Sen. Elizabeth Warren (D-Mass.) and several of her anti-capitalist colleagues are once again showing a lack of understanding and demonstrating disdain for private equity investments.  If Sen. Warren’s effort is successful, it would undermine a vital and extremely successful industry. 

Private equity investments are typically made in privately held companies that are not traded on the public stock exchanges.  This often provides small businesses with the funding needed to become successful.  According to Ernst & Young, approximately 85 percent of the businesses that private equity supports are small businesses and private equity-backed businesses employ a median total of 69 employees.  The private equity sector generates $1.7 trillion in gross domestic product (GDP), which was approximately 6.5 percent of U.S. GDP in 2022, and paid $304 billion in federal, state, and local taxes.

 Despite the clear benefits of private equity investments, Sen. Warren re-introduced her “Stop Wall Street Looting Act” on October 10, 2024, with five cosponsors.  The legislation was first introduced in 2021.  A companion bill, H.R. 9985 was introduced in the House of Representatives by Rep. Mark Pocan (D-Wisc.), with eight co-sponsors. 

Sen. Warren claimed in her announcement of the bill that, “private equity takeovers are legal looting that makes a handful of Wall Street executives very rich while costing thousands of people their jobs, putting valuable companies out of business, and in the case of health care, is literally a matter of life and death.”  This bill’s contents and title show that Sen. Warren and her colleagues either do not know or care about the benefits and importance of private equity to the economy, consumers, and taxpayers. 

As Citizens Against Government Waste noted when Sen. Warren introduced her bill in 2021, “the investments made by private equity funds make substantial contributions to public retirement systems in states like California and New York, as well as other funds like the Massachusetts Pension Reserve Investment Management Board.  In other words, the very people that Sen. Warren and her supporters in the crusade against private equity claim to be helping, including workers at companies like Dunkin Donuts, Jiffy Lube, and Popeyes, along with retired janitors, teachers, and state and local workers, would all be hurt if her legislation was to become law.”

Sen. Warren and her anti-capitalist colleagues on Capitol Hill are renewing their fight against a vital industry.  If their legislation is signed into law, private equity would be undercut, and the people the supporters of this bill claim to be protecting would be faced with more government control and intervention into the economy, higher costs, and less money for their retirement.