(CN) – The private-equity industry needs a complete overhaul, Senator Elizabeth Warren said Thursday, unveiling a new policy initiative for her 2020 presidential campaign.
Polling between second and fourth among fellow Democratic contenders, Warren touted the plan as part of her “economic patriotism agenda,” which she calls “a commitment to fundamentally change the government’s approach to the economy.”
The Massachusetts senator has previously rolled out progressive policy proposals on issues like climate change, child care, and limiting corruption and power by corporations.
Warren said Thursday she would make private-equity firms pay the debts and otherwise take responsibility for some pension obligations of the companies they buy. She wants to limit fees companies charge, adjust tax and bankruptcy rules, and prevent reckless loans, among other changes.
The policy statement issued from Warren’s camp asserts that Washington’s rule on big finance for decades has been, “If it’s good for Wall Street, it’s good for the economy.” She said that approach leaves everyday Americans in the lurch, and wages have stagnated.
“Wall Street is looting the economy and Washington is helping them do it,” Warren said, adding that big banks are also benefitting from the president’s tax cut plan and the regulatory rollback from the Trump administration.
Warren said the explosive growth of the financial sector, accounting today for a full 5% of the U.S. workforce, lures people away from starting their own businesses, generates extra fees, and leads to over-investment in real estate companies while taking away investment from research and development in industries like computing.
Private-equity firms are like “vampires,” sucking companies dry and then moving on to the next one, Warren continued. She said this has particularly harmed retail and local news companies.
Warren called for the enactment of the 21st Century Glass-Steagall Act, first introduced in 2017 by a bipartisan group of senators including Warren and the late John McCain. It would help keep commercial and investment banks separate, she said.
Warren also said executives should be rewarded for making productive investments instead of reckless speculation, and she wants to reverse the “Trump-era weakening” of rules on big banks.
A full quarter of Americans don’t have a bank account, Warren pointed out. She has long advocated for “postal banking,” which would allow people to create basic bank accounts they can monitor at their post office or online.