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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIn praise of crowdfunding
In praise of crowdfunding
The JOBS Act is getting slammed as a sellout to Wall Street. But it's not all bad
By Andrew Leonard
Judging by the lefts response to the passage of the JOBS Act last week, the United States is now once again safe for fraud, Wall Street shenanigans, and old-school 90s style dot-com flim-flam. The basic take is that the bill signed into law by President Obama on April 5 proves that weve learned nothing since reckless financial innovation plunged the world into a massive recession. Instead of tightening the screws, were loosening them. A bill that is supposed to make it easier for startups to get funded and grow (and create jobs) is actually just an invitation for Big Capital to be as reckless as they wanna be.
The critique may well hold true for large deregulatory swathes of the new law it didnt generate massive Republican support for nothing, after all. But theres one piece thats getting unfairly castigated and it just happens to be something that could have enormous progressive potential. Its the piece called crowdfunding: the Internet-enabled aggregation of lots of small sums of cash as way to raise capital for individuals or enterprises who would otherwise face an uphill battle getting the attention of banks or well-heeled investors.
The democratization of Wall Street could be a very good thing, especially if youre looking for ways to invest your capital in local businesses that you value and want to succeed. The basic principle is not so hard to understand. New technological innovations can offer new ways of doing things. Last November, in my article A Declaration of Independence from Wall Street, I quoted the Federal Reserve Bank of San Franciscos Ian Galloway as he painted an enticing picture of the not-too-distant crowdfunding future.
Sounds nice, no? But there was one major obstacle preventing the realization of that scenario. Securities regulations dating all the way back to the 1930s made it very difficult for anyone but the wealthiest Americans to invest in private companies and prevented online crowdfunding facilitators from offering any kind return on ones investment unless they jumped through an expensive series of regulatory hoops. Popular crowdfunding pioneers like Kiva and Kickstarter make do with donations, not investments.
- more -
http://www.salon.com/2012/04/09/in_praise_of_crowdfunding/
The JOBS Act is getting slammed as a sellout to Wall Street. But it's not all bad
By Andrew Leonard
Judging by the lefts response to the passage of the JOBS Act last week, the United States is now once again safe for fraud, Wall Street shenanigans, and old-school 90s style dot-com flim-flam. The basic take is that the bill signed into law by President Obama on April 5 proves that weve learned nothing since reckless financial innovation plunged the world into a massive recession. Instead of tightening the screws, were loosening them. A bill that is supposed to make it easier for startups to get funded and grow (and create jobs) is actually just an invitation for Big Capital to be as reckless as they wanna be.
The critique may well hold true for large deregulatory swathes of the new law it didnt generate massive Republican support for nothing, after all. But theres one piece thats getting unfairly castigated and it just happens to be something that could have enormous progressive potential. Its the piece called crowdfunding: the Internet-enabled aggregation of lots of small sums of cash as way to raise capital for individuals or enterprises who would otherwise face an uphill battle getting the attention of banks or well-heeled investors.
The democratization of Wall Street could be a very good thing, especially if youre looking for ways to invest your capital in local businesses that you value and want to succeed. The basic principle is not so hard to understand. New technological innovations can offer new ways of doing things. Last November, in my article A Declaration of Independence from Wall Street, I quoted the Federal Reserve Bank of San Franciscos Ian Galloway as he painted an enticing picture of the not-too-distant crowdfunding future.
I can imagine a world not too far down the road, says Galloway, where you can walk down the street and pass a blighted piece of property, take a photo of it with your smartphone, click your CDFI (Community Development Financial Institution) app and have that photo geo-coded and sent to the local CDFI with your $25 investment in the predevelopment loan that would cause that property to be redeveloped.
Sounds nice, no? But there was one major obstacle preventing the realization of that scenario. Securities regulations dating all the way back to the 1930s made it very difficult for anyone but the wealthiest Americans to invest in private companies and prevented online crowdfunding facilitators from offering any kind return on ones investment unless they jumped through an expensive series of regulatory hoops. Popular crowdfunding pioneers like Kiva and Kickstarter make do with donations, not investments.
- more -
http://www.salon.com/2012/04/09/in_praise_of_crowdfunding/
This was the Merkley amendment, which was supported by all but one Democrat, Senator Webb.
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=2&vote=00054
Merkley: Crowdfunding Exciting New Opportunity for Small Businesses and Startups
Merkley Crowdfunding Amendment Included in Bill Signed By President Obama Today
April 5, 2012
Washington, DC Oregons Senator Jeff Merkley issued the following statement after President Obama signed into law the JOBS Act, which includes an amendment he sponsored to provide for crowdfunding. The crowdfunding amendment, cosponsored by Senators Michael Bennet (D-CO) and Scott Brown (R-MA), allows small businesses and startups to raise capital online, while instituting strong protections for investors:
http://www.merkley.senate.gov/newsroom/press/release/?id=3EDA2A41-A636-4F64-89A9-96FABF492A82
Merkley Crowdfunding Amendment Included in Bill Signed By President Obama Today
April 5, 2012
Washington, DC Oregons Senator Jeff Merkley issued the following statement after President Obama signed into law the JOBS Act, which includes an amendment he sponsored to provide for crowdfunding. The crowdfunding amendment, cosponsored by Senators Michael Bennet (D-CO) and Scott Brown (R-MA), allows small businesses and startups to raise capital online, while instituting strong protections for investors:
I am very pleased that my crowdfunding amendment is now law. Crowdfunding opens up exciting new opportunities for small businesses and startups across America to raise capital from investors online. The potential is enormous. Entrepreneurs, who previously had to rely on capital from angel investors, will now be able to receive small seed investments from a larger group of investors to create new companies and jobs.
Exciting new opportunities usually come with risks, and crowdfunding is no exception. The original House version of the bill paved a path to predatory schemes. It required no information to be presented, and if startups put forth information, there was no requirement of accuracy. The balanced approach we put forth with investor protections will provide a strong foundation for success.
Exciting new opportunities usually come with risks, and crowdfunding is no exception. The original House version of the bill paved a path to predatory schemes. It required no information to be presented, and if startups put forth information, there was no requirement of accuracy. The balanced approach we put forth with investor protections will provide a strong foundation for success.
http://www.merkley.senate.gov/newsroom/press/release/?id=3EDA2A41-A636-4F64-89A9-96FABF492A82
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In praise of crowdfunding (Original Post)
ProSense
Apr 2012
OP
Of course it's not all bad, you can't run a confidence scheme without some
Egalitarian Thug
Apr 2012
#8
Scurrilous
(38,687 posts)1. K & R
whatchamacallit
(15,558 posts)2. So by posting this, it can be inferred you agree with
this statement: "The critique may well hold true for large deregulatory swathes of the new law it didnt generate massive Republican support for nothing, after all."
Good to know.
ProSense
(116,464 posts)4. Actually,
So by posting this, it can be inferred you agree with
this statement: "The critique may well hold true for large deregulatory swathes of the new law it didnt generate massive Republican support for nothing, after all."
Good to know.
this statement: "The critique may well hold true for large deregulatory swathes of the new law it didnt generate massive Republican support for nothing, after all."
Good to know.
...I don't support that at all (http://www.democraticunderground.com/1002540367), and if you read the entire article it presents other arguments.
girl gone mad
(20,634 posts)3. Good grief.
Now you're openly cheering for more looting of what's left of the middle class by these crooks.
Pathetic.
ProSense
(116,464 posts)5. Well,
Good grief.
Now you're openly cheering for more looting of what's left of the middle class by these crooks.
Pathetic.
Now you're openly cheering for more looting of what's left of the middle class by these crooks.
Pathetic.
...I expect more nonsense from you. Typical.
trumad
(41,692 posts)6. You do know that Andrew Leonard and Taibbi are at war...
with Taibbi usually kicking his ass.
You do know that Andrew Leonard and Taibbi are at war...
with Taibbi usually kicking his ass.
with Taibbi usually kicking his ass.
...for letting me know, but that has nothing to do with the OP or the point. In fact, I doubt Senator Merkley and the other Democrats who supported his legislation considered that feud.
Egalitarian Thug
(12,448 posts)8. Of course it's not all bad, you can't run a confidence scheme without some
bait to bring the suckers in.