Nov 09 2011
U.S. Senator Richard Shelby, ranking Republican on the Senate Committee on Banking, Housing and Urban Affairs, today made the following statement on the Senate floor regarding the necessity for regulatory reform in order to spur job growth by increasing smaller businesses’ access to capital.
Statement of Senator Richard C. Shelby
November 9, 2011
“Mr. President, I rise today to speak about some common sense steps that Congress can take right now to help our struggling economy.
“At a time when job growth is stagnant, Congress needs to lift the regulatory burden that is stifling capital formation.
“The Senate has before it several bills that would help private businesses raise the capital they need to grow and create jobs.
“This is an issue that should enjoy the support of both Republicans and Democrats.
“Access to capital is what allows entrepreneurs to transform new ideas into living companies. Novel products, new services, and, most importantly, good jobs can be created.
“Unfortunately, over-regulation has made it progressively harder for small businesses to access capital.
“The statistics are clear. In the 1990s, an average of 547 initial public offerings took place each year, compared to an average of just 192 per year after 1999.
"Small initial public offerings now make up only 20 percent of the total. In contrast, they made up 80 percent of the total in the 1990s.
“In addition, the number of new businesses being launched each year is falling. In 2010, it was the lowest it has ever been since the Bureau of Labor Statistics started tracking this number in 1994.
“The SEC has been slow to address these problems, even though it has the authority to do so. The Chairman of the SEC has spoken of the need for action, but we have not seen tangible results.
“A year ago, one SEC Commissioner remarked, “My hope is that, as an agency, the Commission will move beyond talking about small business capital formation and will take concrete steps that actually foster it.”
“We can no longer wait for the SEC to do its job. The time has come for Congress to take action. Our economy cannot afford to wait any longer.
"The first thing Congress should do to help improve capital formation is to bring up for consideration several bipartisan bills that would implement important regulatory reforms.
“One bill would modernize the SEC’s Regulation A, which was initially designed to make it easy for small businesses to access our capital markets. Unfortunately, Regulation A is outdated and rarely used.
"Another set of bills would raise the thresholds for reporting so that small banks and small companies are not subject to burdensome SEC reporting requirements.
“These bills would still leave investors protected and ensure that public companies provide meaningful disclosure. Most importantly, investors would still be protected by the SEC’s anti-fraud rules.
“These bills represent a few steps that we can take right now, but they are not comprehensive by any means.
“Much more needs to be done to make sure registration requirements are tailored to the size and type of business.
“The existing one-size fits all approach means that small companies have to bear the same costs that large companies do when they go public. These inequities need to be addressed.
“One would think that we could agree on removing unnecessary restrictions on capital formation. Yet, for the past three years, the majority party has dramatically increased government’s involvement in the economy. They have imposed one costly mandate after another on businesses.
“They have crowded-out the private sector with massive government programs resulting in persistently high unemployment and stagnant economic growth.
“Mr. President, it is time for a new approach. It is time to revitalize the free market in America. We can begin this effort by taking these small steps to help entrepreneurs find the capital they need to build their businesses.
I hope that my Democratic colleagues will now do more than talk about creating jobs and join us in doing something to create jobs.
“Mr. President, I yield the floor.”