You had to know this was coming. Steven Lerner, who runs the private equity watchdog part of labor union SEIU, has just issued a statement related to the possibility that KKR or another PE firm (J.C. Flowers, Bain, Hellman & Friedman…) may buy a piece of Lehman Brothers. Here it is:
The Lehman Brothers scramble is not the time to allow KKR or other buyout firms to break into banks. And under no circumstances should taxpayers underwrite a marriage between banks and buyout firms.
KKR and other buyout firms have made clear their intention to move into banks – and are lobbying hard to tear down important regulatory safeguards. But with their risky debt strategies, exorbitant fees, and poor track record outside their core business, buyout firms like KKR represent the worst of Wall Street.
A lack of transparency and a failure to responsibly regulate risk helped get us into this mess. It would be exactly the wrong response to throw open the doors of our financial infrastructure to secretive, risk-happy buyout firms.
Finally, even if buyout firms are not part of a potential deal, taxpayers should be left out of the Lehman mess. At a time when Americans are watching the values of their homes and 401(k)s drop, and the costs of their bills rise, the Fed should not ask taxpayers to pay for the reckless behavior of bankers and buyout firms, and the failure of regulators to regulate.”
I like Steven personally, and think he often makes salient points on behalf of SEIU members who work for PE portfolio companies (particularly those members who are subcontracted). But “Buyout firms like KKR represent the worst of Wall Street…”
Really Steven? Seems to me that at least the buyout firms have mostly managed to remain solvent, have produced positive returns for their investors and aren’t asking for government bailouts. Sure PE firms have made bad deals, but not when judged against most of Wall Street. In short, the PE firms have been more responsible. It may be tough for the SEIU to swallow, but that’s just how it is.