Dodd spares start-up financiers.
By WSJ Editors
We take our policy victories wherever we can get them amid Washington’s march to Europe-dom, so we’re pleased to report that the Senate finance reform that passed last week did not contain new regulations on investors who finance start-up companies.
Chris Dodd’s original draft contained numerous provisions targeting angel investors, the wealthy individuals who directly fund innovative new businesses that are still too small to attract venture capital. Currently they can do so with minimum government interference, but the bill would have subjected entrepreneurs seeking angel capital to a 120-day Securities and Exchange Commission review, which would ensure that many of these budding companies die a slow bureaucratic death. Angel investors would also have been subject to net worth and income requirements more than double today’s, as well as a 50-state regulatory scheme that would replace today’s single federal standard.
This attack on the businesses that create most new jobs in the U.S. and had nothing to do with 2008’s financial panic was too much even for the Senate, which removed these restrictions in an uncontroversial voice vote earlier this month. Special credit goes to Missouri Republican Kit Bond, who led the charge, though Mr. Dodd and other Democrats cosponsored Mr. Bond’s amendment and at least had the sense to recognize a mistake.
Still, the fact that such a destructive provision made it that far shows how little the Members and staff now running Congress understand about wealth creation and the sources of American prosperity.
Continue reading Angels (Back) in America
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Related Note:
I just sent a thank you to Senator Kit Bond at his contact form.