A bipartisan law, but…

The JOBS Act signed by President Obama yesterday, which obtained true bipartisan support, is unusual for Washington. However, that doesn’t mean members of the House of Representatives are now open to negotiations. Instead, they supported the bill partly because it reduces the financial protections for investors.

The law is part of the White House’s comprehensive strategy to create jobs. The parts of that package connected to worker assistance did not receive Republican support like this legislation. This was the only part of the package they agreed with.

The law helps companies earning less than $1 billion in annual revenue to obtain capital, facilitating their access to investors in the market when they make initial public offerings. It also allows small companies to raise funds through crowdfunding and advertise to the general public about investment opportunities.

For small companies, lacking access to capital is a serious problem that limits their growth and prevents job creation, which is essential for the economy.

The law has a great purpose: to help emerging growth companies. Making it possible to invest in growing companies in order to develop their potential is a necessary part of a vibrant economy.

However, it’s very worrisome that consumer protections will be sacrificed to achieve these objectives. For example, the law allows companies that are doing a public offering to postpone for several years the requirement to file documentation demonstrating the business is sound, which today is required for IPOs.

While it’s true that risk is a normal part of investing, fraud is not. A few years ago, millions of Americans lost their savings because of financial manipulation, and even today there are those who take advantage of unprepared investors. That’s why some of the law’s opponents include consumer advocates; AARP, an association of retirees; and the SEC, which regulates Wall Street.

The White House said investors will be protected through federal agency oversight and the way the regulation is written. This isn’t a guarantee, but it’s the only hope.

Of course, this control will disappear quickly if we have a deregulatory administration, as in the past-and as could happen in the future, according to promises Republican candidates have made.

The law will bring a political bonanza to the president, who seeks the support of the business sector; to congressional Republicans, who will be able to show a bipartisan law when someone accuses them of being obstructionist; and to businesses, which will be able to raise capital.

But why does it all have to be at the expense of financial transparency? Didn’t we learn a lesson from what happened in 2008 and the many frauds that occurred recently?

As has been said before, those who forget the past are doomed to repeat it.