Andy Stern, of SEIU, King of Back Room Regulations

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

WASHINGTON, Aug 22, 2008 /PRNewswire-USNewswire via COMTEX

-- 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.

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 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.

SOURCE Service Employees International Union
http://bigbadbanks.org/