures to investors. There are not the same legal protections for investors either, nor is there the same ability of the SEC or the State securities regulators to police these markets. When the accredited investor framework was first being debated, accredited investors were thought to be those who possess an intimate understanding and knowledge of the risks inherent in investing in private securities. These risks include heightened volatility, less transparency, difficulty obtaining accurate pricing, long lockup periods, and limited liquidity. Ultimately, industry argued for a simpler approach, so the SEC adopted the current definition, which is based around income and wealth. Today, to be an accredited investor, the investor must have a net worth, either individually or, with spouse, exceeding $1 million excluding the value of their home, or they must make more than $200,000 a year or $300,000 with a spouse. Those were definitions applicable in 1983 that may not have defined those with the requisite knowledge, but at least defined those who were high-income, high-net worth individuals. Of course, certain professional certifications or designations such as being an investment adviser could also qualify a person under the existing rules. The wealth and income thresholds, as I have said several times, were set back in 1983. Back then, roughly 2 percent of all Americans were considered accredited investors. As of 2023, that number had risen to 20 percent. Clearly either the standard was wrong in 1983 or it is wrong now, because it is an entirely different level of real wealth and real income. Mr. Hill's bill aims to return back to the original concept of accredited investor, which is that investors in private offerings should be fully aware and knowledgeable of the risks involved. As my friend and ranking member of the Financial Services Committee, Ms. Waters, has said during our markup of this bill: Just because you have $1 million doesn't mean you understand the complexities of the private markets. On the other hand, you shouldn't be prohibited from investing in products if you have full knowledge of the risks involved but don't happen to have $1 million. I would add to that that our definition of ``accredited investors,'' when we are done improving it, and this bill is an important step toward improving it, should focus on what percentage of net worth a person is investing in the particular private offering or private offerings in general. That is because one may be accredited to invest 5 or 10 percent of their net worth, but when you start betting the mortgage payments on one private investment, Mr. Speaker, then that is where our definition of ``accredited investor'' should protect you from that. So there should be diversification and limitation on the amount that an accredited investor can invest in any one or in all private offerings. Nonetheless, that is for a different bill. This bill simply makes one important improvement in our definition of ``accredited investor.'' It is critical for the SEC to revise and update the accredited investor definition to protect those who don't possess the proper knowledge or information about the risks of private unregistered securities. Mr. Hill's bill moves us in the right direction by indicating that certain credentials, such as someone with a master's in business administration, an MBA, or a FINRA certification, for example, should be deemed accredited without needing to meet income or wealth requirements. It also reconfirms Congress' mandate to the SEC that it must adjust the wealth and income thresholds to account for inflation. This is the right balance. I look forward to passing this bill, and I look forward to our subcommittee and the full committee making other changes in the definition of ``accredited investor.'' Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, I want to point out that I think this is the best thing that Congress can do without risk or cost to the American taxpayer. It makes sure that small- and medium-sized businesses have access to capital. With the BDC methodology, BDCs not only provide the capital but also provide the advice that so many growing businesses need. Mr. Speaker, I thank the original cosponsors that I mentioned earlier and all the cosponsors of this bill. I once again thank the chair and the ranking member for getting us to this point. Mr. Speaker, I urge my colleagues to support this bill, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, at the outset, I thank the chair and the ranking member for getting us to this stage on this bill. I also thank the cosponsors of this bill. Just from the committee, we have some 13 Democrats and 8 Republican members of the Financial Services Committee to cosponsor this bill. I especially thank the original cosponsors, Mr. Huizenga, Mr. Garbarino, and Ms. Bynum, for their efforts in bringing us to this point. Mr. Speaker, this is a bipartisan bill. Like all of the most fascinating bills that come to the floor of the House, it deals with accounting. Like the most important bills that come to the floor of the House, it deals with accounting. In this case, it deals with accounting for the expense ratios of mutual funds. This bipartisan bill, H.R. 2225, the Access to Small Business Investor Capital Act, makes a narrow technical correction of the Federal securities rules that had a major unintended consequence over the last two decades. In 1980, Congress created Business Development Companies to facilitate capital formation and get that capital to small- and medium- sized businesses. I want to point out that, as we have had tighter and tighter bank regulations, banks have been reluctant to lend money to small businesses except where their risks are guaranteed by the Small Business Administration. SBA loans are, of course, limited. We need BDCs to provide investment and to provide management assistance to growing businesses that are often underserved by traditional lending institutions. By law, a BDC must invest at least 70 percent of their assets in small- and medium-sized domestic companies. Over time, BDCs have filled that critical gap in our capital markets by funding businesses and industries in geographies often overlooked by other financial institutions. BDCs are often the first institutional investors to step in. This bill will play an important role in getting BDCs the capital that they then put into small- and medium-sized businesses. Calculations are that $120 billion more will be available to invest by BDCs because we expect a 30 percent increase in total investment. That is because this bill opens the door to mutual fund investments in BDCs. Despite the success of BDCs, in 2006, the SEC adopted a rule that inadvertently discouraged capital flows into BDCs, constraining their ability to serve small business. The rule is part of SEC's Acquired Fund Fees and Expenses framework. AFFE requires mutual funds and other investment vehicles that invest in BDCs to disclose as management fees of the mutual fund the expenses and the overhead of the BDC. This is in radical opposition to how similar investments are treated. If a mutual fund invests in the bank, the mutual fund, of course, lists as an expense of the mutual fund the expenses of the mutual fund. It does not list the overhead of the bank as if that is an expense of running the mutual fund. Banks and BDCs are two of the major types of institutions that make business investments and business loans. The double counting of BDCs by counting those as expenses of the mutual funds simply makes it impossible for mutual funds to invest in BDCs. The SEC rule artificially inflates the expense ratios of those mutual funds that are used to invest in BDCs, and so many of them don't. The result is misleading. Investors see a fund's expenses as higher than they actually are simply because the fund decides to invest in BDCs. This perception has led many fund managers to exclude BDCs from their portfolio, not because of performance but because of this distorted regulatory accounting. The intent of this rule to provide transparency was well-meaning. The execution, when applied to BDCs, has been counterproductive. Research by U.S. and international financial professors shows that after BDCs were removed from major U.S. stock indexes, as a consequence of this misguided AFFE rule, BDCs experienced a 29 percent to 33 percent lower investment growth as compared to similar potential investments. The effects were not limited to the financial sector. Companies that rely on BDCs saw lower job creation with employment falling by between 1.5 to 6.5 percentage points compared to pre-exclusion levels. The rule also fails to recognize the unique structure and mission of BDCs. Unlike passive funds, BDCs are actively managed and intentionally incur higher costs in order to provide tailored investment and advisory services to the small businesses that they invest in. This model creates long-term value, but the AFFE rule unfairly penalizes it. This is, of course, a departure. The rule is inconsistent with the way the AFFE rule applies to mutual fund investments in rates and, more importantly, the way it applies to mutual fund investments in banks. Because of this rule's miscounting, BDCs were removed from several stock indexes, as I pointed out earlier. If the SEC had the benefit of hindsight, I think it is unlikely that they would have adopted this rule, which contradicts the rule that they have for investments in banks and rates. That is why Congress needs to reverse this. The Access to Small Business Investor Capital Act fixes this by allowing BDCs' acquired fund fees and expenses from disclosures, while maintaining transparency around the BDC management fees and costs. This restores fairness and aligns the regulatory disclosures with economic reality and gives investors a clear view of their actual costs. Importantly, it does so without rolling back investor protections or weakening SEC oversight. Mr. Speaker, I would point out that this bill will provide $120 billion of capital to our small- and medium-sized businesses without a penny of cost to the American taxpayer and without any risk to the American taxpayer. This bipartisan legislation will open the door to more investment in BDCs, thereby unlocking capital for small- and medium-sized businesses. The most important thing that our financial institutions and the most important thing that our capital markets can do is provide capital for growing American enterprise, particularly small- and medium-sized businesses. Business Development Companies play a vital role, and I am proud to work with a bipartisan group of Members. As I pointed out earlier, we have a substantial number of cosponsors, 25 in all, including 13 Democrats on the Committee. We have seen bipartisan support for this bill, not only in this Congress but in prior Congresses. This is the Congress in which we actually have to get it adopted. The bipartisan legislation will open more investments and unlock capital for small businesses, as I have said. Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.