CFA was among 17 public interest groups that wrote to top Federal Reserve System officials urging them to ensure that private equity firms are not permitted to drain funds intended for Main Street businesses as part of the federal government’s COVID response. The groups warned that current rules were not sufficient to “protect public funds from being diverted from their public purpose by the private equity owner.”

“We urge you to maintain strong affiliation rules in order to continue to focus the MSLP on genuine middle market companies, and, in the event that the Federal Reserve allows private equity firms to access the public funds made available in the program, to take steps to eliminate the ability of the parent fund to misuse or drain loan proceeds from the portfolio company and avoid liability for paying back the loan. Finally, we urge you, again, to impose meaningful conditions around retaining jobs, worker safety, or adequate protections against diversions to executives for all companies, including those that are owned or controlled by private equity firms,” the groups wrote.