The bane of Wall Street guns for private equity
US presidential hopeful Elizabeth Warren wants to rein in financial industry ‘so it stops sucking money out of the rest of the economy’
Washington — US Democratic presidential hopeful Elizabeth Warren released a series of policies on Thursday aimed at regulating the financial industry, including a plan to overhaul the private equity industry.
“We need to shut down the Wall Street giveaways and rein in the financial industry so it stops sucking money out of the rest of the economy,” Warren said in a post on Medium.com announcing her proposal.
The US senator from Massachusetts has been a relentless critic of the financial industry for much of her career and has spent much of her time in the Senate calling for new regulations on Wall Street.
She is one of more than two dozen candidates vying for the Democratic nomination to challenge Republican President Donald Trump in the November 2020 election. Warren has distinguished herself in the crowded field by releasing reams of policy proposals.
Her proposals have met staunch opposition from the financial industry and, if elected, she would face a barrage of opposition lobbying because most of her ideas would require congressional approval.
Warren repeated her previous calls for reinstating Glass-Steagall, a Depression-era law that separated commercial and investment banks. She would also impose limits on compensation for bank executives. She repeated her call for creating a government-backed banking system to work through the US Postal Service.
Building on her prior policy positions, Warren outlined a proposal to transform the private equity industry.
Private equity firms invest private capital to purchase companies that are struggling. Critics like Warren argue the firms bleed the companies dry for their own profit and then let them collapse, costing the economy jobs. Defenders of private equity say the industry brings efficiency and modernisation to struggling companies.
Warren has an eight-prong proposal to address private equity. She wants to make private capital firms responsible for the debts of the companies they purchase. Warren also wants to make the firms responsible for the pension obligations of the companies they purchase.
Warren proposed several tax changes that would alter the way the government treats the debt those companies create and how their profits are counted.
She would also change bankruptcy laws to make it easier for workers to obtain severance or pension payments if a company goes out of business.