Democratic presidential candidate Elizabeth Warren aimed her campaign of economic populism on Thursday at a new target: the private equity industry.
The Massachusetts senator, in tandem with colleagues on Capitol Hill, introduced what she calls the "Stop Wall Street Looting Act." It stands no chance of enactment so long as Republicans control the White House and Senate, but it matters because Warren has risen to the top tier of 2020 Democratic contenders.
Specifically, Warren proposes to:
- Make private equity firms responsible for debts and pension obligations of companies they buy.
- Limit the ability of firms to extract fees, bonuses and dividends from their acquisitions.
- Reinstate the abandoned Glass-Steagall wall separating commercial banks from investment banks.
- Change executive compensation rules to ensure that bankers who profit from speculative bets also assume risk if their bets go bust.
- Expand financial services for Americans of modest means by allowing the U.S. Postal Service to join community banks and credit unions in offering low-cost checking and savings accounts.
Warren framed her proposal as an effort to shrink the amount of money wasted on 21st century financial engineering and redirect it to improve the living standards of average American families. She cited a range of "legalized looting" examples, including Sun Capital guiding discount retailer ShopKo toward bankruptcy and Alden Global Capital forcing job cuts at The Denver Post newspaper after acquiring it.
"To raise wages, help small businesses and spur economic growth, 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," the former Harvard professor argued in a Medium post.
Among those joining Warren in sponsoring the plan is one of her Democratic rivals for the presidential nomination, Sen. Kirsten Gillibrand of New York. In less than two weeks, both women will join the rest of the Democratic field on stage in Detroit for the second series of the party's presidential debates.
