Wall Street’s private equity barons smashed previous records to complete $1.2 trillion worth of acquisitions in the United States in 2021, an all-time record. Globally, the industry gobbled up companies worth $2.1 trillion. The new acquisitions and the massive debts the industry generates is creating the risk of “the dotcom boom meeting with the financial crisis,” according to one insider.
The nomination of the highly qualified Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson to the Fed is a very welcome step forward towards a better-regulated Wall Street. The Fed needs to steer a new course that begins with a reversal of the deregulation of the Trump era. This work must continue with pro-active regulation and supervision of Wall Street.
President Biden’s renomination of Jerome Powell to chair the Federal Reserve Board is a major disappointment to those of us who have fought for tougher regulation of Wall Street as a key tool for protecting financial stability and building a more just and sustainable economy.
“The administration settled on a smart person with a background in the banking industry and in government as well as path-breaking scholarship on financial regulation,” said Carter Dougherty, a spokesperson for Americans for Financial Reform. “In less polarized times, somebody appointed by a Democratic president who worked for a previous Republican administration and for a Wall Street firm would be the kind of candidate everyone can agree on. But we’re at a moment where a candidate acceptable to Wall Street is a candidate that does the bidding of Wall Street. And that’s not acceptable to the public interest.”
AFR’s Senior Policy Analyst Renita Marcellin hosted a conversation with Professor Art Wilmarth, author of Taming the Megabanks: Why We Need a New Glass-Steagall Act. Professor Wilmarth discussed why structural protections, such as a modern Glass-Steagall Act and the separation between banking and commerce, are necessary in the banking system. They also examined how the erasure of these laws have led to many of the challenges we are currently facing in the financial system including ILCs/special purpose charters, the rise of Fintech firms, and stablecoins and highlighted the urgency of revisiting laws on structural separations in the banking system.
AFR joined a letter to Congress in support of the nomination of Professor Saule Omarova to serve as the next Comptroller of the Currency.
At a town hall hosted by United for Respect and Americans for Financial Reform, workers and leaders across industries came out strongly in support of the Stop Wall Street Looting Act. The event focused on the devastating impact of private equity firms on the quality and quantity of jobs across industries.
“Whether it is preserving favored tax loopholes or forestalling more comprehensive reform, private fund executives spend on politics for the purpose of getting richer at the expense of everyone else,” Ricardo Valadez, private equity campaign manager at AFR, said.
Wall Street private equity and hedge funds pumped at least $627 million into the political process – campaign contributions and lobbying – during the 2019-2020 election cycle. The sum, amounting to about $858,000 each day, reflects the meteoric rise in the size and scope of the private funds industry, which has come to control vast swaths of the American economy over the last decade.
The Stop Wall Street Looting Act would rewrite the rules that shape the private equity industry, which now has about $7.1 trillion in assets and wealth under its control, so that regulation and market incentives promote productive, sustainable investment, not the wealth extraction that now is all too common.