Private equity acquisitions may be contributing to a widening of the nations income gap by enriching the few without benefiting American workers and that perception could spur a legislative response, Rep. Barney Frank, D-Mass., said today at a House Financial Services Committee hearing.
We do have a concern about the impact on workers, said Mr. Frank, chairman of the committee. To the extent we see gross imbalances, were going to have to act.
But Douglas Lowenstein, president of the Washington-based Private Equity Council, a newly formed organization representing key private equity firms, testified that a crackdown on private equity acquisitions would not eliminate income inequality. He also said that tens of millions of Americans are benefiting from pension plan and endowment investments in private equity.
These investors seek out private equity because the return on investments made in private equity funds far outstrips that delivered by many other investment opportunities, including the public markets, Mr. Lowenstein said.