Video: Why is the SEC delaying a bipartisan effort to encourage capital investment?

Republicans and Democrats didn’t agree on much in 2012, but one point of bipartisanship on the economy was the JOBS Act.  Part of the bill encourages “crowdsourcing” capital fundraising for projects, along the same line as Kickstarter, which focuses efforts on the arts.  It requires action from the Securities and Exchange Commission to write rules allowing the reforms to be put into place, but the House Oversight Committee reports that SEC chair Mary Schapiro has dragged her heels in complying with this bill.  Why?  They argue that Shapiro is more concerned with her “legacy” than in boosting job creation:

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It has been revealed that Chairman Schapiro unilaterally pushed back against the job creation provisions in the bipartisan law because of the influence of a lobbyist and the concern over her own “legacy.”  The continued restricts critical access to capital for American small businesses, slowing economic growth, hiring, and the creation of new jobs.

“Congress passed this bill – President Obama signed it into law – What’s more important: American entrepreneurs and getting this economy moving again, or a lobbyist and the legacy of one individual?” said Chairman McHenry in the video.

Read the SEC emails here.

Read Chairman McHenry’s letter here.

Be sure to read the e-mails.  The video does seem to take the “legacy” comment a bit out of context, as Schapiro seems to be arguing that she doesn’t want to be seen as unnecessarily blocking or delaying the rule.  The e-mails, which Oversight to their credit produce in full context, show that the issue here was whether to have a full comment period on the rule change, or whether to shorten the period because, as SEC Commissioner Daniel Gallagher argued, “we know what the comments will be.”

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On the other hand, look at the dates on these e-mails.  They’re from August, more than four months ago, and almost four months after Obama signed the JOBS Act.  Even at that stage, Gallagher declared in his e-mail to Schapiro that “I am furious” over the delay in getting a proposal for the rule change.  By this time, the e-mail chain was three months old, and Gallagher had had enough:

I just got word about the latest change to general solicitation. It is not acceptable. I have been operating in good faith, reviewing the multiple proposals sent to me for consideration this month, and I continue to find shifting sands. A “proposal” on general solicitation could have been done months ago, and indeed should have been done years ago. Meredith and Lona made it crystal clear to me on Monday that there is no need for a proposal because we know what the comments will be.  And so, I spent hours working on how to accommodate your desire for a study within an interim final rule, and we did so — just to find out now that you have changed your mind again.

Against the backdrop of a potential open meeting on money market funds that may be just an exercise of you “getting us on the record” as you told me two weeks ago and as was reported in the WSJ today, I can only assume that you have no desire to proceed in food faith as we consider critically important rules in an unreasonable schedule you have set for this month. I will proceed accordingly.

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Four months after that missive, Oversight wants to know why no action has yet to be taken on crowdsourcing rules.  Seems like a pretty good question, and one Schapiro should be answering in Congress.

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