Populist, But Good: Elizabeth Warren Takes Aim at Private-Equity Funds

[50 shades of black + 254]

Elizabeth Warren is teaming up with a slate of fellow congressional Democrats who are calling for greater federal regulation of private-equity firms, which the presidential candidate likened to “vampires” in a policy proposal that would alter the way the funds acquire other companies, according to WSJ. Ms. Warren, a senator from Massachusetts, unveiled legislation Thursday that would require private-equity funds to assume responsibility for the liabilities of companies under their control—including debt and pension-related obligations. The bill, called the Stop Wall Street Looting Act of 2019, would also make private-equity firms legally liable when a company in their portfolio runs afoul of federal law. Ms. Warren contends that private-equity firms are only on the hook for their equity investments, not behavior at the firms, according to a Senate aide. Fund managers would also be required to make public their fees and returns—which are currently shielded from disclosure apart from what public pension funds are required to release. 

[joze44 + 39]

Does she know what kind of limitations private equity funds have? They are ripping investors off but they are upper class investors. 

[Pavel + 384]

I would like to know: What business does the government have meddling in a private negotiation between investors and investees?

[francoba + 93]

Economic patriotism, I like it...

[pinto + 293]

I believe in markets, and the principle for such "regulation" is present in the rigid systems

[Jan van Eck + 7,558]

The aptly-named "Stop Wall Street Looting Act of 2019"  seems to set forth the operating principle that take-overs of various companies will require the acquisition of liabilities as well as assets.  "Private equity" is nothing more than the latest iteration of old-style corporate raiders such as Carl Icahn, who bankrupted TWA Airlines among others, or for that matter T. Boone Pickens, the original corporate raider of old. Those raiders' game plan was to buy up companies with lots of cash and low stock price, such as the New Haven Railroad, a conservatively-run company that kept lots of cash available for capital expenditures such as pricey electric locomotives, loot the cash through "special dividend distributions," then pile debt on the balance sheet by taking out loans against the assets, then another round of looting via special distributions, and when it is all over, the looted cash was greater by far than the purchase price of the controlling stock interest, so the actual asset, the operating company, can be abandoned to its fate.  In the case of the NHRR, that meant financial ruin, a take-over by the Feds in Conrail, another bankruptcy (along with the Boston and Maine RR), more collapse including service collapse, the forming of Metro North RR to take over the rail commuter service, and eventually Amtrak to create a tax-funded rail system on the old NHRR trackage. The looters, meanwhile, are sitting pretty with the looted cash in their mega-mansions out on Nantucket and Martha's Vineyard. 

This kind of abuse of the capital markets system is only possible where tight regulation of so-called "private equity" is absent.  Warren is very much on the right track to tighten up regulatory oversight on these Wall Street looters.  They are the latest version of the rich assholes for which New York is so notorious.  My personal approach would be to snatch the looters up and ship them off to Guantanamo, to go have breakfast with the mujaheddin, which should be interesting.  Do that and Wall Street looting stops instantly.  No new laws needed.  Nothing like a night in a tent with the jihad crowd to change your perspective.