Private Equity need regulating...

From In These Times:

In "Pirates of Private Equity," contributing writer Adam Doster investigates how private equity firms are changing the American economy. As a special bonus for our e-newsletter subscribers, here's a behind-the-scenes Q & A with Adam about this contentious topic.

In "Pirates of Private Equity," you wrote: "To even the playing field with publicly traded companies, lawmakers could write or amend legislation that would subject private firms to more rigorous monitoring." What do you see happening there?
I would hope that private equity funds, especially those that sell their securities to the public, would be forced to tolerate investor security rules just like other investment companies. I [also] hope Congress will take this opportunity to be creative in the way it safeguards working people and pension holders.

You also quoted Kelly Candaele, a trustee of the L.A. City Employees' Retirement System, who says that "the labor movement needs to know much more about how finance works in order to be competitive." In what ways will this help American workers?
What [I found] most encouraging about my research was that so many unions are taking the time to study these relatively new and secret capitalist innovations by hiring finance experts to do research and then passing along that information to the rank and file, who are ultimately impacted. I think that's a great first step to [eliminating] some of the asymmetry in information that puts union members behind the eight ball during bargaining and organizing campaigns.

What do you see in the future for private equity firms? Will they continue to grow?
That's a question that people far smarter than me still can't figure out. Certainly, this summer's credit crunch put a crimp in the popularity of private equity buyouts, but statistics show that support from institutional investors remains high. And as long as Democrats in Congress fail to close the industry's illogical tax breaks or add layers of needed oversight and regulation, the investment disincentives are still pretty low.

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