March 14, 2012; Source: ProPublica
Hopefully, most of the readers and contributors to the NPQ Newswire think that working for a nonprofit—and getting paid for doing it—is a pretty good career move. In fact, the numbers of Americans working for nonprofit organizations has been increasing, even during some otherwise down periods during the worst of the recession. Some of us even think that it might be a good idea for the White House and Congress to include support for nonprofit job creation.
That never seems to happen, but the House of Representatives did pass a jobs bill recently with bipartisan support and the Senate is all but guaranteed to agree and send it on to President Obama’s desk for signature.
Jesse Eisinger, the writer of “The Trade” column for ProPublica (co-published with the New York Times Dealbook), notes “what a bill it is.” The Jump-Start Our Business Start-Ups Act aims to “reopen…our capital markets to exciting new startups by ridding protections for investors and stripping away disclosure requirements for smaller companies.” Columbia University professor John Coffee calls it the “boiler room legalization act,” referring to the small telemarketing firms that ran boiler room operations using high pressure tactics to sell stocks through cold calls.
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In the wake of stock market scandals and corporate implosions such as that experienced by Enron, Eisinger says that investors have been “wary of putting their savings into fledgling companies offered by Wall Street banks.” In the context of this JOBS bill, Eisinger interprets Congress telling investors that they were cautious “needlessly.” He writes that the bill “giv(es) broad exemptions for start-ups that want to ‘crowdfund’ by raising small amounts of money over the Internet.” Crowdsourcing is very popular, but Eisinger warns that these Internet sales pitches would be very attractive to the elderly, who are ripe targets for scams and hustlers. The bill would also allow Wall Street analysts “to shill for the companies that their own investment banks are shepherding through the initial public offering process.” Further, it would allow “new public small companies not to disclose financial information for years.”
Why loosen these restrictions? The message is that “safe, tightly regulated capital markets don’t instill confidence in investors, but rather stifle ingenuity and creativity.” Congressional Republicans and Democrats agree, lobbyists for Wall Street agree, and the Obama administration is also giving the bill a big thumbs up. It sounds like, up and down the political spectrum, at least in this election year, politicians are buying into deregulation as a job creation strategy.
No offense, but the NPQ Newswire is a bit hard up on tears to shed for underemployed boiler room hard-sell hucksters. We also don’t find our heartstrings tugged by arguments in favor of firms that could prey on people’s savings and retirement funds if less regulated.
The nonprofits that deal with the job crisis on an everyday basis through their job training and workforce development programs know where the job needs are and how they can be met—with public sector investments in job development in potentially expanding sectors of the economy. One of those might be the nonprofit sector itself. Unfortunately, since the end of the American Recovery and Reinvestment Act, we haven’t seen a similar public sector strategy of investment in nonprofits with the job generation and job retention qualities of the stimulus.
Do you think that the “boiler room legalization act” might be attractive to both parties right now because the bill’s Wall Street backers are going to contribute to the political campaigns and super PACs of some of the candidates running for office this election cycle? Do you think the sympathies of congressional and White House power brokers for unemployed stock telemarketers might be connected to election year money?—Rick Cohen