Remember the JOBS Act?

The bipartisan law was supposed to spark job creation; instead, it just induced financial shenanigans.

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President Barack Obama signs the Jumpstart Our Business Startups (JOBS) Act, Thursday, April 5, 2012, in the Rose Garden of the White House in Washington.

President Obama was out on the road recently delivering a series of speeches on the economy, the first of which pitched a new "grand bargain," that, while not being very grand, would have swapped corporate tax reform of some sort for a new series of job creation measures. And it's undeniable that some new efforts on job creation are in order. The unemployment rate is still too high and the economic recovery is still far too middling.

Republicans, as has been their wont of late, rejected the proposal without spending much time on the details. But considering what happened the last time the White House and the House GOP agreed on a so-called jobs plan, perhaps that's sadly for the best.

In April 2012, President Obama signed the "Jumpstart Our Business Startups Act," (get it, the JOBS Act?) which was supposed to create jobs by making it easier for companies to raise money and go public. "Going public is a major step towards expanding and hiring more workers," Obama said as he signed the JOBS Act into law. "Our job is to help our companies grow and hire. That's why I pushed for this bill." The other main proponent of the law, House Majority Leader Eric Cantor, R-Va., added: "By increasing access to capital and reducing onerous regulations, entrepreneurs and small business owners will have more ability to take risks, grow and create jobs."

[See a collection of political cartoons on the economy.]

But as Bloomberg News reported last week, the JOBS Act in reality is a lot less appealing than it sounded in theory (emphasis mine):

Billionaire hedge-fund manager Daniel Loeb's Third Point Reinsurance Ltd., which has no staff in the U.S., said it can limit financial disclosure after a public offering because of rules promoting domestic job creation.

Third Point Re is an "emerging growth company" under the Jumpstart Our Business Startups -- or JOBS -- Act, according to filings for the planned initial public offering.

[Check out our editorial cartoons on President Obama.]

So thanks to a bipartisan "jobs bill," a billionaire's reinsurance company is limiting its financial disclosures, while creating no jobs. Bang-up work everyone!

It's not like no one saw this coming. When the bill was up for debate in Congress, a former Securities and Exchange Commission chief accountant said that "It won't create jobs, but it will simplify fraud," adding, "This would be better known as the bucket-shop and penny-stock fraud reauthorization act of 2012."

The bill's main function is that it reduces reporting and transparency requirements for "emerging growth companies," theoretically making it so that they can grow faster and go public more quickly, which was somehow supposed to create jobs. Instead, what happened was a plethora of shell companies popped up to take advantage of the new requirements (or lack thereof), gaming the system on behalf of their bigger, established owners: in many instances these "companies" had no employees or even no revenue.

[See a collection of political cartoons on Congress.]

Perhaps an early sign that the JOBS Act was not going according to plan was that two of the first companies to take advantage of it were Manchester United – a century-old soccer club that is the second-most valuable sports franchise in the world – and an arm of Goldman Sachs. Not exactly start-ups, if the word has any actual meaning.

This is why any talk of a bipartisan jobs bargain should raise red flags: The JOBS Act was passed with bipartisan fanfare, and despite the fact that use of the law's confidential filing provisions is through the roof and scores of companies are using the law to avoid public disclosures, the jobless rate is still high. In essence, the jobs crisis was used a pretext to send a deregulation bill through Congress and onto the books.  Perhaps bipartisanship is just not all it's cracked up to be?

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