It appears a few Democrats have finally gotten around to reading the JOBS Act, the financial industry deregulation bill that would bring back penny-stock scams and remove investor protections. Multiple Democrats in the Senate have proposed changes to the legislation, which breezed through the House with ample Democratic support.

“We can dial back this excessive legislation in a way that will provide capital formation, but will also provide protections to investors,” said Sen. Jack Reed (D-R.I.), in proposing the alternative on Thursday [...]

The Senate seeks to reinstate protections several ways. Democrats propose greater oversight of so-called crowd-funding – a relatively new approach to raising capital by soliciting investments online and through social media from a pool of many individual donors. The House bill loosened federal regulations on this emerging capital formation tool.

The House-passed bill also loosened restrictions that had been put in place after the dot-com era to oversee research and investment analysts that work for the same firm. The Senate reestablishes those barriers.

Perhaps most likely to face objections from the GOP is a provision that would likely reduce the number of companies that could qualify for loosened federal oversight. Under the House-passed bill, businesses with up to $1 billion in annual revenues would be exempt from certain Securities and Exchange Commission reporting requirements when they go public. The Senate measure would drop that threshold to $350 million.

This has the potential to stop the bill in its tracks. House Republicans probably don’t favor the reinstatement of these investor protections. They just wanted a bill they could call a “jobs” bill to tout for the elections. The payoff to capital management companies was a nice sidelight as well.

But these are pretty senior Democrats in the Senate angling for changes, from leading Banking Committee Democrat Jack Reed to Permanent Subcommittee on Investigations chair Carl Levin. And then there is the Ex-Im Bank reauthorization proposal, which is sure to cause controversy as well. Suddenly, a deregulation bill that seemed assured of passage has a host of obstacles. As someone who thinks the most pressing public policy priority at the moment is most assuredly not financial deregulation, that’s welcome news.

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