Barney Frank

In an opinion piece titled "Silicon Valley Lives," The Wall Street Journal applauds Financial Services Chairman Barney Frank for putting forth draft legislation that would reject requirements for venture capital funds to report information like hedge funds and private equity firms.

VCs in the Seattle area have voiced concerns about the possible policy changes, with some arguing that they are unfairly getting lumped in with financial management firms which add little value to the overall economy.

The WSJ piece agrees with that logic.

As a rule, VCs carry no debt, don't use derivatives and don't trade in the public markets. Since they had nothing to do with the credit meltdown, it remains a mystery why Treasury Secretary Timothy Geithner urged Congress to force them to register with the SEC as investment advisers, subject to staggering compliance burdens. Mr. Frank's planned stay of regulatory execution will have a positive economic impact disproportionate to the small size of the VC industry. Venture-backed companies are responsible for supporting firms that now generate more than 20% of U.S. GDP and are needed more than ever to ignite a rebound in private-sector jobs.

And here's what the NVCA -- the chief lobbying group for the venture capital industry -- had to say on the matter earlier this month.

We are extremely appreciative of the work done in drafting this legislation by the Subcommittee and Members of the full Committee under the leadership of Chairman Barney Frank (DMA). This proposal recognizes that venture capital firms do not pose systemic financial risk and that requiring them to register under the Advisers Act would place an undue burden on the venture industry and the entrepreneurial community.