“Not only does the rule address a lot of informational gaps investors in private funds have had, it rightfully also goes after some of the most egregious behavior that funds have been able to get away with,” said Andrew Park, senior policy analyst at Americans for Financial Reform, referring to the curbs on those particular fees.
Alexa Philo, a senior bank policy analyst at the consumer advocacy group Americans for Financial Reform and a former examiner with the Federal Reserve Bank of New York, said the shift would restore needed guardrails that should have never been removed. “If the Fed says seven banks and two IHCs are going to be impacted, my reaction to that is that they should have been in those higher categories to begin with and their current categorizations are an understatement of the systemic risk they present,” Philo said.
“Private equity is a 40-year-old Wall Street creation that thrives on cost-cutting, wealth extraction, short time horizons, and financial engineering,” wrote Aliya Sarbarhwal, campaigns manager for private equity at AFR. “It bought, sold, and liquidated its way through the American retail sector years ago, and is now jumping into traditional book publishing, a business that demands patience, an appetite for risky new authors and deft marketing.”
“Banks, investment firms, and other Wall Street titans have been allowed to secure a heightened level of control over the entire economy,” wrote Lisa Donner, executive director at Americans for Financial Reform. “With that control, they extract increasing amounts of wealth from workers and communities, and deploy an increasingly complex array of financial instruments and products that compound their revenue and their power.”
“The bottom line is that the public has a right to more transparency and input in the decision-making process at a public institution,” wrote Annie Norman, the “Save the Post Office” campaigner at Take On Wall Street at AFR. “This requires engagement with said public — which DeJoy is actively resisting. When you put a rich, white, private-sector executive who isn’t used to public accountability and cooperation in charge of a treasured public institution, such a clash might be inevitable.”
Investor advocates counter that cutting out leveraged loans from the investor protections nearly all other investments enjoy is ridiculous. “Without securities laws, this market becomes a wild west of sorts,” says Andrew Park of Americans for Financial Reform. “The issue is not sophistication. Sophisticated investors couldn’t know themselves that the DOJ was investigating Millennium for Medicare fraud.”
“The International Monetary Fund, the Federal Reserve, and the Bank for International Settlements have been warning of the risk of the growing leveraged loan market for several years. Despite this it has continued to grow,” said Andrew Park, senior policy advisor at the investor advocacy group Americans for Financial Reform.
“What we hear most from those opposed to higher capital requirements has been fairly qualitative and not grounded in robust data,” said Alexa Philo, a senior policy analyst for the consumer advocacy group Americans for Financial Reform and former Federal Reserve bank examiner. “I have not seen a credible data driven study that makes this case.”
“Cox compares the restrictions on bank M&A with the Herfindahl-Hirschman Index, first developed as a way to calculate concentration in the airline industry,” said Alex Philo, senior policy analyst at Americans for Financial Reform. “The Department of Justice allows this to go up to 2,500 in other sectors, says Cox, but for banks, the limit works out at 1,800, and an acquisition can cause a bank’s index to jump by 200 points.”
Writes AFR’s Caroline Nagy: “The climate crisis is exacerbating our housing affordability crisis. The Federal Housing Finance Agency house price index hit an all-time high in June, pushing the American dream of home-ownership further out of reach. And with homelessness on the rise, record numbers of Americans struggle to secure affordable housing, leading many to move into fire- and flood-prone areas.”