Private equity goes to K Street
TEXT OF STORY
Scott Jagow: This is the best of times and the worst of times for the world of private investment. Today, The Blackstone Group makes a big splash on Wall Street. It’ll give investors the share price of its IPO. But Congress is taking a hard look at the industry. So what does private equity do? Hire lobbyists. Steve Henn reports from Washington.
Steve Henn: Private equity firms are taxed at less than half the rate of corporations. Their partners usually avoid income taxes entirely.
And that’s grabbed the attention of some powerful members of Congress, and sent industry leaders scurrying to K Street to hire lobbyists and protect their interests.
Douglas Lowenstein: I mean look, it’s undeniable that the environment for private equity today is more hostile than it was four or five months ago. Because four or five months ago, we didn’t have a threat to the tax treatment of the industry.
Douglas Lowenstein is president of the private equity industry’s trade group. It was founded in February.
Lowenstein: We’ve ramped up much more rapidly, frankly, than we planned to.
Part of the problem, according to some industry insiders, is Blackstone’s CEO Steve Schwarzman. They say Schwarzman’s outsized pay package and penchant for over-the-top parties has transformed him into the Paris Hilton of private equity. Folks on the inside say Schwarzman’s attracting so much negative attention, it’s made life a lot tougher for everyone.
I’m Steve Henn for Marketplace.
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