|Chamber of Commerce Joins Pushback Against Warren’s Private-Equity Plan
The Wall Street Journal
By Chris Cumming
November 12, 2019
Private-equity firms have gained an influential ally in their efforts to resist proposed legislative changes to their industry.
The U.S. Chamber of Commerce, the largest lobbying group in the nation, on Tuesday said the Stop Wall Street Looting Act, a private-equity reform bill introduced over the summer by Sen. Elizabeth Warren (D., Mass.), would have grave economic consequences.
If enacted, the bill would result in the loss of 6.2 million to 24.3 million jobs across the country, while reducing both government tax receipts and the investment returns of public pension funds and other investors, the report said.
The measure “would poison the well of innovation and growth,” said Tom Quaadman, executive vice president of the lobbying group’s Center for Capital Markets Competitiveness, on a conference call with reporters.
The proposed legislation by Sen. Warren, a Democratic presidential candidate, would change the rules for private-equity firms significantly and has sparked intense resistance from the industry. The largest private-equity lobbying group, the American Investment Council, warned of the bill’s economic consequences and recently launched an advertising campaign to improve the industry’s image.
Among its provisions, the bill would tax firms’ profits at higher rates and rewrite bankruptcy law to ensure workers have more protections when a private equity-owned company goes bankrupt. It would also make private-equity firms liable for the debts, legal judgments and pension obligations of the companies they buy.
These changes would so increase the risk of private-equity investing that the industry “could just make the decision to cease to exist,” said Charles Swenson, a professor at the University of Southern California’s Marshall School of Business who wrote the U.S. Chamber’s report, on the conference call.