November 15, 2019


Wall Street Journalreporter Chris Cumming provides a balanced assessment of the sweeping consequences of a pending bill in Congress that takes direct aim at private equity firms. He writes:

If enacted, the bill would result in the loss of 6.2 million to 24.3 million jobs across the country, while reducing both government tax receipts and the investment returns of public pension funds and other investors, the [Chamber’s] report said.

The measure “would poison the well of innovation and growth,” said Tom Quaadman, executive vice president of the lobbying group’s Center for Capital Markets Competitiveness, on a conference call with reporters.

[ . . . ]

Among its provisions, the bill would tax firms’ profits at higher rates and rewrite bankruptcy law to ensure workers have more protections when a private equity-owned company goes bankrupt. It would also make private-equity firms liable for the debts, legal judgments and pension obligations of the companies they buy.

These changes would so increase the risk of private-equity investing that the industry “could just make the decision to cease to exist,” said Charles Swenson, a professor at the University of Southern California’s Marshall School of Business who wrote the U.S. Chamber’s report, on the conference call."

Read the full article at the WSJ and check out our new study examining the impact of the legislation.