P.M. BRIEFING : Bush Prodded on Buyout Curbs

The chairman of the House Judiciary Committee said today that if the Bush Administration will not act, legislation may be needed to curb leveraged buyouts.

“If the executive branch still refuses to act, then Congress must take the initiative by considering antitrust, bankruptcy and tax legislation to stop the LBO frenzy,” said Rep. Jack Brooks (D-Tex.).

He was speaking at a hearing on Campeau Corp., whose Federated and Allied department store chains filed for Chapter 11 bankruptcy protection earlier this month.

Campeau’s takeovers of the two U.S. retail chains were typical leveraged buyouts--takeovers financed with borrowed money.

Brooks said he was upset because well-run companies were being jeopardized by speculative financing while many of their foreign competitors had government subsidies and protection.

Canadian real estate investor Robert Campeau bought the two big U.S. retail chains by borrowing heavily, and though many of the stores say business is strong, it is not strong enough to pay the crippling interest on Campeau’s debt.

Massachusetts Atty. Gen. James Shannon blamed the Federal Trade Commission for not blocking Campeau’s takeovers and said stronger antitrust enforcement was needed.

“The groundwork for today’s fiasco was laid by the Reagan Administration, which took a hands-off view of antitrust enforcement,” he said.