Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, along with six other Democratic senators, reintroduced the Stop Wall Street Looting Act on September 24. The bill, first proposed in 2019, would fundamentally alter the private equity business model by making buyout firms, their general partners, and other insiders liable for the debts, court judgments, and pension obligations of the companies they control. Limited partners—such as pensions, endowments, and individual investors who do not participate in management—would be exempt from this liability.
The legislation also targets the carried interest loophole, which allows fund managers to pay capital gains rates on their 20% share of profits, rather than ordinary income rates. Additionally, the bill would require fund managers to disclose fees, returns, and loan terms, extending into the fast-growing private credit market. For firms receiving federal or state money, the bill would mandate reporting on how those funds are spent and prohibit acquisitions or investor distributions for two years after receipt.
One provision with broad implications for individual investors involves real estate investment trusts (REITs). The bill would repeal the 20% pass-through deduction for all REIT investors, a tax break introduced under the 2017 Tax Cuts and Jobs Act. It would also cut off federal health program payments to providers that sell property to a REIT or pledge property as collateral for a REIT loan.
Warren first introduced the bill in July 2019 during her presidential campaign, co-sponsored by then-Senator Sherrod Brown and others. In a Medium post at the time, she compared private equity firms to vampires, saying they "bleed the company dry and walk away enriched even as the company succumbs." The bill was reintroduced in October 2021 and again in October 2024, but has never advanced.
The latest reintroduction comes as private equity assets have surged from $4.5 trillion in 2020 to more than $9 trillion in 2025, according to the bill's sponsors. The sector is poised to expand further into retirement savings, following a Trump administration executive order last year that encouraged including alternative assets like private equity in 401(k) plans. This has raised concerns among proponents of the bill, who argue that workers' retirement savings should not be put at risk.
Oscar Valdés Viera, a senior policy analyst at Americans for Financial Reform, a progressive nonprofit, said in a statement: "Workers should not be forced to risk their jobs, their communities, and now their retirement savings to subsidize Wall Street’s destructive business model."
Industry groups have opposed the bill since its inception. In 2019, Drew Maloney, then president of the American Investment Council, called private equity "an engine for American growth and innovation," and argued that "extreme political plans only hurt workers, investment, and our economy." The council noted that PE-backed companies in Massachusetts employed nearly 400,000 people. Industry executives also argue that buyouts often rescue companies that would otherwise fail.
Thomas Schatz of Citizens Against Government Waste, a fiscal watchdog, wrote in 2021 that the bill's name unfairly paints all financial services as predatory. He pointed out that private equity returns support public retirement systems in California and New York, as well as the Massachusetts Pension Reserves Investment Management Board, meaning retired teachers and public workers could be harmed.
As private markets continue to gain traction in advisor portfolios, the debate over regulation intensifies. Advisors are being urged to treat private markets as portfolio construction, not just product picks, and allocations have hit record levels amid concerns about AI concentration. The outcome of this legislative push could reshape how advisors incorporate these assets.
