Zana’s Reviews > These Are the Plunderers: How Private Equity Runs—and Wrecks—America > Status Update

“Every time legislators try to attack carried interest, private equity lobbyists swarm and the bills go nowhere. The latest example of this occurred in August 2022 when Congress passed a law targeting climate change and prescription drug costs. Initially, the legislation curtailed the carried interest benefit, generating revenue to the government....

“Private investment fund managers continued to enjoy exceedingly favorable tax treatment on their earnings from these partnerships, known as carried interest. Because these earnings are considered long-term capital gains, they are taxed at a much lower rate than salaries.

This advantageous tax treatment is an enormous driver of the wealth gap in the United States...”

“The Taxpayer Relief Act of 1997 cut capital gains taxes from 28 percent to 20 percent and raised the amounts exempted from estate tax levies. The administration also made it easier for foreign private investment funds to invest in the U.S. without subjecting their profits to U.S. taxes.”

“A key goal of the Clinton administration, which took over in 1992, was removing constraints on banks established after the Great Depression of the 1930s. Robert Rubin, a former Goldman Sachs partner who was Clinton’s treasury secretary, led the charge in early 1995 to abolish Glass-Steagall, the legislation that had protected the financial system from excess risk for sixty years....”

Two sides of the same coin huh

“...after the Al-Qaeda attacks of 9/11, counter-terrorism became the FBI’s top priority, reducing resources available for other crimes, including the financial variety. But another factor was the view increasingly taken by prosecutors and policymakers that large financial firms were too integral to our economy and too interconnected to be taken out and shot when they behaved badly.”

“In 1995, bank regulators referred 1,837 cases for prosecution to the Justice Department; by 2006, that number had fallen to 75. And in each of the four subsequent years, a period encompassing the worst of the mortgage crisis, bank regulators referred an average of only 72 cases for criminal prosecution.”

‘In 1981, Reagan nominated John Shad, the former vice chairman of the Wall Street firm E.F. Hutton, to be chairman of the Securities and Exchange Commission...

“John Shad’s philosophy was that hostile takeovers were a good discipline on the market, and also very beneficial for the investors of the target company,” Goldberg recalled... “So we should be interfering as little as possible.”’

Ronald Reagan strikes again

‘But many of these “saviors” acquire relatively healthy companies and finance the purchases with so much debt that it sickens them. To meet the interest payments on the debt, the firms typically gut the acquired company through the sale of assets or businesses, then cut costs by laying off employees and reducing worker costs like healthcare and retirement benefits....’

Reading about private equity bc my employer was bought out by private equity so I want to be better informed about how my employment will suck in the future cont'd