ICYMI: Private Equity’s Positive Impact Highlighted at Senate Banking Committee

Recently, the Senate Banking Committee Subcommittee on Economic Policy held a hearing examining the impact of private equity investments in the American economy. Senator John Kennedy (R-LA) and several witnesses discussed in-depth the critical value that private equity investments add to the American economy 

 Essential part of the free enterprise system 

Senator John Kennedy (R-LA) began the hearing noting that private equity is an “essential part of the free enterprise system” and plays a critical role in supporting the American economy. 

“Private equity is a huge part of those retirement system’s investments” 

 Senator Kennedy (R LA) also discussed how his former role as Louisiana State Treasurer and his positions on the board of directors for several state retirement systems gave him first-hand insight into the valuable returns private equity generates for public servants.  

“Vital to the economic future of the U.S.” 

David Burton, a senior fellow in economic policy at The Heritage Foundationdiscussed how private capital markets are the primary tool for entrepreneurs to raise the capital necessary to launch and grow a business. Burton specifically cites how private offerings account for at least $2.9 trillion in capital raised annually.  

“These are good paying jobs” 

American Action Forum president Dr. Doug Holtz-Eakin highlighted the massive value added by private equity to the U.S. economy, noting that 11.7 million workers are currently employed by private equity-backed companies. These workers are earning approximately $900 billion in wages a year with the average salary of $73,000.  

“Private equity provides an opportunity to further diversify our portfolio” 

 Illinois State Treasurer Michael Frerichs discussed how private equity investments support public pension funds in Illinois. He explained how private equity fills an important role helping companies grow and expand by providing capital and industry expertise. Private equity also has made progress expanding the circle of opportunity to underutilized businesses and investment firms, particularly those that are women or minority owned. 

“[Legislation] not in the best interest of shareholders, workers, or consumers” 

Later in the hearing, Mr. Burton criticized Sen. Elizabeth Warren’s recently re-introduced “Stop Wall Street Looting Act” stating that its passage would prevent private equity from investing in struggling companies and turning them around. If passed, the legislation would hurt businesses, shareholders, workers, and consumers. 

Click here to read about how bipartisan members of the House Financial Services Committee stressed the importance of private equity during a hearing in 2019.