Statement: Supporters of the Stop Wall Street Looting Act

“The Stop Wall Street Looting Act’s protections are critically important for working families as we continue to deal with the impact of the COVID-19 pandemic and its subsequent economic downturn. CEOs aren’t the only ones hurt by company closings. Bankruptcies shake employees and consumers at their core too. For example, when nursing homes close their doors seniors, people with disabilities, and their loved ones are left scrambling for new homes, while workers are trying to figure out how they will pay bills,” said Mary Kay Henry, international president of the Service Employees International Union. “Under this bill’s provisions, including prioritizing worker pay and benefits, incentivizing job retention and prohibiting companies from running away from their obligations, we can protect more workers and consumers in these uncertain times.”

“We cannot let corporate greed and private equity abuse continue to take advantage of working people,” said Senator Merkley “and this legislation is a critical step in holding billionaires accountable and protecting consumers from predatory companies.”

“Private Equity investment firms are buying up affordable single-family homes that are traditionally the starter homes for first-time homebuyers and converting them to long-term rentals,” said Bruce Dorpalen, executive director of the National Housing Resource Center. “These Wall Street funded firms are aggressively outbidding homebuyers and sharply inflating housing costs. If we fail to rein in these PE firms, we will not be able to close the inequitable Black and Brown homeownership gap and the United States will move from a homeownership nation to a renter nation.”

“The current system that prioritizes lining the pockets of wealthy Wall Street executives, at the expense of communities and workers, is both an injustice and an outrage,” said Leah Greenberg, co-executive director of Indivisible. “Private equity firms simply cannot be allowed to strip a company for parts while leaving employees high and dry—all while making exorbitant, tax-privileged fees. This is nothing more than a legalized scam, and Black and Brown communities have disproportionately been the target. The Stop Wall Street Looting Act finally takes on this greed, and would shield our communities from this predatory behavior.”

“As a former Trustee on two public pension fund boards, I have witnessed the exploitative investment tactics in the private equity industry,” said Wayne Moore, board member and former trustee, Los Angeles County Employee Retirement Association (LACERA). “Using workers’ retirement savings, the industry has enriched itself at the expense of a generation of workers with less retirement security and a future generation with less opportunity for retirement. The rules of our economy must protect workers from this kind of exploitation by ensuring risks and rewards are shared by all. The Stop Wall Street Looting legislation does just that.”

“The current system of special privileges and loopholes for private equity encourages abuses that help super-rich Wall Street executives get even richer at the expense of workers, communities, patients, racial equity, and our climate, and enables them to take control of ever-larger pieces of our world, from retail, to technology, to housing, to healthcare and more,” said Lisa Donner, executive director, Americans for Financial Reform. “The Stop Wall Street Looting Act would be a powerful step toward creating rules of the road that promote a more just and sustainable economy.”

“I was a Sales Manager at Art Van Furniture and absolutely loved my job until private equity firm T.H. Lee (THL) acquired the company and ran it into the ground. In the blink of an eye—and at the beginning of the pandemic—I found myself with no job, no severance pay after 23 years of loyal service, and no health care during the biggest public health crisis of our lifetimes,” said Shirley Smith, former sales manager at Art Van Furniture and Leader with United for Respect. “It’s way past time to protect essential workers over wealthy corporate executives—Congress must pass the Stop Wall Street Looting Act and finally put working people first.”

“This pathbreaking legislation brings needed reforms to a sector whose money manipulations have abused workers and eroded once healthy companies while lining the pockets of Wall Streeter,.” said Bartlett Naylor, financial policy advocate, Public Citizen. “For too long, private equity has sapped the real economy.”

“For too long, private equity barons have targeted white, Black, and Brown working people for wealth extraction, only to be rewarded with a tax break for their predatory practices,” said Mandla Deskins, advocacy coordinator of Take on Wall Street. “It is past time we reined in these firms and stopped rewarding their behavior through the tax code.”

“We applaud Senator Warren for introducing this bill to protect American workers from the excesses of private equity. In the hospitality industry, we have seen companies all but decimated by private equity. Right now, the labor movement’s attention is turned to Brookwood, Alabama, where 1,100 miners have been on strike for seven months, fighting for a fair return on the sweat equity they have made to save their company after its 2016 bankruptcy. A consortium of private equity companies, led by Apollo, purchased the distressed bonds of the mining company’s predecessor and gained control over the company’s primary assets,” said D. Taylor, president, UNITE HERE. “Ultimately, workers agreed to more than a billion dollars in concessions in order to save the company, including wage cuts of up to $6 an hour. Instead of restoring those cuts when the company regained profitability, the company sent hundreds of millions of dollars in dividends to shareholders, the largest of whom were Apollo and other private equity firms. Opportunistic investors shouldn’t be allowed to use the bankruptcy process to extract cash from ailing companies and leave workers and communities high and dry.”

“Predatory private equity managers attack our communities, using huge piles of borrowed money to gentrify our neighborhoods, kill our jobs, steal our pensions, and snatch away our healthcare,” said Ana Maria Archila, co-executive director of the Center for Popular Democracy. “Now we’re fighting back—Senator Warren’s bill strikes a blow against private equity greed and extraction to protect our people and stop runaway inequality.”

“Private equity firms’ heavy usage of debt at companies they acquire, growing extraction of cash from companies through debt-funded dividends, and limitation on their own liability, increasingly set up a ‘heads I win, tails you lose’ structure,” said Jim Baker, executive director, PE Stakeholder Project, “where private equity firms can make substantial profits for themselves regardless of the consequences for workers, consumers, communities in which their companies operate, tenants, government payors, and others.”

“Private equity is entirely incompatible with quality emergency care. Physicians cannot serve two masters. Private equity ownership is a betrayal of the proud history of emergency medicine, rooted in the traditions of social justice that came out of the civil rights movement. Our largest professional organization has become compromised. Physicians risk losing their jobs if they speak out.” said Mitch Li, founder, Take Medicine Back. “Patients are being bankrupted. We need the Stop Wall Street Looting Act to reform this predatory business model so that bedside emergency physicians can advocate in their patient’s best interest once again.”

“For too long, vulture capitalists have harvested companies and pension programs, extracting massive profits while crushing the working class,” said Maurice Mitchell, national director of the Working Families Party. “This bill brings some much-needed accountability, transparency, and reform to the shadow economy of private equity. Members of Congress need to get on board.”

“Every day, working people see more evidence of the harms caused by predatory private equity fund managers. These funds load up companies with debt, strip them of their assets, outsource and eliminate jobs, and, in doing all of this, risk the futures of workers, retirees, and entire communities,” said Chris Shelton, president of the Communications Workers of America (CWA). “CWA is proud to endorse the Stop Wall Street Looting Act, which will fix that by shining a light on these predatory practices and ensuring that private equity funds will be held accountable for the results of their risky bets.”

“The private equity industry has for too long been shrouded in secrecy and lacking real accountability and transparency, which has enabled a massive and unfair wealth transfer from workers to Wall Street. Private equity managers have played fast and loose with public employees’ retirement savings, minting a new class of billionaires at the expense of workers’ retirement security. The Stop Wall Street Looting Act would reverse this trend by closing the carried interest tax loophole, exposing predatory fees and preventing private equity from taking excessive risks to enrich themselves while harming investors, portfolio companies, and working people.” said Randi Weingarten, president of American Federation of Teachers. “This legislation puts a stop to private equity’s most abusive practices, protecting workers and communities across the globe.”

“If pirates had public relations teams, they would claim that their pillaging results in better use of the resources of the ships they attack. That’s the spin used by private equity, whose actions—looting productive resources, not salvaging unproductive ones as claimed—often leave a trail of destruction,” said Heidi Shierholz, president of the Economic Policy Institute. “This bill addresses serious problems with the private equity business model, without getting in the way of firms that actually do produce allocative or operational efficiencies that strengthen the U.S. economy.”

“The Warrior Met Coal strike is the poster child for why we need the Stop Wall Street Looting Act,” said AFL-CIO president, Liz Shuler. “For nearly seven months, coal miners in Alabama have been on strike to recover wages and benefits that were stripped away from them through bankruptcy. In contrast, private equity firms reaped millions in special cash dividends after acquiring the assets of Warrior Met’s predecessor company through bankruptcy.”

“Congress must enact the Stop Wall Street Looting Act to keep funds like Elliott Management from attacking public companies with the one-two punch of hedge fund activism and private equity tactics,” said Dan Mauer, director of government affairs for the Communications Workers of America, which just published a new report documenting that Elliott’s target companies’ performance declines in the three-year period following an Elliott intervention. “Hybrid funds like Elliott bully companies to deliver cash extraction by any means available—cost cuts, spin-offs, stock buybacks, or leveraged buyouts—leaving firms worse off in the long-term. The SWSLA’s transparency provisions help address this dangerous convergence of private fund tactics by giving investors more information about investment performance and use of debt they can use to hold these funds to account for their promised investment benefits.”

“I bought my manufactured home because I needed an affordable place. My neighbors are mostly seniors and people with disabilities. Since Havenpark Capital bought our park three years ago, they’ve increased our rents and fees 50% and are pushing people out,” said Holly Hook, MHAction member and resident of Swartz Creek Estates in Swartz Creek, MI. “They’ve ruined our community.”

“In a world where globalization gets the blame for the loss of American jobs, wage stagnation, and inequality, Wall Street-driven financialization is too often the real culprit. Private equity firms have undermined the financial stability of Main Street companies, thrown them into bankruptcy, sent jobs overseas, and led to hundreds of thousands of layoffs of US workers,” said Rosemary Batt, professor, Cornell University, co-author of Private Equity at Work: When Wall Street Manages Main Street. “This pattern is particularly devastating where private equity firms have bought out manufacturing firms and closed plants in towns where few other good jobs exist – such as Hufcor in Janesville, Wisconsin, or Anchor Hocking in Lancaster, Ohio. These manufacturing companies had survived globalization and helped their communities prosper. But they didn’t survive being the playthings of Wall Street.”

“For too long, private equity firms have held outsized power in our workplaces and communities. COVID-19 created an even bigger opportunity for these Wall Street firms to scale up their predatory practices that directly loot from Black, brown, and Indigenous people” said Maurice BP-Weeks, co-executive director, Action Center on Race & the Economy (ACRE). “If we’re committed to protecting workers and ending the racial wealth gap, we need to end private equity extraction from our communities by passing the Stop Wall Street Looting Act.”

“Through their actions, the private equity titans have cheated state and municipal employees out of bigger pensions.” said Jeff Hooke, senior finance lecturer, Johns Hopkins Carey Business School, and author, “The Myth of Private Equity.” “They have misled people about their investment performance. They have influenced regulators in positions of authority to look the other way. And, worst of all, they can live with this conduct, as long as their personal wealth increases.”

“Predatory private equity companies are pouring gasoline on the gentrification crisis. As a long-term resident of Bed-Stuy, Brooklyn, I have watched my Black and Brown working-class neighbors be driven from their homes due to Wall Street speculation. Billion-dollar asset managers have swooped in to buy apartments on the cheap and drive up the rent, making homes inaccessible to Black New Yorkers like myself,” said Skipp Roseboro, New York Communities for Change. “Our communities are being displaced and priced out and private equity bears responsibility. It’s time for my representatives, Hakeem Jeffries and Chuck Schumer, to start paying attention to private equity’s role in the housing affordability crisis by passing legislation that curbs their outsized power. It’s time to pass the Stop Wall Street Looting Act.”

“For too long, private equity has been allowed to generate outsize returns for its executives through layoffs or pay cuts for workers,” said Irene Tung, senior policy researcher and policy analyst at the National Employment Law Project. “Private equity controls ever-larger proportions of our economy; it’s time to hold the private equity managers that destroy companies and jeopardize workers’ livelihoods accountable for the human costs of their actions.”

“The growth of the private equity industry has highlighted gaps in the laws that govern our economy. Private equity firms’ relentless pursuit of profit imposes side-effects on millions of citizens: some positive, some negative,” said Ludovic Phalippou, professor of financial economics, Saïd Business School, University of Oxford. “It is imperative to take a hard look at the bankruptcy code, the tax code, and investor protection. Private equity plays a valuable role in the economy, but any decision-maker should be liable for the negative side-effects they impose on others. This proposal and the debates it will spark are important milestones on the way to a more sustainable and stable society.”

“In the prison industry, private equity firms like Platinum Equity, American Securities, and HIG Capital prey on a captive market. These three firms, in particular, have significantly consolidated the $1.4 billion prison telecom space and together own an astounding 90% of the market. Their portfolio companies rake in millions charging families as much as $1 per minute to make a simple call and $0.35 to send an email. These are rates that could never pass in the public market, but families supporting incarcerated loved ones don’t have a choice, and the private equity executives puppeteering these companies know it,” said Bianca Tylek, executive director of Worth Rises. “With these predatory practices, Platinum Equity, American Securities, and HIG Capital have driven a third of families impacted by incarceration into debt. And telecom is only one example—private equity firms have ties to a wide range of sectors across the prison industry, from healthcare to commissary to electronic monitoring, which all exploit incarcerated people for investor profits. This is a national crisis.”

 “For too long, private equity barons have strip-mined our society through financial engineering and predation on those of us who work for a living,” said Matt Stoller, director of research, American Economic Liberties Project. “The Stop Wall Street Looting Act is essential to protecting our wages, our dignity, our health, and our liberty.”