Warren of Massachusetts and Ocasio-Cortez of New York said Tuesday that with smaller companies falling victim to the economic turmoil at a higher rate, large corporations with cash reserves bolstered by up to $4 trillion in Federal Reserve lending could increase their power over the U.S. economic landscape.
“As we fight to save livelihoods and lives during the coronavirus
pandemic, giant corporations and private equity vultures are just
waiting for a chance to gobble up struggling small businesses and
increase their power through predatory mergers,” Warren said in a statement.
The proposal would face extremely long odds in the Republican-controlled Senate and with President
It comes as Democrats are seeking to consolidate the party for the November election for president and Congress and come up with a united plan in Congress to tackle the economic fallout from the health crisis. Warren, one of the leading progressive candidates in this year’s Democratic presidential field, endorsed moderate Joe Biden this month after both she and Senator Bernie Sanders, who had been a standard-bearer for the party’s liberal wing, dropping out of the race.
Biden is courting his party’s left wing, and so is House Speaker
The bill would put a hold on mergers and acquisitions involving large companies until the Federal Trade Commission “determines that small businesses, workers and consumers are no longer under severe financial distress,” according to a summary. The proposal was first reported by NBC News.
The idea has the support of House Judiciary antitrust subcommittee Chairman
A summary of the bill on Warren’s website cites private equity and technology companies, as well as drugstore chain Rite Aid Corp., as entities that may be looking to make acquisitions.
The moratorium would apply to companies with more than $100 million in revenue, financial institutions with over $100 million in market capitalization, as well as private equity companies, hedge funds, “companies with an exclusive patent that impacts the crisis, like personal protective equipment,” and transactions that must be reported to the Federal Trade Commission.
It would direct the FTC to “establish a legal presumption against mergers and acquisitions that pose a risk to the government’s ability to respond to a national emergency.”
House Majority Leader
The bill was hailed by Sarah Miller, executive director of the American Economic Liberties Project, a nonprofit group that aims to rein in corporate power.
Bills already passed by Congress to bolster the economy amid the crisis “supercharged big corporations’ and Wall Street’s ability to prey on and abuse small businesses and the communities they support,” Miller said in a statement.
Given the long-shot nature of the bill, initial financial sector reaction was muted.
“It doesn’t seem that the market is overall too concerned about this right now,” said
(adds Cicilline, consultant comment starting in eighth paragraph)
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