View Full Version : Obama's war on private equity is all rhetoric

05-25-2012, 12:36 AM
Link (http://campaign2012.washingtonexaminer.com/article/obamas-war-private-equity-all-rhetoric/559521)

President Obama has promised to run against the private equity industry in which Mitt Romney made his millions. But Obama, amid all his talk of "reform" and battling the special interests, has done virtually nothing to check the supposed excesses of that industry.

"This is not a distraction," Obama said of his campaign's attacks on Romney's private equity career. "This is what this campaign is going to be about." If he follows through, it will be yet another example of Obama governing one way and campaigning another.

Obama's signature financial legislation, the 2010 Dodd-Frank law, did virtually nothing to constrain private equity firms or hedge funds. For one thing, Democrats declined to use the bill to fulfill populist campaign promises and raise taxes on hedge fund and private equity managers.

Most of Dodd-Frank's regulations target investment banks such as Goldman Sachs, commercial banks such as Capital One, and conglomerates of the two forms, such as JPMorgan Chase, Bank of America and Citigroup.

Private equity firms don't take deposits, don't enjoy Federal Deposit Insurance Corp. protection and don't have access to Federal Reserve lending windows. Instead, they raise money from large investors, such as pension funds, and use that money to buy shares in companies that are not listed on public stock exchanges. Often they take public companies private -- meaning they delist the companies from a stock exchange. Dodd-Frank barely touched any of these activities.

"It doesn't really affect us," private equity kingpin Henry Kravis said of Dodd-Frank in January while speaking with Bloomberg News.

Not only does Dodd-Frank have little direct impact on private equity firms, it indirectly helps them by constraining their competition. The law's Volcker Rule limits banks' private equity investing. The result: less competition for PE firms, and thus better deals and expanded opportunities. More at link.
Smoke and mirrors has been a tool used by The Tool's administration.