Legislation Introduced to "Stop Wall Street Looting"

(This article first appeared in the September/October 2019 issue of the American Postal Worker magazine) 

In July, Congressional leaders introduced new legislation that would clamp down on the private equity (PE) industry’s worst abuses. The industry’s predatory practices have cost thousands of workers their jobs, all while enriching billionaire fund managers. The legislation, introduced in both the House of Representatives and the Senate, is known as the Stop Wall Street Looting Act, and it has important links to the Campaign for Postal Banking.

The PE industry has been the driving force behind catastrophic buyouts, bankruptcies and asset lootings – as recently seen at Toys R Us, Sears, Hahnemann University Hospital in Philadelphia and others. In these practices, PE funds buy up profitable companies, strip them of their valuable parts like pension funds and real estate, load them up with debt, and leave workers and communities poorer in their wake.

Senator Elizabeth Warren, a key architect of the legislation and longtime advocate of postal banking, made a clear connection between the two issues in her announcement about the bill. The Stop Wall Street Looting Act, Warren noted, intends to push “finance back to its core purpose of connecting savers with borrowers quickly and efficiently.”

Echoing the calls of our Campaign, Senator Warren noted that today’s financial system fails to reach vast swathes of society, and those left behind spend an inordinate portion of their income – as much as 10 percent for some – on interest and fees “because of their lack of access to basic banking services.”

Sen. Warren rightly pointed out that postal banking could go a long way toward addressing those injustices – without changes in the law. Finally, she recognized that postal management could take steps today to address the problems of the unbanked and underbanked across the country, without changes in the law.

So how does the Stop Wall Street Looting Act take on the abuses of the PE industry? There are four key elements to the bill:

1) Make private equity executives personally liable for the damage their predatory practices cause. Today, tax law allows those running massive private equity funds to funnel massive profits into their own pockets while paying little or no tax, and without any risk of consequences for the carnage they’ve left behind.

2) Close tax loopholes that encourage predatory practices. Tax loopholes encourage PE executives to saddle companies with debt, with the carried interest loophole allowing them to pay lower taxes on their massive profits than ordinary wage earners.

3) Protect workers if employers go bankrupt. All too often, PE firms strip companies of their worth and leave the unprofitable shells behind. In bankruptcy cases, workers usually lose most or all of their pensions and other benefits. This legislation would make workers’ pensions a priority in bankruptcy proceedings, or allow workers to pursue the wealth of PE partners in court if the bankruptcy estate is insufficient to ensure their fair treatment.

4) Require PE firms to be transparent and disclose costs and fees. PE firms are notorious for overstating their promised returns and understating the fees they charge to institutional investors. This means they’re able to attract big clients, entrenching their power in the market and deepening their pockets. This bill would require improved transparency, so big investors can make clearer choices before partnering with PE Firms. The bill is supported by a broad array of labor, consumer and community organizations, including the APWU, the AFL-CIO, the Communication Workers of America (CWA), SEIU and Public Citizen.

This edition of The American Postal Worker will be arriving in your home just as Congress is returning from its August recess. Postal workers should call their congressional representatives at 202-225-3121. Let them know you support the Stop Wall Street Looting Act and it’s time for postal banking!

The Campaign for Postal Banking is a coalition of consumer, worker, financial reform, economic justice, community, civic, and faith-based organizations calling for low-cost, consumerdriven financial services via the Postal Service. Products and services could include check cashing, bill payment, savings accounts and small-dollar loans. Postal Banking will benefit consumers without access to traditional banks as well as those who want a public option. The expansion of services would also strengthen our public Postal Service. To learn more, visit www.CampaignforPostalBanking.org.