SEIU Proposes New Rules for Private Equity Investments in Nation’s Struggling Banks

    Principles unveiled by fastest-growing union would protect working

families, consumers from risky buyout firms' practices, strengthen

long-standing consumer protections, and ensure safety of nation's biggest

banks



    WASHINGTON, Aug. 22 /EMWNews/ -- With private equity

firms publicly calling for radical change to banking regulations that would

ease their investment into the nation's struggling banks, the Service

Employees International Union (SEIU) today proposed new rules to protect

consumers and working families against the buyout firms' riskiest

practices, strengthen long-standing consumer protections, and support

stronger banks. The new principles called for by SEIU -- the

fastest-growing labor union in the Americas and a leading advocate for

better private equity and banking practices -- directly address recent

moves by a number of leading private equity firms to win special treatment

by the Federal Reserve allowing them to take over commercial banks but

avoid the current transparency and oversight rules by which other investors

must abide.



    "The biggest buyout firms are used to gaming the system to turn a

profit--it's no surprise they want special rules now to take over another

sector of our economy," said Andy Stern, SEIU International Executive

President. "Working families who get up and go to work everyday are

struggling to stay afloat in our economy, and they need higher standards

and stable banks, not backroom regulations that subsidize risky behavior by

profiteering buyout firms."



    Allowing private equity to purchase controlling stakes in large banks

would undermine long-standing banking regulations and consumer protections

by permitting buyout firms to access subsidized funding in the form of

FDIC-insured deposits. Special rules could allow buyout firms to sell

themselves their own debt at a discounted rate from the banks they want to

control. Under the terms called for by the private equity industry, buyout

firms would remain exempt from oversight and transparency rules governing

bank holding companies. This kind of special treatment from the Federal

Reserve could open the door for private equity firms to assume little

responsibility if a bank fails, adding unacceptable risk to taxpayer

bailouts of banks deemed "too big to fail" by federal regulators.



    The new banking principles, entitled "SEIU Principles for Safe Banks

and Fair Lending," are available on http://www.BigBadBanks.org.



    With 2 million members, the Service Employees International Union

(SEIU) is the fastest-growing labor union in the Americas. Together with

consumer advocacy organizations nationwide, we're working to hold big banks

accountable to working families and our communities.