It’s Time To Target Cerberus, the Private-Equity Firm That Dominates the Gun Industry

Spitzer
How to Make Government Work
Dec. 17 2012 2:19 PM

It’s Time To Target Cerberus, the Private-Equity Firm That Dominates the Gun Industry

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A Bushmaster rifle on display at the 135th National Rifle Association annual convention.

Photo by JEFF HAYNES/AFP/Getty Images

Maybe this time really is different, and the legislative wheels will begin to turn, producing simple and sensible progress on gun control. The conversions of Joe Scarborough and Sen. Joe Manchin make me think this is finally a possibility.

But if Congress doesn’t act, here are two other ways to approach the issue. First, let’s bring pressure to bear on the owners of the gun companies—Cerberus Capital in particular. Cerberus is a $20 billion private-equity firm that has acquired several of the top gun manufacturers over the past years, bundling them together into one entity called the Freedom Group. (See Natasha Singer’s excellent story in the New York Times.) What Cerberus hope to gain from the concentration of ownership is a bit unclear but irrelevant. Cerberus gets its capital from traditional sources, institutional investors such as pension funds and endowments and a few select wealthy individuals. While Cerberus, whose array of holdings is vast, is generally immune to public pressure and the opprobrium of trafficking in products that while legal may be marketed in a loathsome way, Cerberus would not be immune to pressure brought by its own investors. The irony is that it was tougher to rent a car from Cerberus when it owned Alamo than to buy a semi-automatic. To rent a car, one had to provide ID, a drivers’ license, and get insurance coverage. To buy a gun? Cash and carry, from the back of a station wagon at a gun show. No concerns about downstream liability or risk.

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Cerberus’ investors are indirect owners of Bushmaster, the company that made the weapon that brought evil to Newtown, Conn. It is time to determine pension fund by pension fund who has invested in Cerberus and bring pressure on those investors either to get out of Cerberus or have Cerberus change the way it runs the gun industry. If a major union pension fund or university endowment has an investment with Cerberus, it surely doesn’t want to be tarred as a passive owner of the company that sells semi-automatic weapons with no background checks or concern for the use of the weapons. Those investors have enormous leverage over the Cerberus. And all those investors collectively, if they spoke with one voice to the management team at Cerberus, could wield vast power. Ownership has both responsibility and power. It is time for every comptroller and pension fund manager with an investment in Cerberus to use that power.

And it is time for those of us on the “outside” to find out who those investors are, so that we can prod them to act. Every student at a university should ask the university if it is invested in Cerberus. Every member of a union should ask their pension-fund managers if they are invested. Information is the key first step. From there, action will quickly follow.

Second, we should revive an idea first raised by the late, great Sen. Daniel Patrick Moynihan: bullet control. There may be too many guns to rid the streets of guns, but there are not that many bullets, especially in the calibers needed for the types of weapons used in these shootings. Let’s create a regime that makes sale of bullets to anybody not licensed to carry a gun illegal, makes resale illegal, micro-stamps bullets so they can be traced. No Second Amendment issues here. This would have a remarkable impact on both violence and the capacity to solve shooting crimes. Let’s turn the NRA catchphrase that “guns don’t kill people” against them. Because they may be right: Bullets kill people. Regulate them and limit their sale.

It is time to go beyond the linear debate about the few minimum gun-sale limitations that Congress may agree to. Pressure the companies that own and market to change their habits and control the sale of bullets.

Eliot Spitzer, the former governor of the state of New York, hosts Viewpoint on Current TV. Follow @eliotspitzer on Twitter.

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