July, 18 2019, 12:00am EDT
For Immediate Release
Contact:
Dan Beeton, 202-239-1460
"Stop Wall Street Looting Act" Will Create Sensible Rules for Private Equity Industry and Stop Abusive Practices, CEPR Co-Director Says
New legislation introduced today by Senator Elizabeth Warren (D-MA) "would address the worst abuses" of private equity (PE) by ensuring accountability; limiting PE firms' ability "to loot the companies they take over"; helping investors fully underst
WASHINGTON
New legislation introduced today by Senator Elizabeth Warren (D-MA) "would address the worst abuses" of private equity (PE) by ensuring accountability; limiting PE firms' ability "to loot the companies they take over"; helping investors fully understand PE and other private funds; and protecting workers, customers, and other stakeholders and businesses, Center for Economic and Policy Research Co-Director Eileen Appelbaum wrote in a public letter today.
Noting that private equity investments are "exploding," even though the median private equity fund launched since 2006 is doing no better than the stock market, Appelbaum wrote to Senator Warren: "The Stop Wall Street Looting Act will, for the first time, create sensible rules for the private equity industry that will allow productive investment to continue while halting the kinds of abusive practices that wipe out jobs and cripple strong companies."
Appelbaum notes: "Americans in every community are affected by the industry--today, more than 11 million people are employed by private equity-owned businesses and millions more have their pensions invested in private funds."
According to Appelbaum, Warren's legislation would:
- Align the PE firm's incentives with the target company by requiring shared liability for debt, ending the most abusive practices of the industry while preserving economically valuable transactions.
- Address the negative consequences of transfers of resources from the portfolio company to its PE owners, protecting the interests of the company, its workers and its creditors.
- Require PE firms to share liability for target firm obligations.
- Confront "the most egregious looting" by prohibiting dividend payments in the first two years post-acquisition, taxing private equity firms for the full value of the monitoring fees they charge, allowing creditors to claw back other transfers to the firm in bankruptcy, and ending the tax code's favorable treatment of debt in highly leveraged companies.
- Require private equity firms to focus on what they claim to prioritize in the first place: making improvements to the target firm's business model to better position it for medium- and long-term growth.
- End federal policy that currently encourages companies to load up on risky, unsustainable levels of debt by allowing them to deduct interest on that debt from their taxes.
- Protect the interests of workers and creditors in bankruptcy, while also reducing the incentives for PE owners to drive companies into bankruptcy in the first place.
- Ensure that workers receive legally required compensation owed to them such as pension obligations or severance payments by making the PE firm jointly liable for those obligations.
- Empower investors by increasing transparency around the true return of private equity investments.
- Require marketing materials for new funds to include information about historic performance, past bankruptcies of portfolio companies, workers hired and laid off by those companies, and past exit strategies from portfolio companies.
- End the increasingly prominent practice among private investment firms of forcing limited partners to waive fiduciary duties that require the investment firms to work in the best interest of their investors.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.
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Israeli Settlers, Soldiers 'Wiping Palestinian Communities Off the Map' in the West Bank
"While the attention of the world is focused on Gaza, abuses in the West Bank, fueled by decades of impunity and complacency among Israel's allies, are soaring."
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Israeli soldiers have either passively watched or participated in the uprooting of at least seven communities in the West Bank since October of last year, Human Rights Watch said Wednesday in a new report documenting surging settler violence in the occupied Palestinian territory.
The rights group interviewed dozens of eyewitnesses and examined video footage showing harassment and other abuse of Palestinians in the West Bank "by men in Israeli military uniforms carrying M16 assault rifles."
Following the Hamas-led October 7 attack on southern Israel, the Israeli military drafted more than 5,000 settlers into "regional defense" units in the West Bank, Haaretzreported earlier this year. The Israeli newspaper noted that "alongside this large-scale mobilization, the [Israel Defense Forces] has distributed some 7,000 weapons to the battalions as well as to settlers who were not recruited into the army but received them as civilians whom the army considers eligible to carry military arms."
HRW's investigation found that "armed settlers, with the active participation of army units, repeatedly cut off road access and raided Palestinian communities, detained, assaulted, and tortured residents, chased them out of their homes and off their lands at gunpoint or coerced them to leave with death threats, and blocked them from taking their belongings."
"Israeli settlers and soldiers are literally wiping Palestinian communities off the map," said Omar Shakir, HRW's Israel and Palestine director.
"While the attention of the world is focused on Gaza, abuses in the West Bank, fueled by decades of impunity and complacency among Israel’s allies, are soaring."
The new report comes days after Israeli settlers—escorted by IDF soldiers—went on their latest destructive and deadly rampage in the West Bank, killing at least two Palestinians, injuring dozens, and setting homes and vehicles ablaze. At least 20 households were displaced after Israeli settlers burned down their homes.
The wave of settler violence came after a missing 14-year-old Israeli boy was found dead in the area around the West Bank city of Ramallah. The Israeli military said the boy was killed in a "terrorist attack."
Since October 7, according to the United Nations, Israeli settlers have launched more than 720 attacks on Palestinians in the West Bank, displacing at least 206 households comprised of 1,244 people—including 603 children. Israeli soldiers in uniform have been present at many of the attacks.
"Settlers and soldiers have displaced entire Palestinian communities, destroying every home, with the apparent backing of higher Israeli authorities," Bill Van Esveld, associate children's rights director at HRW, said in a statement Wednesday. "While the attention of the world is focused on Gaza, abuses in the West Bank, fueled by decades of impunity and complacency among Israel's allies, are soaring."
HRW's new report examines five West Bank communities that have come under attack by Israeli settlers, including one in which uniformed Israeli men armed with assault rifles entered tents and destroyed or stole people's belongings, abused residents, and threatened to kill them if they didn't leave the area.
"One man in uniform kicked me in the back of my neck," a Palestinian mother told HRW. "They said, 'Go to the valley, and if you come back, we will kill you.'"
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Following the latest wave of settler violence in the West Bank this past weekend, a coalition of human rights organizations said in a joint statement Wednesday that "the international community must swiftly and decisively pressure the government of Israel to halt these attacks and urgently de-escalate the situation."
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The measure in question would reauthorize Section 702 of the Foreign Intelligence Surveillance Act (FISA) for two years and massively expand the federal government's warrantless surveillance power by requiring a wide range of businesses and individuals to cooperate with spying efforts.
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Wyden's remarks came after the Senate narrowly approved a motion Tuesday to proceed to the FISA reauthorization bill ahead of Section 702's expiration at the end of the week. The Oregon senator, an outspoken privacy advocate, was among the seven members of the Democratic caucus who voted against the procedural motion.
Despite its grave implications for civil liberties, the bill has drawn relatively little vocal opposition in the Senate. A final vote could come as soon as Thursday.
Titled Reforming Intelligence and Securing America Act (RISAA), the legislation passed the Republican-controlled House last week after lawmakers voted down an amendment that would have added a search warrant requirement to Section 702.
The authority allows U.S. agencies to spy on non-citizens located outside of the country, but it has been abused extensively by the Federal Bureau of Investigation and National Security Agency to collect the communications of American lawmakers, activists, journalists, and others without a warrant.
Privacy advocates warn RISAA would dramatically expand the scope of Section 702 by broadening the kinds of individuals and businesses required to participate in government spying. A key provision of the bill would mandate cooperation from "electronic communications service providers" such as Google, Verizon, and AT&T as well as "any other service provider who has access to equipment that is being or may be used" to transmit or store electronic communications.
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More than two dozen House Democrats on Tuesday challenged the Biden administration's claim that Israel is using U.S.-supplied weapons in compliance with domestic and international law—an assertion made amid an ongoing World Court probe of "plausibly" genocidal Israeli policies and practices in Gaza.
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