Marc Rowan, a potential candidate for one of the most influential economic roles within the U.S. government, is the Chief Executive Officer of Apollo Global Management, a titan in the private equity realm known for its aggressive, profit-driven ethos. At the age of 62, Rowan's potential appointment to Donald Trump's Cabinet could signify a significant triumph for a sector of finance that wields considerable power and is often the subject of public disdain.

Should Rowan be nominated and confirmed as Treasury Secretary, he would have direct authority over the Financial Stability Oversight Council, which is ostensibly in charge of monitoring the "nonbank" financial sector, including the private equity industry where he is a prominent figure. The Treasury Department also encompasses the IRS and the Office of the Comptroller of the Currency (OCC), which is tasked with bank regulation.

More importantly, as Treasury Secretary, Rowan would be in a position to ensure that these regulatory entities continue their historical approach to private equity, which has been one of minimal interference, regardless of the political administration. "The regulation is virtually nonexistent," remarked Bill Lazonick, head of the non-profit Academic-Industry Research Network. "You can't even discern what private equity possesses—everything is concealed by an array of transactions and corporate structures."

It is impossible to predict the kind of Treasury Secretary Rowan would make if selected. It is not unusual for industry leaders to join the governmental bodies that oversee the companies they once led, with their track records being, to put it mildly, inconsistent. With an estimated personal wealth of $11 billion by Bloomberg, Rowan, as the nation's Treasurer, would be well-placed to mitigate any regulatory efforts aimed at Apollo and other major private equity firms such as KKR, Blackstone, and the Carlyle Group. Apollo has chosen not to comment on the matter.

Private equity firms, along with hedge funds and venture capital firms, constitute the enigmatic sphere of "private capital"—a market valued at over $24 trillion, according to EY research. This figure is roughly equivalent to half the size of the U.S. stock market, which is public and primarily overseen by the Securities and Exchange Commission. The term "private equity" has an almost poetic ability to obscure, causing most individuals to tune out when they hear it. This is intentional. "It is an industry that prefers to operate discreetly," stated Megan Greenwell, a journalist and author of the upcoming book "Bad Company," which delves into the world of private equity. "People may not be aware of the extent to which private equity impacts their lives until a crisis occurs."

In essence, private equity firms (also known as "leveraged buyout" firms) invest in companies that are struggling and not publicly traded, restructure their operations, and then sell them for a profit. This may sound reasonable, but there is a reason why workers often view private equity negatively. To acquire a company, a private equity firm typically uses debt financing, which means borrowing money from a bank.

This debt then appears on the balance sheet of the company that has been acquired and is repaid using the business's own revenue. For instance, when a buyout firm bought Red Lobster a decade ago, it profited by selling the company's real estate. Subsequently, Red Lobster was obligated to pay rent on properties it had to give up, significantly increasing its operational costs. Companies that are targets of private equity often resort to layoffs and other drastic cost-cutting measures to service the debts imposed by their private equity owners, in an attempt to avoid bankruptcy. (However, research indicates that the bankruptcy rate for companies acquired by private equity is ten times higher than that of comparable companies not targeted by private equity.)

"Placing a private equity executive at the helm of the Treasury Department would be catastrophic for the American public," Dennis Kelleher, CEO of the non-profit organization Better Markets, which advocates for robust market regulations, stated in an email. "The private equity sector is woefully under-regulated, and its business model relies heavily on extreme leverage and wealth extraction, often at the expense of communities, patients, and workers."

Apollo, which Rowan co-founded in 1990, currently manages over $700 billion in assets and aims to double that amount by 2029. According to Bloomberg, Apollo "established its reputation as the most aggressive private equity and distressed-debt investor on Wall Street by purchasing businesses and burdening them with debt that offered creditors minimal safeguards in the event of default."

Historically, private equity deals were primarily handled by large banks. However, in the aftermath of the 2008 financial crisis, as traditional banks became more regulated and risk-averse, specialized private equity firms like Apollo stepped in to take on deals that traditional financiers were no longer willing to undertake. The industry has since become a concentrated and formidable force in the global economy, with over $8 trillion in assets under management last year.

Private equity firms now hold controlling interests across a wide range of sectors, including supermarkets, housing, healthcare, fashion, restaurants, and veterinary clinics. It is not an exaggeration to say that private equity's financing is incredibly complex and opaque, which is why regulators and some lawmakers have identified the industry as a threat to financial stability. (The Financial Times created the most straightforward flowchart of private equity's intricate financing network, and it remains quite perplexing.)

Democrats, led by Senator Elizabeth Warren of Massachusetts, have introduced legislation that would hold private equity firms accountable for the actions of their target companies and better protect employees whose jobs are eliminated. However, this bill has struggled to gain bipartisan support. Other attempts to increase transparency and accountability in private equity have also faced opposition. Over the summer, a federal appeals court overturned an SEC effort to impose new regulations on the industry.

As of Thursday afternoon, the president-elect had not announced his choice for Treasury, although Rowan was widely reported to be among the top contenders, along with hedge fund manager Scott Bessent and Kevin Warsh, a former investment banker and former Federal Reserve governor. "I believe that if you are concerned about the growing influence of private equity, there is nothing in the current situation that will curb it," Greenwell said. "Perhaps Democrats were not going to slow it down either, but certainly, it will now continue to expand in size, power, and influence."