carolyn maloney

Description

On 5/23/13, the House Financial Services Committee discussed several bills to further deregulate Wall Street, Private Equity, and large corporations (see complete list at: http://financialservices.house.gov/uploadedfiles/052313_cm_memo.pdf). One of them discussed, HR1105 (http://www.govtrack.us/congress/bills/113/hr1105/text) would exempt nearly all private equity fund advisers from the registration requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act. In the clip, Rep Carolyn Maloney asks Damon Silvers of the AFL-CIO to discuss the downsides of HR1105. She also asks Thomas Quaadman of the Chamber of Commerce (a front group for the world's largest and most powerful corporations) to weigh in. In a very telling part of Thomas Quaadman's response, he deeply praises Rep Jim Himes (D-CT) for his support of this deregulatory bill. More on HR 1105: Dodd-Frank requires the registration of advisers to private equity funds if those funds have more than $150 million in assets. H.R. 1105 would exempt advisers to private equity funds from registration, unless that fund has a leverage ratio of more than 2 to 1. However, the "leverage test" that the bill has does not provide protection, because these funds don't issue debt at the fund level. From Damon Silver's testimony (http://financialservices.house.gov/uploadedfiles/hhrg-113-ba16-wstate-dsilvers-20130523.pdf): "This limitation is also an illusion, clearly drafted in bad faith, because it applies to leverage at the fund level, and only to 'private equity funds.' Investment partnerships that pursue private equity strategies—which is public relations code for leveraged buyouts rarely utilize debt at the fund level. The vast majority of borrowing in private equity transactions occurs at the portfolio company level, in their operating subsidiaries, not at the fund level.11 Often advisers are subject to explicit contractual limitations on leverage at the fund level that are agreed to with tax-exempt investors to allow them to avoid paying 'unrelated business income tax (UBIT)'."