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Saturday, July 16, 2016

Private Equity Lobbying

The New York Times reports:
Since the 2008 financial crisis, Fortress and other private equity firms have rapidly expanded their influence, assuming a pervasive, if under-the-radar, role in daily American life, an investigation by The New York Times has found. Sophisticated political maneuvering — including winning government contracts, shaping public policy and deploying former public officials to press their case — is central to this growth.

Yet even as private equity wields such influence in the halls of state capitols and in Washington, it faces little public awareness of its government activities, The Times found.

Private equity firms often don’t directly engage with legislators and regulators — the companies they control do. As a result, the firms themselves have emerged as relatively anonymous conglomerates that exert power behind the scenes in their dealings with governments. And because private equity’s interests are so diverse, the industry interacts with governments not only through lobbying, but also as contractors and partners on public projects.
Private equity firms, onetime “corporate raiders” that made their name taking over distressed companies, have pushed into activities previously dominated by banks and local governments. This shift has upended the definition of private equity as the industry expands into real estate, infrastructure and lending.

Today, six other private equity firms are publicly traded, and over 7,500 are in operation worldwide, according to the data provider Preqin — more than ever before. Private equity firms “are ubiquitous, they are everywhere,” said Eileen Appelbaum, a senior economist at the Center for Economic and Policy Research who studies private equity.

Everywhere includes the government. The amount the private equity industry spent on lobbying in 2015 was more than triple what it had spent a decade earlier, according to the Center for Responsive Politics. At the peak of the financial crisis, the figure was even higher. Political donations have increased nearly sixfold. Former House Speaker John Boehner’s chief of staff is now president of the industry’s lobbying group.

That group, the American Investment Council, argues that the public has benefited from private equity. Pension funds have reaped 12 percent net returns from private equity over a recent 10-year period, the group said.