Accusing private equity companies of “drooling” over the prospect of snatching up businesses faltering during the ongoing Covid-19 pandemic, Sen. Elizabeth Warren on Wednesday led the reintroduction of a bill to “fundamentally reform” the predatory industry and “level the playing field” by forcing firms “to take responsibility for the outcomes” of their acquisitions.

“Private equity firms get rich off of stripping assets from companies, loading them up with a bunch of debt, and then leaving workers, consumers, and whole communities in the dust.”

Warren (D-Mass.), along with Sens. Tammy Baldwin (D-Wis.) and Sherrod Brown (D-Ohio), and Democratic Reps. Mark Pocan (D-Wis.) and Pramila Jayapal (D-Wash.), reintroduced the Stop Wall Street Looting Act, an effort to foist accountability and transparency upon an industry whose assets have more than doubled over the past five years to over $5 trillion, according to the U.S. Securities and Exchange Commission.

“Private equity firms were already gutting companies and killing jobs before Covid-19, now they’re drooling over companies to exploit during this crisis,” Warren said in a statement introducing the bill. “Private equity firms get rich off of stripping assets from companies, loading them up with a bunch of debt, and then leaving workers, consumers, and whole communities in the dust.”

“The Stop Wall Street Looting Act ends these abusive practices by putting private investment fund managers on the hook for the companies they control, ending looting, empowering workers and investors, and safeguarding the markets from risky corporate debt,” she added.

If passed, some of the bill’s provisions would:

• Ban dividends to investors and the outsourcing of jobs for two years after a firm is acquired;
• Close the carried interest loophole;
• Safeguard companies and workers against private equity fund abandonment by prioritizing worker pay during bankruptcies, incentivizing job retention, and other measures;
• Boost transparency by requiring private equity managers to disclose fees, returns, and other information about their funds; and
• Require regulators to address risky debt securitization arrangements.

“The industry relies on a business model in which managers are incentivized to pursue short-term profits and pocket huge fees as they load up companies they buy with debt, strip them of their assets, and extract exorbitant fees, often walking away from workers, communities, and investors if the bets go bad,” a statement from Warren’s office explained.

According to the statement:

A recent report found that private equity firms’ portfolio companies received over $5 billion in taxpayer money from the CARES Act, despite private equity firms sitting on record-high amounts of cash. Private equity-owned nursing homes had devastatingly high mortality rates during the pandemic, consistent with academic research showing that private equity ownership increases nursing home deaths.

Private equity-owned retailers shut their doors for good, too loaded up with debt to make it through. Meanwhile, private equity landlords laid in wait for the eviction moratorium to end so they could make more money, even if it meant kicking families out of their homes.

Lisa Donner, executive director of the advocacy group Americans for Financial Reform—one of more than a dozen organizations supporting the bill—said in a statement that “the current system of special privileges and loopholes for private equity encourages abuses that help superrich Wall Street executives get even richer at the expense of workers, communities, patients, racial equity, and our climate, and enables them to take control of ever-larger pieces of our world, from retail, to technology, to housing, to healthcare, and more.”

“The Stop Wall Street Looting Act would be a powerful step toward creating rules of the road that promote a more just and sustainable economy,” she added.

Jayapal, who chairs the Congressional Progressive Caucus, said that “the devastating Covid-19 pandemic has only made it more clear that we must finally put working people over Wall Street and our communities over corporate profits.”

“As we fight for an equitable and transformative recovery that makes long-overdue investments in families across America,” she continued, “the Stop Wall Street Looting Act will hold Wall Street accountable while putting power back where it belongs—in the hands of working people.”

Pocan contended that “it’s long past time for billionaires and big corporations to stop gambling with hardworking Americans’ and their communities’ assets in service of corporate greed.”

“Too often private equity leaves workers and communities out in the cold,” he added. “This bill will finally hold predatory private equity firms… accountable and protect workers from the consequences of firms’ greed.”

Sen. Bernie Sanders (I-Vt.), who supports the bill, asserted that “Congress must ensure that the greed and recklessness of Wall Street can never destroy the livelihoods of everyday Americans ever again.”

“Now is the time,” the Senate Budget Committee chair added, “to end Wall Street’s greed, protect workers, and create an economy that works for everyone, not just the 1%.”