Massachusetts Senator Elizabeth Warren wants to put choke collars on Private Equity firms that provide vital capital infusions into both failing and rapidly growing small startups and larger businesses. Tens of thousands of family-owned businesses have been saved by PE investments.
PE financing offers a critical oxygen supply for undercapitalized companies and often offers new management teams to help turn around underperforming firms and raise their value.
It’s now a $1.5 trillion industry that has saved or created some 25 million jobs.
But PE firms often get rich off of their interventions and rescue operations and sometimes the companies they try to save go under. So Warren views them as “pillagers” and “predators,” not saviors. Her article titled “Stop Wall Street Looting Act” would bring new regulations, taxes, and lawsuits to the industry. She has even proposed jail sentences for PE executives who buy out a company and see it fail. Apparently, the Senator thinks PE firms want the companies they buy to fail.
We can’t think of a better way to slow new small businesses than blocking their access to capital. Jack Kemp used to say “Without capital, there is no capitalism.” But, of course, Warren hates both.