Lest anybody think that Sen. Elizabeth Warren plans to relax her offensive against Wall Street titans, the 2020 Democratic presidential hopeful now is dramatically dialing up her attacks on the private equity industry.
The Massachusetts Democrat just in the last few days has:
gone after the Blackstone Group, Colony Capital, and Cerberus Capital Management for buying up foreclosed homes in the wake of the financial crisis;
singled out the Carlyle Group for its role in a dispute over Taylor Swift’s early recordings;
and accused the industry’s Washington arm, the American Investment Council, of presenting a “sham study” of its contributions to economic growth.
Warren’s fusillade comes as the industry takes the hot seat in a House Financial Services hearing today titled, “America for Sale? An Examination of the Practices of Private Funds.” It will focus in part on the House companion to Warren’s proposal, “The Stop Wall Street Looting Act,” which would fundamentally remake private equity’s business model.
The latest from Warren came in the form of a letter, also signed by fellow 2020 contender Sen. Bernie Sanders (I-Vt.) and seven other lawmakers who have signed on to Warren’s private equity proposal, to Ernst and Young. They accuse the accounting firm of cooking up an analysis with “misleading conclusions and glaring flaws” to paint a falsely rosy picture of private equity’s impact on workers and wages.
“These studies are distorted and biased and misused in the regulatory and legislative and regulatory process, lending an air of legitimacy to corporate special pleading,” the lawmakers write. “The new EY report, prepared with and for a trade group for the private equity industry, appears to be a picture-perfect example of such sham study.” (Read the letter here and the original report here.)
The American Investment Council — whose CEO Drew Maloney will be testifying at the House hearing today — defended the report. “EY is a respected third-party consulting firm and their new report shows exactly how private equity supports millions of jobs across America,” said Emily Schillinger, a spokeswoman for the group.
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