Over the past four decades, private equity has become a powerful, and malignant, force in our daily lives. In our May+June 2022 issue, Mother Jones investigates the vulture capitalists chewing up and spitting out American businesses, the politicians enabling them, and the everyday people fighting back. Find the full package here.
For years, Sen. Elizabeth Warren has railed against the excesses of private equity firms, including megadeals that leave companies bankrupt and their workers jobless as fund managers line their pockets with fees and performance bonuses. In 2013, for instance, Warren proposed legislation that would shrink PE’s sway by barring commercial banks—where most Americans hold their money—from investing in the industry. Two years later, she went after what Insider called PE’s “golden goose,” asking the Treasury Department and the IRS to crack down on waivers that allow fund managers to pass off their entire compensation as “carried interest,” which is taxed at a far lower rate than ordinary income.
But her reputation as private equity’s greatest foe in Washington may have been cemented in 2019, when—as a top presidential contender in the Democratic primary—Warren took the rare step of announcing that she would not accept donations of more than $200 from PE executives. (By comparison, private equity and investment firms contributed $3.8 million to Joe Biden’s run for the Oval Office.) She also joined several Democratic colleagues to unveil the Stop Wall Street Looting Act—a sweeping bill that would have not only killed the carried-interest loophole, but hobbled the ability of fund managers to saddle the companies they acquire with massive loans while pulling out a big chunk of cash for themselves. “Let’s call this what it is: legalized looting,” Warren wrote on her campaign website. “Looting that makes a handful of Wall Street managers very rich while costing thousands of people their jobs, putting valuable companies out of business, and hurting communities across the country.”
She’s had little success, though, getting her colleagues onboard. The Stop Wall Street Looting Act never hatched out of the Senate Finance Committee—which isn’t too surprising, given that lawmakers on both sides of the aisle lean heavily on contributions from rich financiers. PE and investment firms alone spent $42 million on donations to congressional candidates during the 2020 election cycle. About two-thirds of that went to Warren’s fellow Democrats.