- The Swarm
- Posts
- Make Private Equity Pay for the Companies It Wrecks
Make Private Equity Pay for the Companies It Wrecks
Buy a company. Load it with debt. Take the money. Walk away when it collapses. That's the private equity playbook, and workers and whole communities are left holding the bag.
That's why Senator Elizabeth Warren and lawmakers in both chambers have reintroduced the Stop Wall Street Looting Act to end it. The bill would make private equity firms and their insiders responsible for the debts their companies leave behind.
Private equity-backed firms made up 19 of the 35 largest corporate bankruptcies in America last year, according to the Private Equity Stakeholder Project. When Shopko went bankrupt in 2019, about 14,000 people worked there, and some say they never got the severance they were promised. Sun Capital, the private equity firm that owned the chain, had collected a $50 million dividend four years earlier, according to Axios.
The Stop Wall Street Looting Act would close the carried interest loophole that lets fund managers pay lower tax rates on their profits. It would force private equity firms to disclose their fees and returns. And it would double the priority for unpaid wages and benefits in bankruptcy, from $10,000 to $20,000 per worker.
Private equity now controls more than $9 trillion in assets, up from $4.5 trillion in 2020, according to the bill's sponsors. The industry says buyouts rescue struggling companies. But the workers left with nothing never got a vote.
Congress has already shown it can act. This summer, it passed a law by votes of 85 to 5 in the Senate and 358 to 32 in the House barring large corporate investors from buying up single-family homes. Reining in Wall Street can win support across party lines.
Every member of Congress should have to answer a simple question: will you stand with workers or Wall Street?
Thanks for all that you do,
Matt from the Swarm