The private equity industry is a major player in the American economy, owning companies that employ nearly 6 million people. In the first half of 2019, the value of leveraged buyouts climbed to a near-record $256 billion, according to a commentary in The Hill by Illinois State Treasurer Michael Frerichs and Pennsylvania State Treasurer Joe Torsella. Private equity buyout firms have set up a business model that allows many of them to buy companies, load those firms up with debt, and then pay themselves massive and often secret fees with that borrowed money, according to the commentary. If the companies go bankrupt, investors like public funds might not get paid. Worse yet, these predatory practices harm the economy and make it harder for the governments we represent to stay solvent over the long term. Frerichs and Torsella advocate for the passage of S. 2155, "The Stop Wall Street Looting Act," that aims to protect workers, communities, and investors alike by prohibiting some of the worst abuses, eliminating tax breaks for others, and finally mandating real transparency for this industry. Read more.
*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.