[Congressional Record Volume 158, Number 37 (Wednesday, March 7, 2012)]
[Senate]
[Pages S1454-S1456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      MOVING AHEAD FOR PROGRESS IN THE 21ST CENTURY ACT--Continued

  Mr. TOOMEY. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Capital Formation

  Mr. TOOMEY. Mr. President, it is probably clear to all of us that the 
American people have a very high level of frustration with the lack of 
productivity of this Congress. The fact is, when we go home to our 
respective States, I am sure we are all hearing what I heard last week 
as I traveled across Pennsylvania. People ask me: Why can't you guys 
work together? Why can't you get something done? Why does it seem there 
is so much partisan bickering that you can't come together even on 
simple things that could help grow this economy, help make progress in 
these very difficult times?
  Well, on this front I think we have some good news, and I am 
delighted to talk about this tonight. I hope this early sign of good 
news reaches fruition and we actually have a meaningful accomplishment 
soon in this body as well as the other body.
  Specifically, I am referring to the work that has been coming 
together of late on a series of capital formation bills that will help 
small and growing companies raise the capital they need to expand, to 
hire new workers, to help improve our economy and give us a healthier 
economy with the job growth we badly need.
  In particular, I want to thank House majority leader Eric Cantor. 
Congressman Cantor took the step of pulling together a series of 
separate bills and putting them together in a package--a capital 
formation package. There is very broad support for this package in the 
House. I think under his leadership it is very likely to pass the House 
and will present a tremendous opportunity for us because there is broad 
bipartisan support for these commonsense reforms that will help 
companies raise capital and grow.
  The bipartisan support includes the President of the United States. 
Much to his credit, the President--I believe just yesterday--issued a 
formal Statement of Administrative Policy indicating his full support 
for the passage of the measure that Leader Cantor is proposing in the 
House. Many of these proposals come from the work that the President 
initiated. Some of them are included in the startup America jobs plan 
that the President proposed. Some of them were recommended by 
commissions that the President assembled. The President spoke about the 
need for enhancing small- and medium-sized companies' access to capital 
in his State of the Union Address. So I think the President has been 
very clear and very strong in his support as the House Republican 
leadership has been.
  In this body I think the leadership on both sides of the aisle has 
indicated support. The majority leader and the minority leader have 
both indicated their support for moving in this direction. The chairman 
and the ranking member of the Banking Committee have expressed a desire 
to move forward with the capital formation package, and there is wide 
support among outside groups. In fact, there is very broad support and 
very little opposition. The support includes support of entrepreneurs, 
whether they be from convenience stores, financial services firms, or 
high-tech firms.
  In Pennsylvania, the life science companies feel very strongly about 
this because for them access to capital is a huge challenge. It is the 
absolutely essential precondition for their growth, and they are not 
alone. Manufacturers generally, supermarkets, all kinds of trade 
associations, the support for these kinds of capital foundation bills 
is very broad.
  I want to touch specifically on three of the bills that I have been 
working on for quite some time now, and I am very hopeful and 
optimistic. First of all, these three bills are among six bills. The 
House companion version of these bills is in the package that Leader 
Cantor has proposed, and I believe there is broad support in this body 
for these bills as well.
  The first I want to refer to is a bill that I have introduced with 
Senator Tester. It is S. 1544, and it is called the Small Company 
Capital Formation Act. It is more commonly known as the reg A bill. 
What it does is lift the current ceiling on the amount of money that a 
business can raise under the regulation provision of the securities 
law. That is a provision that allows a small

[[Page S1455]]

company to issue a modest amount of debt or equity without being 
subject to the full range of very costly regulations. The limit has 
been at $5 million for many years, and the bill that Senator Tester and 
I have proposed would raise that limit to $50 million. It has not been 
updated in almost two decades, and there is no question that raising 
the ceiling would allow a lot of companies that need to raise 
substantially more than $5 million the ability to do so and to thereby 
grow.
  This is something the President has supported as well, and it passed 
the House by a pretty stunning margin of 421 to 1. It was not very 
controversial. I don't think it is controversial here, so I am glad 
this bill is included in this package in the House.
  The second bill I would like to mention is S. 1824, the Toomey-Carper 
bill. It has to do with the limit on the number of shareholders a 
closely held company can have without triggering the full SEC 
compliance. Currently, that limit is at 500 shareholders. If you reach 
500 or go above 500, then you are treated as a public company such as 
ExxonMobile for reporting purposes. That might have been appropriate 
many years ago, but in the modern era where communication is so much 
easier, access to information is so much greater and so much faster, 
the necessary information for shareholders can be distributed more 
broadly, more quickly, more easily, it is high time we raised that 
limit from 500 to 2,000 as this bill would do.

  I appreciate Senator Carper's support for this legislation.
  This is a bill that has a companion measure in the House that was 
raised at the House Financial Services Committee. They voted on it. 
They voted by voice vote and approved it. By voice vote that means, 
generally speaking, there is no opposition and nobody bothered with the 
rollcall vote because everybody supported it. That is a big, broad 
committee that represents virtually every constituency in the House of 
Representatives, and it was passed by a voice vote. This has very 
strong and broad support.
  The third bill I want to mention is S. 1933, the Schumer-Toomey bill. 
The technical name is Reopening American Capital Markets to Emerging 
Growth Companies Act. We call this more colloquially the on-ramp bill. 
The reason we call it that is because we think of it as an on-ramp to 
becoming a publicly traded company, a path to launching an IPO that 
will facilitate this.
  There has been a big reduction in the number of IPOs that occur in 
the United States. The IPO, initial public offering, is the process by 
which a private company becomes a public company. It can be a very 
substantial opportunity to raise capital. As I mentioned earlier, when 
companies raise capital, they put that money to work by expanding and 
hiring new workers. An IPO is a hugely important step in a company's 
progress and almost invariably follows a substantial increase in 
hiring, and that is why this is so important.
  One of the reasons companies are slower to go public now than they 
were in the past is because we in Congress created a much more 
expensive set of regulations when a company does go public. Part of 
that is the Sarbanes-Oxley bill, and certain features within Sarbanes-
Oxley are enormously complex and expensive to comply with.
  Our bill says if you are a relatively small company--specifically, 
less than $1 billion in revenues or less than $700 million in public 
float, the amount of stock that is traded, then you can do an IPO 
without having to comply with all of the Sarbanes-Oxley regulations 
immediately. Over time you will have to comply if you exceed those 
thresholds that I mentioned, or within 5 years. In any case, you have 
to comply as everybody else does, but at least you have the opportunity 
to grow and the ability to afford the expense that is associated with 
it.
  A companion measure to this bill--an identical version in the House 
was considered by the House Financial Services Committee, and that 
passed just a week ago. It passed the Financial Services Committee by a 
vote of 54 to 1. This is not very controversial. This has very broad 
bipartisan support, and this is the kind of legislation that is going 
to help businesses grow. I cannot stress enough the link between 
raising capital and growing one's company and hiring new workers. 
Capital and jobs are completely linked. What these bills will do, 
together with the other bills that make the broader package, is they 
will encourage a wealthier economy, stronger job growth, and more 
people working.

  Let me stress one other aspect about this that I think is important 
to note. This came out at a hearing we had earlier this week on this 
very topic; that is, for many small companies, young companies, growing 
companies, there are a number of steps along the way to becoming a 
larger and more successful company, employing more people.
  There are a number of steps along the way in raising capital that can 
start with an angel investor, followed by venture capital, followed by 
private equity, followed by maybe a securities issuance, followed by an 
IPO. This sequence of capital-raising is very important. If you 
facilitate any one step along the way, as these bills would, the 
experts who came and testified before our committee confirmed that by 
facilitating one step along the way, you facilitate the capital-raising 
at the earlier steps because what happens is the investors are more 
confident they will have the opportunity to liquidate their investment 
at a later stage if they see that the regulations have been made more 
amenable to that liquidation further down the road. So even if a 
company is not yet necessarily poised, for instance, to do the IPO, the 
fact that the IPO is easier to achieve when that company gets there 
increases their chance of raising money now through other vehicles, 
through other sources, and therefore increases their ability to grow.
  I am very enthusiastic, as my colleagues can tell, about this 
legislation--certainly the three bills I have been working on and the 
other bills as well, which are a perfect complement to this and really 
constitute a portfolio of bills that will facilitate portfolio-raising 
across the board.
  I thank my Democratic cosponsors of these particular bills, including 
Senators Tester, Carper, and Schumer, for working with me. I also wish 
to commend Leader McConnell for his leadership and Senator Reid for 
his, as well as Ranking Member Shelby and Chairman Johnson. I think 
what our constituents have been telling us for a long time is they want 
to see us working together and doing what is right for our country, for 
our economy, for job growth. This is a wonderful opportunity to do 
that.
  I think it is quite likely that a package of these bills is going to 
pass the House very soon. I hope some comparable measure will pass in 
the Senate. The President has already indicated he supports it and 
wants to sign it. I don't think we should waste any time at all in 
passing the legislation that will be good for small and medium-sized 
businesses and good for their ability to grow and hire more workers.
  With that, Mr. President, I yield the floor and suggest the absence 
of a quorum.
  The PRESIDING OFFICER (Mr. Manchin). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, first of all, I don't think apologies are in 
order. We have been doing the best we can for several days now. We have 
a typical agreement, not one that either side jumps for joy about. In 
the near future, we are going to be able to finish this important piece 
of legislation.
  Mr. President, I ask unanimous consent that the motion to recommit be 
withdrawn; that the pending second-degree amendment be withdrawn; that 
the Reid of Nevada amendment No. 1761 be agreed to; that the bill, as 
amended, be considered original text for the purposes of further 
amendment; that the following amendments be the only first-degree 
amendments remaining in order to S. 1813:
  Vitter No. 1535; Baucus or designee relative to rural schools; 
Collins No. 1660; Coburn No. 1738; Nelson of Florida, Shelby, Landrieu 
No. 1822, with a modification in order if agreed to by Senators Nelson 
of Florida, Shelby, Landrieu, and Baucus; Wyden No. 1817; Hoeven No. 
1537; Levin No. 1818;

[[Page S1456]]

McConnell or designee with a side-by-side to Stabenow No. 1812; 
Stabenow No. 1812; Demint No. 1589; Menendez-Burr No. 1782; DeMint No. 
1756; Coats No. 1517; Brown of Ohio No. 1819; Blunt No. 1540; Merkley 
No. 1653; Portman No. 1736; Klobuchar No. 1617; Corker No. 1785, with a 
modification; Shaheen No. 1678; Portman No. 1742; Corker No. 1810; 
Carper No. 1670; Hutchison No. 1568; McCain No. 1669, modified with 
changes at the desk; Alexander No. 1779; Boxer No. 1816; and Paul No. 
1556; that on Thursday, March 8, at a time to be determined by the 
majority leader, after consultation with the Republican leader, the 
Senate proceed to votes in relation to the amendments in the order 
listed; that the following amendments be subject to a 60-vote 
affirmative threshold: Vitter No. 1535; Baucus or designee relative to 
rural schools; Collins No. 1660; Coburn No. 1738; Nelson of Florida-
Shelby-Landrieu No. 1822; Wyden No. 1817; Hoeven No. 1537; McConnell or 
designee side-by-side to Stabenow No. 1812; Stabenow No. 1812; DeMint 
No. 1589; Menendez-Burr No. 1782; that there be no other amendments in 
order to the bill or the amendments listed other than the managers' 
package and there be no points of order or motions in order to any of 
these amendments other than budget points of order and the applicable 
motions to waive; that it be in order for a managers' package to be 
considered and, if approved by the managers and the two leaders, the 
managers' package be agreed to; further, the bill, as amended, then be 
read the third time and the Senate proceed to a vote on passage of the 
bill, as amended, and if the bill is passed, it be held at the desk; 
finally, that when the Senate receives the House companion to S. 1813, 
as determined by the two leaders, it be in order for the majority 
leader to proceed to its immediate consideration, strike all after the 
enacting clause and insert the text of S. 1813, as passed by the 
Senate, in lieu thereof; that the House bill, as amended, be read the 
third time, a statutory pay-go statement be read, if needed, and the 
bill, as amended, be passed, the motions to reconsider be considered 
made and laid upon the table; that upon passage, the Senate insist on 
its amendment, request a conference with the House on the disagreeing 
votes of the two Houses and that the Chair be authorized to appoint 
conferees on the part of the Senate.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.

                          ____________________