Private equity firms are some of the most secretive, unregulated financial firms - and they want to buy up failed banks with taxpayers' money while keeping most of the profits for themselves.
SEIU President Andy Stern wrote about these firms' plans on the opinion pages of the Wall Street Journal this morning:
These financial wolves want to bring their brand of risk-taking to the same banking industry whose own wild risk-taking helped collapse the economy in the first place.Last month, the Federal Deposit Insurance Corporation (FDIC) released draft guidelines limiting the ability of private-equity firms to invest in failed banks. These new guidelines will ensure that the banks are well capitalized, that the details of their investments and loans, like those of any commercial banks, are made available to the FDIC, and that the FDIC and other agencies can prevent a rerun of the Savings & Loan crisis of the 1980s and '90s.Meanwhile, private-equity stalwarts have been arguing against those guidelines. If we are to believe these guys, any attempt to rein in private equity's ability to invest in bank deals would stifle investment and hinder economic recovery.
They promise they'll play by the rules this time, that we can trust them, that they're looking out for taxpayers. But we've played that game before. And we learned ordinary Americans pay the price when financial markets are unregulated and overleveraged deals--which initially thrived--eventually go bust. [...]
The FDIC's new guidelines are a good first step, but full economic recovery will take more. We must continue to act more boldly and more broadly if we are truly serious about building a new financial model that rewards long-term sustainability over quick profits and fad investments.
You can make sure this doesn't happen. The FDIC will soon vote on tougher regulations on these private equity firms - they need to hear from you by Monday.
Click here to write to the FDIC in support of tough regulations for private equity firms.
Read our message to SEIU activists about this campaign below the fold.
From: Stephen Lerner
Subject: Financial wolves
Dear Friend,
The wolves are at the door.
Some of the most secretive, unregulated financial firms are in the market to buy failed banks. Problem is, they want to do it with taxpayers' money - and keep most of the profits for themselves.
These big firms - called private equity firms - build their whole reputation on making large profits in short periods of time by taking big risks. Worse yet, they can exploit weak regulations to get it done.
Now these financial wolves want to bring their brand of risk-taking to the same banking industry whose own wild risk-taking helped collapse the economy in the first place.
You can make sure this doesn't happen. The FDIC (which insures bank deposits) will soon vote on tougher regulations on these private equity firms.
Can you write to the FDIC in support of these tough regulations?
Click here to write your letter to the FDIC: http://action.seiu.org/page/speakout/fdicprivateequit
Our economy collapsed in the first place because big banks made riskier and riskier investments. And as they added more debt, our economy eventually became so unstable that it collapsed. If private equity firms get their way, banks could once again be exposed to the same risks that collapsed the economy last year.
It'd be enough to support these tough new regulations if that was all that was wrong with private equity firms. But that's not all.
Private equity firms are under fire across the country. Already, five people have been indicted for illegal activities relating to investments in one of the biggest private equity firms, Carlyle Group. The same firm was just sued for losing one man's $20 million investment after the supposedly "low-risk" fund completely collapsed from leveraged risk.
And these are the people who want to run our banks?
Click here to write the FDIC in support of tough regulations for private equity firms. Your comments will help make the difference before the vote.
Thanks for your help towards real financial reform. We'll let you know how the FDIC vote goes.
Take care,
Stephen Lerner
SEIU.org Financial Reform Campaign
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