“Today was a bad day for predatory payday lenders and the Wall Street lobby groups that lent their names to some very ridiculous claims,” said Elyse Hicks, consumer policy counsel at Americans for Financial Reform. “None of their legal arguments passed the red-face test, and even the questions from the conservative justices reflected that reality.”
Americans for Financial Reform, a coalition of groups that advocates for tougher financial regulation, said that private-equity roll-ups of small companies have serious anticompetitive effects and need to be reined in. “The private-equity industry has become the primary driver of consolidation and merger activity in the United States and the predatory practices and economic extraction of private-equity firms from their portfolio acquisitions present unique risks to a competitive economy,” the group said in a Sept. 18 letter to the FTC and Justice Department.
“We strongly disagree that new capital requirements will undermine credit availability,” said Alexa Philo, senior policy analyst, Americans for Financial Reform, after Rep. Ayanna Pressley, D.-Mass, asked whether the new rules could protect the availability of lending in a downturn.
“Based on terms granted to similarly rated borrowers, and on our analysis of Bloomberg data on recent transactions, Simon & Schuster would have to pay interest rates above 9 percent,” wrote Andrew Park, senior policy analyst at Americans for Financial Reform. “That would cost the publisher nearly $100 million, about 40 percent of operating income in 2022, on interest alone. In raw financial terms, the transaction will weaken Simon & Schuster the moment it closes, never mind what KKR does as an owner.”
Carter Dougherty, Americans for Financial Reform communications director, says the size and reach of the private equity industry’s financial influence is having an impact on the housing market. “Private equity firms have assembled big real estate empires, and that’s one of the things driving housing prices in this country,” he explains. “Private equities buy a large number of homes in a certain area, and they have the financial muscle to muscle out homeowners who want to buy for the first time or they raise rents on people who end up renting from them,” Dougherty added.
“History clearly shows that unfettered growth in the name of capitalistic “success” results in sustained and growing inequality, human and planetary exploitation, and worse,” wrote Ericka Taylor, popular education manager for the Take on Wall Street campaign of Americans for Financial Reform. “Yet there are other models—many that come from Black, Indigenous, and other historically marginalized communities—that take a more holistic, symbiotic approach to growth.”