WASHINGTON, D.C. – Though many Americans may not be aware of the scope of large private investment corporations, like the Carlyle Group, Bain Capital or Blackstone, they play a large role in the American economy.
House Democrats argue these companies are preying on hard working Americans to maximize profits, while House Republicans say venture capital, growth capital and buyouts are necessary functions of capitalism.
“There are plenty of success stories that demonstrate how small businesses prosper through private investment and benefit from strategic insight that private funds can offer,” said Rep. Andy Barr of Lexington, Kentucky at a House Financial Services Committe hearing Tuesday entitled America for Sale: An Examination of the Practices of Private Funds.
This month, Taylor Swift knocked the Carlyle Group for working with her former manager to allow him to buy her music catalog.
The Carlyle Group has not spoken publicly about the matter.
Another notable criticism came when retail giant Toys ‘R’ Us laid off 30 thousand of their employees last year. Private equity owners from Bain and Kohlberg Kravis Roberts still received 470 million dollars in interest payments.
A laid off worker testified before the House committee.
“How could I tell my special needs son that someone on Wall Street made a series of decisions that turned our lives upside down? I couldn’t find anything but seasonal work for over a year despite my experience. My co-workers and I were left with nothing, while the executives and private equity owners walked away with millions,” said Giovanna De La Rosa, who now advocates on behalf of United for Respect.
Barr says while bankruptcies are unfortunate, private investment are helping small businesses grow in his district.
“One example of this success is Big Ass Fans, headquartered in my district in Lexington, Kentucky. This private equity backed business has grown at an astounding annual rate of 30%. Since their private equity investment, Big Ass Fans has added nearly 200 jobs, developed and introduced new products and increased their distribution channels,” he said at the hearing.
Through organizing, laid off Toys ‘R’ Us workers, like De La Rosa, were able to push private equity corporations to offer severance payments from a $20 million fund. It was a rare victory but fell short of the $75 million dollars workers’ rights group says they were owed.
“We need to think about our economy, not just in terms of the returns for stock holders but in terms of how the lives of workers are impacted,” said Ocasio-Cortez who also sits on the Financial Services Committe.
One of the bills before Congress that addresses the issue is called the Stop Wall Street Looting Act.
It has no Republican co-sponsors in either the House or Senate.
Republicans have instead called for solutions that can gain bipartisan support.