Scott Leads Banking Republicans in Introducing Capital Markets Reform Legislation
Washington, D.C. – Senator Tim Scott (R-S.C.), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, led fellow Banking Committee Republicans in introducing comprehensive legislation to revitalize the businesses within our communities and open up our capital markets to all Americans. Ranking Member Scott’s Empowering Main Street in America Act will boost avenues for capital formation that create jobs and generate economic growth. The Ranking Member’s legislation is the result of feedback on the capital markets framework he released last fall, from his roundtable with Black investors and business founders discussing ways to improve minority communities’ access to capital, and from his Republican colleagues on the Senate Banking Committee.
Banking Committee members, including Senators Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), Thom Tillis (R-N.C.), John Kennedy (R-La.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), Katie Britt (R-Ala.), Kevin Cramer (R-N.D.), and Steve Daines (R-Mont.) joined the Ranking Member on the legislation. Senator Jerry Moran (R-Kan.) is also a co-sponsor of the bill.
“Our capital markets system is the envy of the world and has helped many Americans build wealth and save for their futures. But unfortunately for individuals in communities like the one I grew up in, investing in a local venture or raising capital to grow a business seems out of reach. We need to change that – and this comprehensive legislation will create economic opportunity and provide more Americans with the resources necessary to achieve financial security for their families and realize their version of the American Dream, while ensuring small business owners can access capital to grow and innovate,” said Ranking Member Scott.
“Republicans are committed to addressing and correcting the burdensome regulatory regime that limits the ability of small businesses to grow. Cleaning up bureaucratic red tape will allow these small entities to readily access our capital markets, and will provide more opportunities for retail investors,” said Senator Crapo.
“South Dakota entrepreneurs and startups need access to capital to grow,” said Senator Rounds. “The Empowering Main Street in America Act has a number of provisions that would cut burdensome red tape and encourage economic growth. It also includes my legislation that would allow more investment in startups and future public companies that would help power the next generation of American economic success. I look forward to working with my colleagues to move this pro-jobs agenda forward.”
"Empowering entrepreneurs and fostering innovation is vital to our nation's economic strength," said Senator Tillis. "This legislative package streamlines access to capital and removes burdensome regulations that stifle growth, ensuring small businesses have the tools needed to scale and create jobs. This includes my Equal Opportunity for All Investors Act, which expands opportunities for business and community leaders to act as accredited investors. By supporting our small businesses and entrepreneurs, we're investing in a dynamic and innovative economy that will benefit all Americans."
“Every day, the American dream is becoming less attainable thanks to government bureaucracy. Louisianians and all Americans deserve a level playing field when it comes to accessing capital and making investments. I’m proud to help introduce the Empowering Main Street in America Act to ensure that small businesses and job creators in every corner of our country have the tools for financial prosperity and security,” said Senator Kennedy.
“Capital formation is a foundational element for building the American dream, making the Empowering Main Street in America Act a vital initiative at a time when the Biden-Harris Administration is actively hindering access to capital markets,” said Senator Hagerty.
“We have the best capital markets in the world. Now more than ever, we must expand and improve our system to ensure every business in America has the tools they need to achieve economic success,” said Senator Lummis. “I am partnering with Senator Tim Scott to create more opportunities for Americans to start and grow a business by removing some of the burdensome hurdles that stifle innovation.”
“We must ensure the American Dream is accessible in every corner of our nation, and for many, access to capital is a gamechanger in making that a reality. I’m proud to join Senator Tim Scott in introducing the Empowering Main Street in America Act, legislation to strengthen our markets, facilitate capital formation, and expand opportunities for small businesses, entrepreneurs and hardworking Americans to save, invest, and succeed. This includes my Small Entity Update Act—which would ensure small entities are not unduly impacted by burdensome SEC regulations—and my Retirement Fairness for Charities and Educational Institutions Act—which would enhance retirement savings investment opportunities for nonprofit employees,” said Senator Britt.
“Overbearing regulations burden small businesses, stifling innovation and competition throughout North Dakota communities and across our nation,” said Senator Cramer. “I joined my Senate Banking Republican colleagues in introducing the Empowering Main Street in America Act to create more access to capital for businesses to generate economic growth and shape a regulatory environment to attract investments.”
“Supporting Montana small businesses and job growth is crucial right now as Montanans feel the weight of the Biden-Harris administration’s sky-high inflation. The ‘Empowering Main Street in America Act’ is a step forward to bolster our economy, fuel innovation and restore the American dream,” said Senator Daines.
BACKGROUND:
The Empowering Main Street in America Act is designed to empower, support, and foster growth by providing streamlined access to funding through our capital markets system which can be used to innovate, job create, and accelerate economic growth. This creates opportunity – the single best means to financial security for all Americans – especially those who are often underserved and overlooked.
The legislation would return the Securities and Exchange Commission (SEC) to its primary focus on ensuring the engines of the U.S. capital markets system are primed to fuel the next chapter of American exceptionalism, instead of putting up new and burdensome hurdles that limit opportunity, drive new investors out of markets, and chill innovation and competition.
Promoting Greater Capital Formation in U.S. Public and Private Markets:
Innovation, not regulation, spurs economic growth. Small businesses accounted for 66% of employment growth in the last 25 years, however most entrepreneurs report access to capital as the number one barrier to their company’s survival. The Empowering Main Street in America Act will address the unique challenges small businesses face and reverse an onerous regulatory regime that limits their ability to grow.
To help entrepreneurs, small businesses, and newly public companies more easily access the funding necessary to expand their operations and create jobs, the Empowering Main Street in America Act will streamline and modernize the rules governing capital raises for public and private markets. This begins with ensuring the current regulatory environment doesn’t disproportionately impact small businesses’ ability to raise funding to grow their businesses. Tailored regulatory relief is a key driver of economic growth and job creation, enabling businesses to use funding to invest in growth rather than unduly burdensome regulatory compliance.
Further, the Empowering Main Street in America Act seeks to improve access to capital in rural and non-metropolitan hubs and for a broader swath of entrepreneurs who continue to face challenges accessing capital including rural residents, women, veterans, and minorities – at every stage of a company’s growth cycle.
Responsibly Expanding Investment Opportunities for Retail Investors:
The goal of our nation’s capital markets system is not only to help business grow, but also to help everyday Americans secure their financial future by turning one dollar into two. Investing your hard-earned money shouldn’t be an act limited to the wealthy. Bridging the wealth gap through equity investing and financial literacy will allow all investors the opportunity to succeed.
The Empowering Main Street in America Act will increase opportunities for everyday investors to build wealth and help American businesses access new sources of capital by responsibly expanding the definition of who can qualify as an accredited investor.
Fostering Investor Confidence in Market Integrity, Fairness, and Transparency:
Markets that operate fairly and safely benefit investors and businesses alike. However, deciphering complex financial statements, like a 10-K, has become so onerous it’s pushed participants out of the market. To address this issue, Empowering Main Street in America Act focuses on improving the readability, clarity, and accessibility of important information to ensure retail investors have the tools they need to make informed investment decisions.
Furthermore, Empowering Main Street in America Act improves market confidence and transparency by requiring the Securities and Exchange Commission (SEC) to shed light on the costs associated with small and medium sized businesses going public, which will in turn encourage more middle market Initial Public Offerings (IPOs).
Holding Regulators Accountable Through Increased Oversight:
The Securities and Exchange Commission’s (SEC) mandate is to facilitate capital formation, protect investors, and maintain fair, orderly, and efficient markets. However, the agency has created an increasingly hostile regulatory environment for investors, and private and public companies alike. Increased regulatory oversight and transparency of the SEC ensures the agency upholds its three-part mission and is accountable to the investors they serve.
The Empowering Main Street in America Act ensures more consistent transparency and accountability to Congress and the public by extending the oversight provisions authorized under the Dodd-Frank Act to mandate the SEC Chair to testify on a semi-annual basis and to statutorily require the SEC to perform thorough rulemaking cost-benefit analysis.
For a section-by-section on the legislation, click here. To read the Ranking Member’s February op-ed outlining his capital markets framework, click here.
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