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Private equity firms are doing their best to avoid the regulation in the development of a news financial system. Discussions about solutions to the crisis barely even mentioned private equity at this stage. However private equity is most certainly part of the financial crisis.

You need not look far to find examples of private equity firms affected by the ‘credit crunch’. Cerberus is the most recent private equity firm to cut up to 10% of jobs within the firm as a result of the crisis. This follows other private equity firms American Capital, Carlyle Group and 3i who cut staff in the last quarter of 2008. Like many other enterprises, private equity firms are affected by the crisis. The difference with between these firms and public companies is that private equity investment practices are part of the reason that both their firms and their investments are struggling.

Cerberus prior to cutting costs within its own firm, lined up for a bailout from the US government to rescue two of its biggest portfolio companies in the auto business, Chrysler and GMAC finance. They received $6billion USD for GMAC and $1.5billion USD for Chrysler from the US government.

As the crisis continues to move into another downward phase the urgency to act is growing. UNI Global Union urges private equity firms to engage in discussions with the labour movement to work together on solutions to struggling portfolio companies.

Encouraging steps have been made at a European level to address private equities contribution to the crisis. In response to requests from the European Socialists Party, European Commission president Jose-Manuel Barroso has indicated a willingness to include private equity as part of a round of discussions on new regulation. UNI Global Union is ready to play a part in this process.