Warren likens private equity to 'vampires' in plan targeting Wall Street 'looting'

close

Video

Fox News Flash top headlines for July 18

Fox News Flash top headlines for July 18 are here. Check out what's clicking on Foxnews.com

Sen. Elizabeth Warren, D-Mass., unleashed a sweeping attack on the financial sector Thursday, demonizing private equity firms and accusing Wall Street of "looting" the U.S. economy.

"For decades, Washington has lived by a simple rule: If it’s good for Wall Street, it’s good for the economy. But it just isn’t true," Warren tweeted. "Big banks are making record profits and handing out huge bonuses as average wages barely budge."

The 2020 hopeful's new plan for Wall Street expands on her vision for "economic patriotism" by imposing several restrictions on private equity firms, which she compared to "vampires."

"Private equity firms raise money from investors, kick in a little of their own, and then borrow tons more to buy other companies. Sometimes the companies do well. But far too often, the private equity firms are like vampires — bleeding the company dry and walking away enriched even as the company succumbs," her plan read.

WARREN CALLS FOR REPLACING COMMERCE DEPARTMENT IN JOBS PLAN

Warren's plan would extend private equity's responsibilities to debts of the companies they invested in as well as those companies' pension obligations. Several of her provisions also focus on regulating relations between firms and others.

For example, she wants to prevent "lenders and investment managers from making reckless loans to private equity-owned companies already swimming in debt." Firms, under her plan, also wouldn't be able to charge monitoring fees.

Warren portrayed her proposals as a way to recalibrate the economy amid over-indulgent activities by financial firms.

ELIZABETH WARREN PROPOSES BREAKING UP BIG TECH GIANTS, INCLUDING AMAZON AND GOOGLE

But according to the American Investment Council (AIC), a pro-private equity group, Warren's plan could end up doing more harm than good.

“Private equity is an engine for American growth and innovation - especially in Senator Warren’s home state of Massachusetts. Extreme political plans only hurt workers, investment, and our economy," Drew Maloney, AIC CEO and former Assistant Secretary of the Treasury for Legislative Affairs, said in a statement provided to Fox News.

The Chamber of Commerce similarly blasted Warren's plan as "another brick in the wall to stop growth, job creation, and creating return for retirement."

Private equity has also doubled over the last decade and invested more than $3 trillion in the U.S. economy from 2013-2018. And private equity-backed businesses provided the U.S. economy with employment for more than 5.8 million Americans, Maloney's group claims.

ELIZABETH WARREN'S ATTENTION-GRABBING PROGRESSIVE PLAYBOOK

Warren's home state of Massachusetts benefited heavily from private equity, with 341,000 jobs backed by firms and $165 billion in investments.

But according to Warren and Sen. Bernie Sanders, I-Vt., Wall Street was at a point that it created a lop-sided economy that benefited itself at the expense of the American people. Billionaire and investment guru Warren Buffett drew headlines in May when he also cautioned against utilizing private equity, saying he saw proposals with dishonest calculations.

"The purpose of the financial sector is to connect savers with borrowers as efficiently as possible and to spread risk," Warren said in her policy proposal.

"A growing financial sector can help the rest of the economy if it helps connect more people more efficiently and spreads risk more effectively. But, as several studies have shown, past a certain point, the growth of the financial sector undermines the rest of the economy by extracting money from it without producing any real value. America is well past that point."

WARREN RELEASES TAX RETURNS SHOWING MILLION-DOLLAR INCOME, MOMENTS AFTER PITCHING WEALTH TAX

Warren and Sanders have been bringing criticism of financial sector to the fore, teaming up with freshman Rep. Alexandria Ocasio-Cortez, D-N.Y. She and Sanders, for example, pushed a proposal that would cap interest rates at 15 percent.

Warren indicated the battle against Wall Street was personal, recalling earlier in June how her mother helped keep her family afloat by taking a job at Sears.

CLICK HERE TO GET THE FOX NEWS APP

The department store giant had been ripped of by a private equity firm, according to Warren, costing hundreds of thousands of employees their jobs.

In a joint video from May, Ocasio-Cortez and Warren railed against Sears' former management which included Treasury Secretary Steve Mnuchin. Both sent a letter to Mnuchin requesting more information about Sears' bankruptcy and suggesting he might disadvantage Sears' workers while in the Trump administration.