May 16, 2016
Today, Monday, May 16, more than four years and one month after Congress passed and President Obama signed the Jumpstart Our Business Startups (JOBS) Act of 2012, the law’s Title III provisions for investment-based crowdfunding finally go into effect.
While this implementation by the Securities and Exchange Commission is better late than never, the crowdfunding rules are not only years too late, but millions of dollars short. European and Asian countries have now far surpassed the U.S. in reducing their red tape to allow startup entrepreneurs to raise funds from ordinary investors, and giving both the opportunity to grow wealthy with a firm’s success.
The limit of $1 million for a crowdfunding raise, given that legal and auditing costs under the rule may be in the hundreds of thousands, is likely too low to provide many investors and entrepreneurs the opportunity to...
April 28, 2016
Today, the U.S. House of Representatives is expected to vote on H.J. Res 88, the resolution pursuant to the Congressional Review Act to disapprove the Department of Labor fiduciary rule, which was introduced by Reps. Phil Roe (R-Tenn.), Charles Boustany (R-La.), and Ann Wagner (R-Mo.).
The Competitive Enterprise Institute strongly supports this legislation. Congress must disapprove this regulation for many reasons, the first being the Obama administration’s blatant disregard of the statute that Congress wrote. The Employee Retirement Income Security Act of 1974 gives the Department of Labor very limited authority over employment-based pensions. It in a way authorizes the Labor Department to redefine the term “fiduciary”—much less in a way that differs from decades-old interpretations of the...
April 13, 2016
Meet the new deities. They apparently sit on the Financial Stability Oversight Council and other regulatory agencies, especially those created by the Dodd-Frank banking “reform” act.
Obama administration officials and Dodd-Frank cheerleaders have been simply apoplectic in their reactions to U.S. District Judge Rosemary Collyer’s carefully reasoned March 30 decision reversing FSOC’s designation of the MetLife insurance company as “systemically important,” or too-big-to-fail. Expect similar reactions to a bill, H.R. 3340, likely to be voted out of the House this week that makes FSOC more accountable to Congress by placing its budget under the appropriations process. Similarly, the House Financial Services Committee approved a bill today,...
April 6, 2016
I and others had pointed out that the Labor Department’s proposed fiduciary rule defined the term “fiduciary” so broadly that even financial broadcasters such as Dave Ramsey and Suze Orman could be ensnared. The final rule claims to give relief to Ramsey and Orman—though there is still some doubt even on this point—but hardly anyone else. There appears to be some minor grandfathering in financial professionals’ existing relationship with clients, but that likely won’t keep middle-class savers from losing access to brokers and insurance agents they like any more than Obamacare let patients keep the doctors they like.
The DOL rule creates a presumption against brokers taking third-party commissions from mutual funds they sell to...
April 4, 2016
On Wednesday, the Labor Department plans to unveil new regulatory restrictions against brokers, insurance agents, and other who service 401(k)s and individual retirement accounts (IRAs). That means less access to financial advice and fewer options for a secure retirement for middle class investors. Who thought that was a good idea?
The Obama administration thinks people aren’t smart enough to seek out and discern good investment advice. When the Labor Department first proposed its so-called fiduciary rule last April, it explained that individuals cannot “prudently manage retirement assets on their own,” and that they “generally cannot distinguish good advice, or even good investment results, from bad.” That paternalism was the administration’s justification for some pretty draconian restrictions.
The rule puts a big burden on professionals who service 401(k) plans and...
March 18, 2016
AUSTIN, TX—President Obama traveled here to the ongoing South by Southwest festival from Washington, D.C., and so did I. In his March 11 presentation, he said, “The reason I'm here really is to recruit all of you.” Recruiting the tech and entertainment savvy attendees of SXSW, as it is called, was one of my purposes too.
But the differences at what has become one of the premier festivals for music, film and technology, ended there. President Obama’s speech was a defense of big government in all its forms. He sang the praises of the Consumer Financial Protection Bureau and wondered aloud why left and right complain that Dodd-Frank hasn’t reined in Wall Street.
The reason is called reality. Big banks have gotten bigger since Dodd-Frank, while the...
February 12, 2016
In my debut column as a Forbes contributor, I celebrate George Washington’s birthday by telling the story of how he championed early American inventor James Rumsey, and in so doing, played a pivotal role in developing the steamboat. As I note in the piece, the steamboat can be called America’s first great invention and “disruptive technology”:
In 1787, two events changed the course of history in America—and the world. And George Washington, who two years later would become the first U.S president, would play an indispensable role in both.
One was, of course, the drafting of the U.S. Constitution to safeguard our liberties and create a federal government checked by separation of powers. The other less well known event concerns a mode of transportation that would not come into fruition until the next century: the...
February 4, 2016
Cronyism and boondoggles in an energy bill is nothing new in the U.S. Congress. But this week, senators of both parties are taking the process to new lows in amendments they are offering to the pending S.2012—the Energy Policy Modernization Act.
Not only are these politicos picking winners and losers through subsidies and mandates favoring selected “green” industries and technologies, they are roping in housing and finance agencies into their “environmentally correct” schemes. At best, this would divert the agencies away from their missions at a time of great economic volatility. At worst, it could cause a financial crisis of its own.
First, there is an amendment from Sen Johnny Isakson (R-Ga.), a former real estate agent, which would loosen credit standards for “green” homes...
January 11, 2016
On Tuesday evening, President Obama will give his final State of the Union address. In evaluating the state of the U.S., it’s useful to look at the state of economic freedom, including the ability for ordinary Americans to start and invest in a new business without undue government interference.
By several measures, economic freedom has declined rapidly since 2009. Though some harmful policies were enacted in during the Bush administration, such as the Sarbanes-Oxley accounting mandates that made it so much more difficult smaller companies to go public, the Obama administration has not reversed those policies and pushed through many new detriments to economic freedom. These include Obamacare, which makes it difficult for small and midsize firm to hire new employees to due to the expensive and prescriptive insurance coverage mandates, and the Dodd-Frank “financial reform,”...
December 29, 2015
As 2015 comes to a close, it’s time for year-end retrospectives, in which the past year is proclaimed the “year of” something. So in that spirit, I declare 2015 to be the Year of Equity Crowdfunding. Some proclaimed 2012 the “Year of Crowdfunding. But 2015 has been the year that regulatory barriers to equity crowdfunding slowly but surely began to fall at the state and federal level.
As I explain in my rcent paper, “Declaration of Crowdfunding Independence,” significant regulatory roadblocks – including laws more than 80 years old – have stopped entrepreneurs...