Crowdfunding Back On Track — As Milk Train, Not TGV

Last week I penned an in-depth critique of the portion of the JOBS Act seeking to legalize crowdfunding in the United States. The bill, which may have more to do with political grandstanding in an election year than with actual job creation, was approved by a strong bipartisan majority in the House of Representatives. As I argued last week, the version of the JOBS Act approved by the House is a bold experiment in targeted radical deregulation of financial markets on the heels of one of the worst economic disasters in American history — itself attributable to deregulation with inadequate oversight — while the asthmatic U.S. economic recovery wheezes and stumbles through the smoldering wreckage of once-mighty financial institutions.

JOBS Act-style crowdfunding legislation is a form of market deregulation aimed exclusively at investors who by definition have assets or income placing them squarely in the middle class and are making investments so small that in reality they have neither the leverage nor the economic incentive to demand adequate disclosure by issuers. As I wrote last week, an economics professor could hardly dream up a better textbook example of guaranteed market failure.

By Antone Johnson

Full Story: http://gust.com/angel-investing/startup-blogs/2012/04/02/crowdfunding-back-on-track-as-milk-train-not-tgv/