More than two-thirds of likely voters support tougher restrictions and worker protections on private equity firms, according to a poll released Monday by a financial sector watchdog group.
The poll found wide approval for legislation that would force private equity executives to pay higher taxes on their earnings, pay severance to laid-off workers, and take legal responsibility if a company they own goes bankrupt, violates labor laws or lacks funding to pay worker benefits.
The survey of 1,000 likely voters was commissioned by Americans for Financial Reform, a nonprofit that advocates for tougher financial rules. The online poll was conducted by Democratic polling firm Lake Research Partners and Chesapeake Beach Consulting.
"Private funds now wield enormous influence over the American economy, and the dangers of their current business model are becoming increasingly clear, so voters are overwhelmingly critical,” said Lisa Donner, executive director of Americans for Financial Reform. “We need effective rules of the road to stop predatory practices by these Wall Street giants, which often bring terrible consequences for workers and communities.”
The results come a day before the House Financial Services Committee holds a hearing on the practices of the private equity industry and considers expansive new restrictions.
Private equity firms pool investor money to purchase controlling stakes in companies with the goal of making the business more profitable.
While the industry and supporters say private equity is a crucial force behind job creation and economic productivity, skeptics cite several examples, such as the bankruptcy of Toys 'R' Us, where firms purchased by private equity failed and cut thousands of jobs as its investors made substantial profits.
The poll, conducted in July but released Monday, found broad support among Democrats and Republicans for measures meant to protect workers at firms purchased by private equity investors.
At least 70 percent of Democratic and Republican respondents said they would support laws to require private equity firms to pay severance, make private firms or CEOs legally liable for the firm’s obligations to workers and requires Wall Street private equity executives “to act in the best interests” of investors in their firms.
Several Democratic lawmakers, including presidential candidate Sen. Elizabeth WarrenElizabeth WarrenSenate Democrats propose corporate minimum tax for spending package The Hill's Morning Report - Presented by Facebook - Budget negotiators: 72 hours and counting Democrats face critical 72 hours MORE (D-Mass.), have introduced legislation to crackdown on the industry. Private equity advocates say such restrictions would cost thousands of jobs.
“Millions of teachers, firefighters, police officers and dedicated public servants in all 50 states are now relying on private equity to help deliver a stronger and more secure future for themselves and their loved ones,” said Drew Maloney, president and CEO of the American Investment Council, a trade group representing private equity firms. “Private equity is a driving force for economic growth and opportunity that is investing in communities and it has become vital to the retirement security of American workers.”