The private equity industry is massive, hugely influential, and playing a role in more and more aspects of life in the US and around the world. The industry manages $4 trillion in assets and owns companies that employ more than 11 million American workers, plus millions more in other countries. Much like the corporate raiders of the 1980s, these private Wall Street firms are increasingly buying control over businesses, housing, education, consumer lending, energy, infrastructure and more, making a small class of money managers extremely rich.

Their debt-fueled model is not unlike payday lending or loan sharks, only for companies rather than individuals. Private equity’s aggressive use of debt and other methods drain value from companies. Employees, creditors, and other stakeholders bear the consequences if the company fails, while the private equity owners themselves most often still walk away with gains. As a result, private equity’s involvement in a company has a tendency to kill jobs and suck wealth from workers, tenants and communities. As one expert quips, private equity is perhaps the single most efficient wealth transfer from taxpayers, workers, and retirees to the .01%.

One recent example is how the firms Bain Capital, KKR, and Vornado killed the toy company Toys R Us and laid off 33,000 workers. Our partners at Rise Up Retail, OUR, and the Center for Popular Democracy decided to fight back, and Toys R Us workers organized to secure a $20 million severance fund from Bain and KKR in November 2018.

Bills

The Stop Wall Street Looting Act of 2019 (S. 2155/H.R. 3848)

The bill addresses the predatory elements of the private equity business model that harm workers, investors, and communities. Specifically, it would make private equity executives legally liable for the damage they cause; stop looting that enriches PE executives at the expense of workers, communities, and businesses; close tax loopholes and change rules that encourage predatory financial activities; protect workers if employers go bankrupt; and require PE firms to be fair and transparent to investors in disclosing costs and returns.

Factsheet: Stop Wall Street Looting Act of 2019

Source: Center for Economic and Policy Research 2019

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