Investment firms, private equity advocacy group hire lobbyists as lawmakers target tax loopholes

  • Investment firms and a private equity advocacy group are lobbyists as lawmakers take aim at tax loopholes.
  • Cerberus Capital Management and the Carlyle Group have recently hired lobbyists.
  • The American Investment Council, an advocacy organization that represent the interests of dozens of private equity firms, also made some hires.

Investment firms, incluing Cerberus Capital Management and the Carlyle Group, and an organization that advocates for the private equity industry have recently hired lobbyists as lawmakers take aim at tax loopholes.

Democrats in Congress are looking to close the carried interest loophole, for instance. Rep. Bill Pascrell, Jr., D-N.J., a member of the tax-writing House Ways and Means Committee, and Reps. Andy Levin, D-Mich., and Katie Porter, D-Calif., recently introduced legislation that would close the carried interest loophole.

Carried interest is a portion of a private equity firm's or hedge fund's profits that serves as compensation for fund managers. Carried interest isn't taxed as ordinary income. Instead, it is taxed at the lower capital gains rate.

The American Investment Council, an advocacy organization that represent the interests of dozens of private equity firms, hired lobbyists, as well.

The lobbyists for the firms and the advocacy group registered for their clients in January, according to new disclosure reports reviewed by CNBC.

CNBC reported in January that several Wall Street firms were hiring lobbyists as Joe Biden and Democrats were set to take power in the White House and both houses of Congress. Blackstone, a massive private equity firm, was among the firms hiring lobbyists at the time. Blackstone and the Carlyle Group are also members of the American Investment Council.

Cerberus Capital Management recently hired Hobart Hallaway & Quayle Ventures to lobby on "federal legislation and policies impacting private equity including spectrum related issues," according to a lobbying report.

Cerberus co-founder Stephen Feinberg was once appointed by former President Donald Trump to head the White House's Intelligence Advisory Board. Cerberus focuses in part on what it calls operational private equity, which, according to the firm's website, "differs from standard private equity investing in that sustainable operating improvements and accretive strategic initiatives are at the core of every investment from start to finish."

Cerberus' website says it has invested more than $15 billion of equity into 69 portfolio companies.

Lobbyists from Hobart Hallaway and Quayle who are working with Cerberus have ties to both Democrats and the GOP. ​Rashid ​Hallaway, who is working on the Ceberus account, was previously an an advisor to former Sen. Evan Bayh, D-Ind. Benjamin Quayle was an Arizona Republican congressman prior to becoming a lobbyist.

A 2020 fourth quarter lobbying report shows that Cerberus terminated its previous work with Hobert Hallaway & Quayle in December before appearing to rehire the firm again for the new Congress. Data from nonpartisan Center for Responsive Politics shows that Cerberus spent over $2 million last year on lobbying, including efforts for their subsidiaries.

The Carlyle Group, which was co-founded by former Jimmy Carter advisor David Rubenstein, has hired Marcus Mason of the Madison Group to lobby on its behalf. The new lobbying registration form says Mason, who served as a campaign advisor to former President Barack Obama, will focus on "issues pertaining to private equity, asset management, real estate, and business finance."

"We work with advisors on both sides of the aisle to help us advocate on how policies may impact our business, our companies and the communities in which we serve," Brittany Berliner, a spokeswoman for Carlyle, told CNBC in a statement.

A person familiar with Mason's work said that he has not been asked by Carlyle to lobby on carried interest.

The American Investment Council hired Ogilvy Government Relations to target "legislation affecting the regulation of private equity including tax related issues."

At least two of Ogilvy's representatives for the American Investment Council have ties to current and former senior Democratic leaders, including a former advisor to Sen. Bob Menednez, D-N.J., a member of the Senate Banking, Housing, and Urban Affairs Committee.

A former ​deputy chief of staff to former House Democratic leader Dick Gephardt is also on the new lobbying team hired by the American Investment Council.

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