President Romney and Crowdfunding
On the eve of the election, I’ve been thinking about how a Romney presidency would impact investment crowdfunding in the U.S. This isn’t a prediction as the odds seem to be that Romney will lose. It isn’t a preference either. It is just interesting to think about because of the timing of the election and pending regulations under Title II and Title III of the JOBS Act. For that matter, it is also interesting to think about how a change from Mary Shapiro as head of the SEC will impact investment crowdfunding regulations, in terms of both substance and timing, even if Obama is reelected. It is widely expected that Shapiro will leave even if Obama wins. However, one would think that a new Obama appointee would keep more of the senior SEC staff in place that dictate internal policy.
What about Romney? There is probably little to no difference on the legislative front. Given that the odds are that Congress will remain divided after the election, with the Democrats retaining the Senate and the Republicans retaining the House, any type of major legislation is unlikely to happen for either candidate. After this election, and in our hyper-partisan times, only a horse trade over the catastrophic financial cliff seems likely. That is not going to include any modifications or fixes to the crowdfunding law.
However, the regulatory landscape could change quite dramatically. The LA Times had an interesting piece on how a Romney driven change in leadership at Treasury and the SEC would potentially water down Dodd Frank based Wall Street reform. For what it is worth, I see this as one of the bigger downsides to a Romney win. Letting the Wall Street foxes back in the henhouse for entities that have systemic risk is scary. But what about the pending crowdfunding regulations? Would piling excessive costs and regulations on Title III crowdfunding transactions be the type of abusive regulations that Romney has been talking about killing? One might guess that the regulations that come out would have a lighter regulatory touch. Would Romney see investment crowdfunding as competitive to his finance cronies and seek to undermine it? Who knows?
The more likely issue is that a wholesale change at the SEC after a Romney win would seem to put in some period of transition on top of an already backlogged agency. It is impossible to predict how any of this shakes out, but it is yet another reason to speculate about just how far off investment crowdfunding really is in the U.S.