Tags: Reich | Obama | JOBS | Act

Reich: Obama’s ‘JOBS’ Act is a Scam

Wednesday, 04 April 2012 08:05 AM

Economist and former U.S. Secretary of Labor Robert Reich says the “Jumpstart Our Business Startups” or “JOBS” Act — which President Obama is expected to sign into law — is a scam.

"It allows so-called 'crowd funding' by which people whose net worth is less than $100,000 can gamble away (invest) up to 5 percent of their annual incomes in any get-rich-quick scam (start-up) that any huckster (entrepreneur) may sell them," Reich writes in his blog.

Forget the usual investor disclosures or other protections, says Reich, now a professor of public policy at the University of California at Berkeley.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

In the interest of “streamlining,” Congress has streamlined the way to fraud.

"Although start-ups will have to market themselves through third-party portals approved by the Securities and Exchange Commission, this is like limiting Bernie Madoff to making pitches over the radio," Reich says.

"The SEC can barely keep track of Wall Street let alone thousands of Internet portals," says Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton.

"Small wonder SEC Chair Mary Schapiro has been one of most outspoken critics of bill."

Reich says the bill was sold to Congress as a way to promote jobs on the supposition that small start-ups create huge numbers of them.

“Wrong.” says Reich. “That assumption comes from research by the Kauffman Foundation, which counted as a ‘start-up job’ every laid-off worker who morphed into an independent contractor.”

“I’m all in favor of more entrepreneurship, and it’s good to give investors another way to participate in emerging companies. But this bill doesn’t do nearly enough to protect the vulnerable.”

The Washington Post reports that unemployment rates fell last month in most U.S. states, including in some hit hardest during the recession. Employers added jobs in 42 states, the most in almost a year, with Ohio, Texas and New York experiencing the biggest job gains.

Editor's Note: Obama’s Last-Ditch Effort to ‘Fix’ America Will Cause the Unthinkable

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