Update (3/28): Yesterday, the House approved the JOBS Act. It has now been sent to the White House for the president's signature.
Finally, the House passed a jobs bill last week. And what a bill it is!
Officially called the Jump-Start Our Business Start-Ups Act, it calls for reopening our capital markets to exciting new start-ups by ridding protections for investors and stripping away disclosure requirements for smaller companies.
JOBS has been repeatedlyassailed, but it will bring much-needed help to some of the harder hit sectors of the economy.
John Coffee, a Columbia Law professor, has hailed the bill as "the boiler room legalization act." And rightly so. Boiler room operations were one of the unsung job creators of the 1990s, producing some of America's greatest penny stocks and boom times for yacht makers and coke dealers.
But these small, hard-working firms have run into hard times. Areas of Long Island and Boca Raton, Fla., have still not recovered since the heyday of the Nasdaq. How long must a lost generation of Lamborghini-loving twenty-somethings suffer while their talents for talking quickly go to waste?
Congress is on the case, with Democrats and Republicans working together at last. It's not just the House. The Senate is expected to pass a similar bill this week.
Since the technology stock blowup, the accounting scandals at Enron and WorldCom and the worst financial crisis since the Great Depression, investors have been needlessly wary of putting their savings into fledgling companies offered by Wall Street banks.
The JOBS bill fixes that. Taking advantage of the revolutionary possibilities of the Internet, the bill loosens decades-old investor protections so that companies can directly advertise to those who would like to be separated from their money. It does that by giving broad exemptions for start-ups that want to "crowdfund" by raising small amounts of money over the Internet. I.P.O. pitches next to "Lose Your Belly!" ads. Sounds like a great idea!
Nigeria shouldn't be the only country to benefit from the web. Right here in America, the elderly are increasingly attractive to a variety of entrepreneurial spirits. If JOBS becomes the law, such innovators could flourish.
Let's not forget Wall Street analysts. Once, men and women could make a good living by stamping glowing ratings on companies offering stock to the public for the first time, even if they secretly believed those companies were dogs. You could even become famous, like Jack Grubman or Henry Blodget.
Ever since the cleanup back then by the New York State attorney general, Eliot Spitzer, analysts have lost some luster. With JOBS enacted, Wall Street analysts will once again be able to shill for the companies that their own investment banks are shepherding through the initial public offering process.
And then there are the short-sellers, the type of investor who ferrets out the overvalued companies, the hype stories and stock frauds.
It's been about a year now since Chinese reverse-merger companies collapsed. In that scandal, dozens of those small Chinese companies went public in the United States without having to run the gantlet of the Securities and Exchange Commission's registration rules.
After they blew up by the boatload, the S.E.C. cracked down and tightened its rules.
Since then, short-sellers' pickings have been slim. By allowing newly public small companies to not disclose financial information for years, the bill will provide new targets for short-selling hedge funds.
Clearly, the many critics of the law underestimate what a boon this will be. Sure, it would be better not to have the scams in the first place. But now short-sellers will now be able to use their talents to uncover fraud that might not have occurred without JOBS. Capital will pour into this sector of the economy.
Finally, one shouldn't underestimate how tough things have been for lobbyists promoting financial deregulation. Not in finding work, of course. Legions of civic-minded lawyers have found gainful employment helping banks desperately fight the Dodd-Frank regulatory overhaul.
But these people have suffered no end of social embarrassment. When they go to cocktail parties and say their job is to protect banks from regulations that hurt America, people have been known to laugh.
Now, the lobbyists can point out that even the White House agrees. The Obama administration has backed JOBS and is on the same page as the banks when it comes to the message: Safe, tightly regulated capital markets don't instill confidence in investors, but rather stifle ingenuity and creativity. Expect these same arguments to come up again in the push to revise Dodd-Frank. That's change we can believe in.
And, anyway, trust and confidence are overrated. Wild West markets are more thrilling. If Americans thought otherwise, Las Vegas casinos would have the buy-and-hold room next to the roulette wheels.
Then again, for entertainment, our capital markets just cannot compete with Congress.
