Wall Street is driving retail bankruptcies
When Toys ‘R’ Us shut down in 2018 and 33,000 of us lost our jobs, we had a vision to change our laws to prevent other working people and their families from going through the struggles and pain that we went through. The Stop Wall Street Looting Act is groundbreaking legislation introduced in July 2019 to stop Wall Street from destroying our jobs and our communities for profit.
In the past 10 years, a staggering nearly 600,000 people working in retail have lost their jobs, livelihoods and financial security for themselves and their families at retail companies owned by private equity firms and hedge funds. This massive extraction of wealth by a few very rich people from millions of Americans MUST STOP.
These billionaires have paid off our politicians and engineered our laws to make it easier to buy and pillage our companies, line their own pockets, and escape with no consequences when our companies fail and our jobs are destroyed. They walked away with millions while leaving us with nothing. More than 5.8 million Americans, including disproportionate numbers of women and people of color, work at companies owned by private equity and hedge funds where they are vulnerable to these predators destructive tactics.
The Stop Wall Street Looting Act Would:
Stop Wall Street from destroying jobs for profit
Looting companies would no longer be profitable and Wall Street owners would share liability if things go wrong.
Protect pensions from reckless fund managers
Private equity fund managers would be forced to be transparent and could no longer give incomplete information to investors.
Put workers first in the event of bankruptcy
Laws would change to protect workers’ severance and pensions.
What are private equity and hedge funds?
Private equity firms are shadowy investment firms that buy companies only to saddle them with debt, forcing them to sell off real estate, dump their retirement obligations, and lay off workers just to turn a quick profit. It keeps happening. Of the 14 largest retail bankruptcies since 2012, 10 were at private equity-acquired chains. Meanwhile, loopholes and tax and regulatory provisions incentivize this destructive behavior, and allow private fund executives to avoid paying their fair share of taxes.
Hedge funds often employ the same destructive tactics. Eddie Lampert, through his hedge fund ESL, was a major player in the looting of Sears. 250,000 people lost their jobs since ESL took over Sears after and merged it with Kmart.
Private equity and debt
Private equity firms use huge amounts of debt to buy companies by borrowing money that the company, not the private equity firm, is responsible for repaying. This provides an excuse to cut wages and benefits and avoid investing in the company. It is usually not a surprise that those companies eventually go bankrupt and leave their employees with nothing. Suppliers and investors like pension funds also suffer huge losses.
But these predatory billionaires cash out. This is not limited to retail but has destroyed jobs and lives in other industries like media, manufactured housing, talent agencies, and single-family homes. Private equity firms have over and over again chosen to focus on wealth extraction, rather than building and improving businesses they acquire.
Wall Street’s expansion into retail and risky deals have led to more than half a million retail job losses in the last decade. The stakes are high for the one million additional people working in retail who could lose their jobs and livelihoods in the coming years. We must regulate private equity firms and hedge funds in order to curb these high-risk financial practices that extract wealth, destabilize employers, and hurt working people.
A path forward
Wall Street has become TOO BIG and TOO POWERFUL. Private equity firms impact everything about our lives – these predatory institutions not only have their hands in retail bankruptcies but also in dirty fossil fuels, predatory payday loans, and for-profit private prisons and detention centers. The “Stop Wall Street Looting” Act would prevent billionaires from continuing to destroy our jobs and our communities. If you are ready to fight back join us today.
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