Marc Rowan, co-founder of private equity firm Apollo Global Management, is calling for the Federal Reserve to expand one of its bailout programs, potentially allowing private equity firms and their portfolio companies to become eligible for support.
In a presentation shared with policymakers earlier this month, Rowan argues that the Fed should broaden the types of collateral it accepts for loans made under its Term Asset-Backed Securities Loan Facility (TALF), a $100 billion fund originally enacted during the 2008 financial crisis to support lenders and reinstated on March 23. Rather than only accepting AAA-rated securities, Rowan argues the Fed should accept “all investment-grade” assets.
Yesterday, in an article about how private equity interests are struggling to find support in D.C. for their bailout pleas, the New York Times got one member of Congress to go on the record in support of Rowan’s plan. “We need to ensure small businesses have access to liquidity, or have the liquidity they need to reopen, and we shouldn’t discriminate against them because of their ownership structure,” New Jersey Democrat Rep. Josh Gottheimer told the Times.
Gottheimer has also recently signed at least two letters to Fed Chairman Jerome Powell in support of expanding TALF. Both letters were also signed by multiple other members of the House Financial Services Committee.
According to Americans for Financial Reform, a nonprofit that supports stricter financial regulations, the private equity industry does not need a bailout.
“Private equity titans are sitting on trillions in undeployed capital, and one of their main selling points is that they can offer the strong financial backing that others can’t,” Americans for Financial Reform spokesperson Carter Dougherty told Sludge. “There is no earthly reason to let private equity-backed companies reach into the taxpayers’ pocket and fill the wallets of an industry with enormous wealth at its disposal.”
Rowan and Apollo Global Management have provided significant financial support to Gottheimer over the course of his congressional career. Apollo Global Management is Gottheimer’s sixth largest contributor since he first ran for Congress, with individuals affiliated with the company giving his campaigns $97,600, according to the Center for Responsive Politics. Rowan, Apollo Global Management’s billionaire co-founder, has personally donated $13,700 to Gottheimer’s campaigns, according to Federal Election Commission records.
The private equity industry has given Gottheimer $308,550 so far this election cycle, more than it has given to any other member of the House, according to the Center for Responsive Politics.
Gottheimer is also co-chair of a centrist voting bloc in Congress that has ties to Rowan and the private equity industry. The Problem Solvers Caucus, which Gottheimer co-chairs along with Rep. Tom Reed (R-N.Y.), was launched with support by No Labels, a 501(c)(4) nonprofit that describes itself as “a movement of Democrats, Republicans, and everything in between, dedicated to the politics of problem solving.” No Labels does not disclose its donors, but internal documents reviewed by the Daily Beast in 2018 revealed that Rowan has backed the group and/or its 501(c)(3) affiliate, the No Labels Foundation. Rowan “gave $150,000 in 2016 and was labeled a ‘reoccuring donor,’” the Daily Beast reported. Other private equity donors include Oaktree Capital Management co-founder Howard Marks, Berkshire Partners co-founder Carl Ferenbach, and Searchlight Capital Partners founding partner Eric Zinterhofer.
In 2018, No Labels Action, the group’s super PAC, spent $377,642 on digital ads and mailers supporting Gottheimer’s re-election. So far in the 2019-20 election cycle, No Labels Action has spent $10,800 on Gottheimer’s behalf.
Dr. Arati Kreibich, who is mounting a primary challenge against Gottheimer, blasted her opponent in a press statement for supporting Rowan’s proposal.
“While Rep. Gottheimer refuses to support crucial COVID-19 relief measures like a rent and mortgage moratorium and additional $2,000/month direct payments, he isn’t hesitating to stand up for his biggest campaign donors: private equity investors,” Kreibich said. “NJ-5 deserves a representative who’s focused on North Jersey’s interests, not Wall Street’s.”
Late last year, Gottheimer formed a joint fundraising committee with two of his colleagues that raised $111,400 from executives and employees of Kohlberg Kravis Roberts (KKR) in the weeks after he defended the private equity industry at a Financial Services Committee hearing. “Our job in the committee is to, of course, make sure we are punishing bad actors while not interfering with those that produce good returns,” Gottheimer said at the hearing, which was focused on how private equity firms often hurt workers at companies in which they invest. Two of the largest private equity firms, The Blackstone Group and KKR, were invited by the committee to appear, but declined to send representatives, Politico reported.
“Wall Street private equity firms don’t need a bailout, they need accountability,” said Bruce Miller, a United for Respect member and former Sears employee who was involved in pushing for a guaranteed severance pay bill that was passed in New Jersey earlier this year. “Working families are struggling to make ends meet, working the frontlines with little to no protection and support, and many are losing their jobs amid this global pandemic because private equity firms are only worried about their bottom line.”
While he pushes the Fed to expand its bailout program, Gottheimer is also leading an effort with Reed calling for state and local aid at levels far less than what Democratic House Speaker Nancy Pelosi (Calif.) is requesting. While Pelosi has proposed appropriating $1 trillion for states impacted by the coronavirus, Gottheimer and Reed are organizing their colleagues around a package that would total $500 billion.
Gottheimer’s office did not respond to a request for comment.
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