Private equity took the heat as members of Congress questioned the industry's effect on retailers and hospitals during a House Financial Services Committee hearing Nov. 19, according to CBS News.
According to a memo prepared for the hearing, buyout firms managed as much as $7 trillion in assets at the end of 2018, up from $1 trillion in 2008.
Lawmakers and private equity representatives sparred over whether new rules are needed to rein in the industry's growing role in the U.S. economy.
Private equity supporters argue that the industry's effect on the U.S. economy is positive because it creates jobs and helps build better businesses.
"Our industry creates jobs, powers the economy and strengthens the retirements of millions of Americans," Drew Maloney, president and CEO of American Investment Council, said in prepared remarks.
However, opponents are calling for new regulations on the private equity industry, arguing that what the industry is doing now is "legalized looting" as investment firms take over troubled companies for a profit.
Presidential hopefuls Sen. Elizabeth Warren, D. Mass, and Sen. Bernie Sanders, I-Vt., are among the lawmakers calling for change.
"Far too often, the private equity firms are like vampires — bleeding the company dry and walking away enriched even as the company succumbs," Ms. Warren wrote in a Medium post in July.
One of the examples brought up at the hearing was the recent closure of the 171-year-old Hahnemann University Hospital in Philadelphia, after it was purchased by private equity firm Paladin Healthcare.
"They didn't lift a finger to do anything to turn around a troubled hospital," Eileen Appelbaum, co-director of the economic policy think-tank Center for Economic and Policy Research, told lawmakers.
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