McHenry: Private Equity Creates Investment Opportunities that Lead to Jobs
Washington,
November 19, 2019 -
Today, the House Financial Services Committee is holding a hearing on the role of private equity in U.S. capital markets and their impact on the American economy. Committee Democrats attached several pieces of legislation to the hearing for consideration including the House companion to Senator Elizabeth Warren’s bill, H.R. 3848. One study found that in a “modest-case scenario,” the bill would cost the U.S. approximately 6 million jobs and lead to $109 billion per year in lower tax revenue.
Watch the Republican leader of the House Financial Services Committee, Patrick McHenry’s (NC-10), opening remarks here.
McHenry opening remarks as prepared for delivery:
“Thank you, Madam Chair, and thank you to all the witnesses for appearing today.
“While my Democrat colleagues are just down the hall attempting to undo the 2016 election, it appears Financial Services Committee Democrats are working to predetermine the 2020 Democrat nomination for their party.
“Today’s hearing is devoted to H.R. 3848, the House companion to Senator Warren’s bill and a key tenet of her presidential platform. Moreover, one of our witnesses testifying here today is cited in Senator Warren’s press release as providing the economic “analysis” of the bill and its impact.
“This bad bill strikes at the foundation of American capitalism. A recent, more detailed analysis of the bill found that in a modest-case scenario, H.R. 3848 would reduce the American workforce by 6 million jobs and lead to $109 billion per year in lower tax revenue.
“To repeat, that is the modest-case, conservative estimate. In the worst-case scenario, over 26 million jobs could be lost. To sum up, the Warren bill, if enacted, would be a disaster for American workers.
“Congress should be focusing on policies that make American capital markets more attractive and more competitive, rather than bills that add regulatory cost and harm our markets and hurt jobs. Good policies, such as bipartisan bills we passed last Congress, will lead to greater opportunity and choices for everyday investors to grow their savings.
“Instead, this Committee wants to use full committee hearing time to allow my colleagues on the other side to vilify the private equity industry.
“There will likely be several misconceptions presented today by my Democrat friends, so I want to use my remaining time to clear up a few of them in advance.
“First: private equity is not just large investors buying out large public companies. Generally speaking, “private equity” should be viewed as all sorts of private investment, from venture capital to capital injections for small businesses that need it to buyouts of companies with potential that have been mismanaged for decades.
“Second: Private equity’s business model does not involve intentionally bankrupting companies. Private equity makes money by making successful investments and creating value.
“A third misrepresentation my Democrat friends will talk about today is that private equity only benefits Wall Street and the rich. This is incorrect. Private equity creates investment opportunities that lead to jobs. According to a recent Ernst & Young study of the impact of private equity in the U.S. last year, private equity supports at least 100,000 jobs in twenty-seven states, and over 10,000 jobs in each state.
“Additionally, everyday Americans directly benefit from private equity through their pensions. According to a recent study performed by the American Investment Council, U.S. public pension funds invest 8.7% of their portfolios in private equity, and, that same study found apart from fees public equity on average outperformed investments in public equity, fixed income, and real estate investments over the last decade.
“That means that everyday Americans – teachers, firefighters, and police officers have safer and more prosperous retirements.
“But don’t take my word for it. The Chief Investment Officer of CalPERS recently said the following: “we need private equity to be successful, we need more of it, and we need it sooner rather than later.”
“With that said, I do want to note: private equity has become more important in the American economy due in no small part to the increased regulatory barriers imposed on public companies. This Committee should be focused on removing those barriers, not have a presidential rally for Senator Warren.”
