George Washington famously (and perhaps apocryphally) compared the Senate to a cooling saucer, where the heated legislation from the more democratically accountable House could be considered by calmer, wiser statesmen.  Such thinking was the mark of sagacity in an era where the landed gentry feared political usurpation at the hands of rabble-rousing mobs.  Today, the senatorial saucer seems to act more like a senatorial liquid-nitrogen bath. 

Then again, maybe I’m just letting my passions get the best of me.  Specifically, I’m excited by the prospect of Crowdfunding and seeing the Entrepreneur Access to Capital Act become law.  This week, my favorite favourite magazine, the Economist, added its finely-accented voice to the Act’s chorus of media coverage. 

The Senate has not yet taken major action on the bill.  Sen. Scott Brown introduced a similar bill earlier this month, the Democratizing Access to Capital Act (S.1791), which now sits forlornly in the Banking committee. 

Admittedly, the bill has some detractors who see it as a new avenue for fraud because it allows retail investors to participate in “unregulated offerings.”  These fears are overblown.  First off, the offerings will be unregistered, but that doesn’t make them unregulated – the Act still requires disclosures to the investors and notice of the offering to the SEC.  Second, the size of these offerings are limited ($2 million if the company provides audited financial statements, $1 million if they don’t) as are the size of the investment (the lesser of $10,000 or 10% of the investor’s income).  But most importantly: there are easier ways to scam small time investors that don’t involve sending the federal government your name and address.  The “scammers” who might take advantage of this bill are presumably the same Nigerian princes, the same faith-based fraudsters, or the same well-endorsed companies who already prey on their victim’s naivete, hopes and dreams. 

Crowdfunding offers a sensible, cost-efficient way to provide retail investors opportunities to invest directly in small businesses, and those small businesses the start up capital they need to grow.  And that’s something worth waiting for – hopefully, not too much longer.