This Patriotic Millionaire calls out Wall Street and wants a debate
Morris Pearl, chairman of the Patriotic Millionaires lobbying group, is unlike many of the wealthy plutocrats that many of us justifiably rail against. To be clear, he is a capitalist. But he’s a capitalist with a conscience, and not an oligarch. In fact, his aim is to prevent the slide toward oligarchy that many believe is occurring—or has already occurred.
Pearl was a managing director at BlackRock, one of the largest investment firms in the world. He worked on the Maiden Lane transactions, and assessing the government’s potential losses from the bailouts of Citibank and AIG. Prior to BlackRock, Pearl enjoyed a long tenure on Wall Street where he invented some of the securitization technology connecting America’s capital markets to consumers in need of credit.
Mr. Pearl was not born poor. His parents were middle-class small business owners of six small clothing stores in upstate New York. He went to public schools and the University of Pennsylvania., where he studied computer science. Additionally, he was in the right place at the right time when asset securitization was becoming the vogue. He made his fortune from his computer skills and securitization of mortgages.
But Pearl, unlike many who have made their fortunes in that domain, has always felt moral responsibility to society at large. He says his desire to do right isn’t altruism. The reality is that he cares about society in general, like any real moral person should.
Morris Pearl and the Patriotic Millionaires are doing an important deed. It is not an exaggeration to state that absent their success, America will continue on an unstable path to increasing inequality, discontent, and instability.
Now, Pearl and his team are ramping up the pressure. They released an open letter challenging the president of the Private Equity Growth Capital Council (PEGCC) on preferential treatment for carried interest. That’s a tax loophole which allows fund managers to pay a lower long-term capital gains tax rate on income from managing a fund, despite having none of their own capital at stake.
In other words, it’s the rich getting—and staying—richer.
I interviewed Mr. Pearl back in November about the genesis of his organization and the release of his organization’s new book, Renegotiating Power and Money in America. The book has a rather prescient passage:
Working together, we can assure the adoption of rational policies that encourage a vibrant economy and the inclusive society the vast majority of Americans want.
Will the fight be hard? Sure, the most important ones are.
Will it be impossible? Not even close. In fact, we could revitalize our democracy, raise millions of Americans out of poverty, and start to reinvest in our country by this time next year if, over the next 12 months, we commit to creating an overwhelming demand—a true public mandate—for economic policies that enrich hard-working Americans and political process policies that facilitate citizen participation in our decision-making.
My interview with Morris Pearl, and the press release containing the challenge, follow. Pearl is strongly against any preferential treatment for carried interest.
FOR IMMEDIATE RELEASE
DATE: 2/23/16
New York, NY – Today, Morris Pearl, Chair of the Patriotic Millionaires published an open letter which challenged Mike Sommers, President of the Private Equity Growth Capital Council (PEGCC) to a public debate on the preferential tax treatment of “carried interest”. The so-called carried interest tax loophole allows fund managers to pay a capital gains tax rate on income from managing a fund, despite having none of their own capital at stake.
Mr. Sommers is the former Chief of Staff to former Speaker Boehner and took over the PEGCC just two weeks ago. The Patriotic Millionaires drew attention to Mr. Sommers new position in a public email titled “Who Is Mike Sommers and Why You Should Care.” which was reported in Politico. The PEGCC is the private equity industry’s leading lobbyist and the top defender of the loophole, which the Patriotic Millionaires call “intellectually indefensible and a prime example of money’s corrupting influence on our public policy.”
The Patriotic Millionaires challenge was accompanied by a copy of a 2015 letter the PEGCC distributed to Congress in defense of carried interest. Throughout the letter, Mr. Pearl offers critiques and commentary, line by line dissecting the lobbying groups assertions.
“We hope that with your new leadership, it might be possible to correct some of the inaccuracies put forward by your organization under your predecessor regarding this policy,” added Mr. Pearl.
The Patriotic Millionaires first began their campaign against the carried interest tax loophole in 2015 which included their members calling Congress, numerous targeted placement of opinion editorials, and a day at the Capitol with Senator Baldwin and Representative Levin in support of The Carried Interest Fairness Act.
We will be following up on this challenge, and ensuring that it gets the coverage that is lacking from our derelict traditional mainstream media. The Patriotic Millionaires are doing their part make this a more equitable country.