I rise today, glad this chamber is focused on job creation, on access to capital, on ways that we can help strengthen the speed and the growth of high-promise, start-up companies and grateful for the input and leadership of the Senator from Louisiana for her hard work on trying to make sure that we pay attention to the matter that is before this body today and making sure that we strike the right balance between continuing to ensure investor protection while also providing relief from regulations that may hold the promise of accelerating capital formation and job growth in this country.
When I go home to Delaware every night and when I attend events across our state every weekend, I most frequently hear from those deeply affected by our too-long recession, from which we are still growing and recovering, families who are still dealing with unemployment, with loss of their homes, or with the threats to loss of their life’s savings, businesses that are facing a credit crunch and struggling to expand or to retain their employment. Americans, I’ve heard over and over, and Delawareans want us to come together and find solutions in this body.
The good news is that today, in a rare bipartisan spirit, that’s exactly what we’re doing. I’m glad we are taking up two different versions of this legislation to create a positive climate for capital formation for early-stage companies that have enormous potential to grow, one of which has passed overwhelmingly in the House and has earned the public support of President Obama. But the other which is, as you’ve heard a number of Democratic Senators speak to today, tries to mirror those same core provisions but insists on investor protection and on ensuring that we don’t overreach in opening up markets in ways that we may regret later.
Sometimes, as you know all too well, Mr. President, sometimes this body deliberates overly long, in fact in my first year and a half here I have been struck at just how long we deliberate before acting and how many measures have sat here on the floor without action that should have been taken up promptly and quickly. In this case, I am concerned about the opposite, that we are rushing through a measure that deserves some careful consideration and review. In any event, making progress in access to capital for entrepreneurs and start-up businesses is something I hope we can all agree on.
In both versions of the bill that we will consider later today or tomorrow, there are great ideas and I continue to believe that ensuring investor protection, market transparency, and the vibrancy of our capital markets through preventing fraud and ensuring clarity about what investors are getting is a fundamental principle all of us should share. Without the right time to consider this legislation, I’m worried about the potential, the potential risks for investors, the potential burdens it may place on business. I’m worried about a proposal around beneficial ownership in one proposal and I’m worried about concerns that may overly open the market to fraudsters and those who would scam investors on the Internet in the other.
There’s much to like about these proposals, though, and let me dedicate the remainder of my time of focusing on two of them.
Two of the strongest proposals that we will consider today or tomorrow address a critical need for our business community, which is access to capital. Capital is what allows businesses to invest in new technology, new facilities, new workers, and in growth. Credit has, as well all know, been far too hard to come by in the last few years but we can and should take action to make it more available to small business owners with high-growth potential.
One option, as we’ve heard a number of Senators address today, is to continue to expand the opportunity for financing from the Export-Import Bank and the other is to make somewhat easier the pathway to an initial public offering. Today’s legislation would ease both processes and that’s the right kind of positive movement that will create opportunity all over the United States and for companies in my home state of Delaware.
First, if I can, the Export-Import Bank has long established its record of promoting exports and job growth. It has provided essential capital to help manufacturers and small businesses all over the company export more American-made goods. The reauthorization measure that we take up hopefully later today has passed unanimously out of the Senate Banking Committee and has already enjoyed broad, bipartisan support.
Last year financing from the Ex-Im Bank supported hundreds of jobs in my home state and thousands more across the country. The Bank supported a dozen companies in Delaware, for example, Air Liquide, which has a proprietary MEDAL membrane, a selectively permeable membrane, that turns landfill gas into usable energy. One example of many innovative, local Delaware companies creating high quality jobs in our communities and able to sell these products by export through Ex-Im Bank financing.
And equally importantly, the Ex-Im Bank hasn’t added a single cent to the deficit. It works to give American businesses a fair shot in the global market. If American businesses and workers are going to be competitive, we have to ensure they have the support they need. Otherwise they’ll continue to lose out.
China already provides three to four times as much export financing as we do to help their exporters. Our companies, our manufacturers, our communities simply ask for a level playing field; and in my view, reauthorizing the Ex-Im Bank is vital to these companies and our manufacturing sector.
Given the realities of the global economy, it is not enough for American companies today to just make great products– they also have to be able to sell them to the burgeoning global middle-class. As we all know, 95% of current and future customers and consumers live outside of the United States and reaching those consumers who are hungry for American products is essential to the steady growth of businesses of all sizes. Boosting American exports will be central to creating the kind of growth that will continue to sustain this ongoing economic recovery and allow our businesses to hire new workers.
Financing from Ex-Im can come in at a critical time for businesses in need of capital, but it doesn’t meet the needs of every company.
For some other early-stage companies, Delaware businesses in particular, when they are in need of capital, one solution is to move towards an initial public offering by becoming a publicly traded company.
Today’s legislation also includes an “on-ramp” to ease the path to an IPO. By reducing the regulatory burden on highly innovative companies poised for significant growth, we can encourage job creation on a great scale.
At the moment we’re simply not seeing the rate of IPO’s in our economy that we need to be healthy. 92% of the jobs that a company typical creates over its entire life cycle come after it goes public. In the 1990’s, nearly half of all global IPOs happened in the U.S. – today, that number is less than 10%.
There’s many reasons companies choose not to go public but one of them that I’ve heard cited repeatedly in Delaware and in Washington is regulatory compliance under the Sarbanes-Oxley section 404(b). Now that’s a mouthful, but it essentially requires some auditing, disclosures, some pre-IPO work which while the spirit of the law is the right one, ensuring transparency and investor protection is the right direction.
This particular section has proven in practice to be overly burdensome to businesses with potential to be the greatest job creators. After hearing about this issue many times, I got together last fall with my colleague, Senator Rubio, to craft a solution. We found bipartisan agreement on this and six other issues which we included in our joint legislation, the so-called AGREE Act, which we introduced last November.
That legislation was chock full of job-creating proposals designed to spur ideas and encourage more of our colleagues to come together on this sort of bipartisan jobs legislation we can and should move to. In the case of encouraging IPO’s, that’s exactly what’s happened.
Senator Schumer and Senator Toomey have also picked up this particular proposal and moved further along with it. Then on the House side, my longtime friend and fellow Delawarean Congressman Carney worked with his Republican colleague, Congressman Fincher, to write and pass legislation on this exact issue, which has now come to us as part of this bipartisan jobs package, H.R. 3606.
I want to specifically congratulate Congressman Carney, who with this bill became the first freshman Democrat in the House to pass a major piece of legislation.
As you heard Senator Landrieu speak to just a few moments ago, and as several Senators have stood on the floor and raised today and last week, the question we have to ask is – in providing this relief from Sarbanes-Oxley 404(b), what’s the appropriate level, what’s the appropriate duration, where do we strike the right balance between investor protection and accelerating capital formation and job growth?
Is it at $250 million as we proposed in the AGREE Act, $350 million as the Democratic alternative proposes that’s on the floor today, or $1 billion, as provided in the bill that came over from the House? In my view, and the view of many Democratic Senators, we need to take the time to debate this, discuss it and ensure we are striking the balance. It is worth a few more hours of our time to get this matter right, Mr. President.
Creating a favorable environment for businesses to create jobs can and should be our top priority here in Washington. Since I arrived a year and a half ago, that hasn’t always been the case, but today it can and should be the primary focus of our work. There is no reason we have to rush to pass this today, Mr. President.
We can and should take some time to deliberate, to work through the appropriate process, and it is my hope that we will reauthorize and extend the reach of the Export-Import Bank and move to a consensus bipartisan bill that will strengthen access to capital for entrepreneurs and for early stage companies and that will show all the people of the United States that the House, the Senate, and the President can and will stand together on the side of job creators in this economy.
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