Dems renew effort to curb private equity with Stop Wall Street Looting Act

Marco Bello/Bloomberg

A large group of congressional Democrats led by Sen. Elizabeth Warren, D-Mass., are reintroducing the Stop Wall Street Looting Act, a bill that would crack down on private equity misconduct. 

The updated version of the bill — which includes imposing penalties on private equity executives who cause a patient's death via their behavior in a health care business, such as a nursing home or hospital — specifically responds to the bankruptcy of Steward Health Care. 

The health care chain and its former private equity backer, Cerberus Capital Management, has faced scrutiny in Massachusetts for its finances, specifically those "bolstered by risky real estate deals," The Boston Globe Spotlight team reported. 

"For over five years, this political bill has failed to gain bipartisan support in Congress because it's real impact would be to Stop Main Street Investment," said American Investment Council President and CEO Drew Maloney, in a statement. "Across America, private equity is fueling small businesses, jobs, and retirements – especially in Senator Warren's home state of Massachusetts."

While the specific bill only addresses banks to the extent they interact with private equity firms, it represents a growing concern among progressive Democratic lawmakers about how private equity — and, by extension, their banking partners — interacts with consumer-facing businesses. 

The issue is trickling up into the presidential race as well. Vice President Kamala Harris has made Wall Street ownership of rental housing a part of her pitch for her "opportunity economy." 

"Some corporate landlords, some of them buy dozens, if not hundreds, of houses and apartments, then they turn them around and rent them out at extremely high prices," she said in an August speech. "And it can make it impossible, then, for regular people to be able to buy, or even rent a home." 

She also called on Congress to pass the Stop Predatory Investing Act, a bill introduced by Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and other Democratic lawmakers. The bill would prevent an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties. 

Building on that, she called on Congress to pass the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act, a bill from Sens. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, and Peter Welch, D-Vt., that would make it illegal for rental property owners to use companies that coordinate rental housing prices. 

It's a growing refrain within the populist wings of both the Republican and Democratic parties. 

"This issue of housing — and I think those of you listening on this — the problem we've had is that we've got a lot of folks that see housing as another commodity," said Tim Walz, Harris' running mate, at the vice presidential debate in early October. "It can be bought up, it can be shifted, it can be moved around. Those are not folks living in those houses." 

Former President Donald Trump's running mate, JD Vance, has also alluded to similar thinking, although at the same debate, he largely blamed immigration for high housing costs. 

"We should get out of this idea of housing as a commodity," he said.