On April 5,2012, President Barack Obama signed the JOBS Act (Jumpstart Our Business Startups) to create jobs, with support from both Democrats and Republicans.
The JOBS legislation is designed to help small businesses create capital while starting up, providing opportunities for entrepreneurs. The bill was introduced as a way to enhance fragile economic recovery and battle high unemployment rates.
“This bill represents exactly the kind of bipartisan action we should be taking in Washington to help our economy. When their ideas take root, we get inventions that can change the way we live,” Obama stated.
The most important component of the bill allows the Securities and Exchange Commission to set laws, over a five year period, thereby allowing smaller companies go public quicker. Firms that have annual gross revenues of less than $1 billion would benefit from this “emerging growth company” position.
Some republicans joined with President Obama and supported pro-small business ideas in the House, including House Majority Leader Eric Cantor, R-VA. Following the ceremony, Cantor stated to reporters, “[A] problem that we face in America today…is that our economy is lagging and our small businesses are having too hard of a time getting up off the ground.”
Another provision facilitates the performance of “crowd-funding”, in which the Internet is used to request a lot of smaller investors. Senate Democrats were ineffective in their efforts to add further investor protections, but accomplished one of their goals: a prerequisite that obliges websites involved in crowd funding to register with the Securities and Exchange Commission. The provision also demands that companies seeking to raise money this way present information on their financial standing, business tactics, and shareholder risks.
Consumer advocates have advised that the new law could weaken regulatory oversight of stock contributions to private investors. However, President Obama addressed such concerns and noted that his administration will watch closely to make sure that these laws are followed. Obama added that the Securities and Exchange Commission should be “properly funded.”
UCM student Jorge Marquez stated, “I believe that the JOBS Act is a great piece of bipartisan legislation that primarily aim[s] to ameliorate the job crisis. I'm not a big fan of stimulus packages or direct assistance to the consumer, so I think that the JOBS act is a great way to foster sustainable job growth in the public and private sectors. The protection investors receive is diminished, but at least small businesses have an incentive [to] grow through different mediums.”
Signing of the JOBS Act marked an infrequent occasion, with Republicans and Democrats conforming with each other, rather than criticizing each other.
The law will not take effect until the Securities and Exchange Commission arranges new rules, a procedure that is expected to extend into next year.