Venture Capital to be Regulated?
June 17, 2009
Earlier today, Obama’s team rolled out an 85-page document that lays out his plan to regulate the private equity and venture capital businesses. The plan creates three new agencies to oversee hedge funds, private equity funds and venture capital firms. Of course this drives me nuts. The reasons for our current situation are largely related to HEAVILY regulated businesses including insurance companies, banks, investment banks and mortgage companies. The systemic problems we are facing are NOT a result of venture capital firms. VCs have no leverage, don’t trade public securities or hold deposits for ordinary Americans. The Venture Capital business is one of the reasons our economy is so successful.
Why don’t we focus on what is broken instead? Why not reform the way investment banks can use leverage. Why not limit the percentage of the market a single insurance company can have? Our government’s existing regulators failed to recognize systemic risks that seem patently obvious today. Why hire a bunch more to regulate an industry with very little potential systemic impact? Is this Obama’s jobs program? Newly minted Ivy League grads who can’t find work on Wall Street will now be able to head to Washington to oversee the demise of American’s innovation engine - Venture Capital.
I don’t care if you are a Republican or Democrat - hopefully you are an entrepreneur (or love one) - if so call your Senator and Congressman and ask him NOT to pass Obama’s plan.
