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Don't debase private equity in funding infrastructure

Regarding the May 7 Opinion piece, "Main Street, not Wall Street, should fix crumbling US infrastructure" by Kansas Governor Kathleen Sebelius and Service Employees International Union President Andy Stern: The authors' suggestion that public pension funds could be an important new source of capital for public infrastructure projects is one that public officials charged with making these decisions should carefully consider.

However, we take issue with their gratuitous and inaccurate attack on private equity investment partners as short-term profiteers who somehow spawned the subprime mortgage crisis and whose interest in public infrastructure investment should be regarded with, at best, suspicion, or at worst, contempt. The authors well know – or should know – that private equity investors had nothing to do with packaging, promoting, and securitizing consumer mortgages.

The truth is that a raft of independent research conducted by widely respected scholars and institutions demonstrates that private equity firms are long-term investors that significantly improve the performance of the companies they acquire. The research shows that private equity firms have generated hundreds of billions of dollars in profits for their investors – many of which are the public pension funds that Mr. Stern Ms. and Sebelius want to lead into infrastructure investment.

It seems premature to slam the door on what is potentially tens of billions of dollars of investment capital.


 

In response to Kathleen Sebelius and Andy Stern's recent Opinion piece on infrastructure investment: The piece highlights a critical issue but proposes the wrong solution. As a nation, our need isn't more debt. Our need is to prioritize our wants, including the public versus private allocation of resources.

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