In Paducah, the beauty parlor operator and the kitcat café owner are besides themselves. In Louisville, they talk about it on sidewalk corners and at bus stops. In Lexington, the subject of horse races has been dropped, and it is the theme of knitting circles and barroom conversations.
I’m talking, of course, of the ardent desire of millions of Kentuckians to see IPO law changed to remove regulation, transparency, and accounting standards that impede the simple pleasure of rentseeking and fraud.
The man with his hand on the pulse of Kentucky is Kentucky senator Mitch Mcconnell. Many doubt that Paduchians, for instance, are more fascinated by the possibility that the less than one percent of ‘small” businesses – the American governing class loves the word “small” as much as Starbucks loves the word “tall”, and applies it to all things bright and beautiful – who actually do have an IPO than they are by the fact that, for instance, a prominent Middle School principle was recently arrested for rape and unlawful imprisonment. But those doubters were corrected yesterday by Mitch, who is quoted in the NYT:
“Senator Mitch McConnell of Kentucky, the Republican leader, urged members of both parties to approve the bill as it was to avoid further delays. “This bill is exactly the kind of thing Americans have been asking for — greater freedom and flexibility. And that’s one of the reasons it’s had such overwhelming bipartisan support,” Mr. McConnell said.”
And what is that flexibility and freedom about, when we look under the hood? As Simon Johnson and Bill Black have pointed out, a bill that damages transparency and accounting requirements will in all likelihood be very good – for bucket shops and Wall Street investment banks that like to bet against their clients. It will be very bad for “small” businesses. Yves Smithquotes John Coates on the issue:
“While the various proposals being considered have been characterized as promoting jobs and economic growth by reducing regulatory burdens and costs, it is better to understand them as changing, in similar ways, the balance that existing securities laws and regulations have struck between the transaction costs of raising capital, on the one hand, and the combined costs of fraud risk and asymmetric and unverifiable information, on the other hand.”