White House hopeful Sen. Elizabeth WarrenElizabeth WarrenWarren, Democrats urge Trump to back down from veto threat over changing Confederate-named bases OVERNIGHT DEFENSE: Joint Chiefs chairman says he regrets participating in Trump photo-op | GOP senators back Joint Chiefs chairman who voiced regret over Trump photo-op | Senate panel approves 0B defense policy bill Trump on collision course with Congress over bases with Confederate names MORE (D-Mass.) unveiled a sweeping plan Thursday targeting the private equity fund industry, accusing companies in the sector of being “vampires” and vowing to “rein in the financial industry so it stops sucking money out of the rest of the economy.”
Warren, a favorite of the progressive base who built her reputation railing against economic inequities, has made attacks against Wall Street, top corporations and big tech a major component of her 2020 presidential platform.
Under the new plan unveiled on Thursday, which she also introduced in Congress along with other lawmakers as the “Stop Wall Street Looting Act of 2019” bill, Warren would force private equity companies to take responsibility for certain pension obligations of the companies they buy.
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The plan would also force private equity funds to assume the debts of companies they buy, while limiting how much in fees, bonuses and dividends they can extract from the companies they purchase.
“We should start by transforming the private equity industry — the poster child for financial firms that suck value out of the economy,” Warren said in a Medium post.
“Private equity firms raise money from investors, kick in a little of their own, and then borrow tons more to buy other companies. Sometimes the companies do well. But far too often, the private equity firms are like vampires — bleeding the company dry and walking away enriched even as the company succumbs.”
Private equity funds typically rely on a business model involving buying companies and cutting costs to maximize profits with an eye towards reselling them at a profit.
The model has come under criticism because it has often led to layoffs or major cost-cutting.
The private equity industry has hit back at Warren’s legislation, saying it could hurt the economy.
“Private equity is an engine for American growth and innovation – especially in Senator Warren’s home state of Massachusetts. Extreme political plans only hurt workers, investment, and our economy,” said Drew Maloney, president and CEO of the American Investment Council, which represents the private-equity industry.
Beyond the private equity proposal, Warren pushed for a slate of reforms she says would help working families.
She vows in her plan to allow the Postal Service to partner with local community banks and credit unions to offer services like checking and savings accounts at post offices and online and adopt real-time payment management technology to expedite the process for banks to process checks, saying she’d appoint governors to the Federal Reserve who would advocate for the changes.
The Massachusetts Democrat has recently enjoyed a jolt in support after a strong debate performance last month and her “I have a plan for that” playbook have drawn the notice of Democratic primary voters.
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She is currently in a pitched battle with Sen. Bernie SandersBernie SandersThe Hill’s 12:30 Report: Milley apologizes for church photo-op Harris grapples with defund the police movement amid veep talk Biden courts younger voters — who have been a weakness MORE (I-Vt.), who rails against many of the same economic issues, for the primary field’s progressive mantle.
— Updated at 12:36 p.m.