They may not be blaming him for making their lives more difficult -- yet. But rivals at private equity firms sure wish that Stephen Schwarzman, the founder and CEO of buyout firm The Blackstone Group, would get his name off the front pages.

Such were the sentiments of four private equity executives at major buyout firms interviewed by Reuters on Friday, a day after two powerful U.S. senators introduced a bill that would tax publicly traded private equity firms at a much higher rate than they pay now.

That was enough to have some of the biggest private equity firms immediately reconsider plans for public offerings. Apollo Management, Kohlberg Kravis Roberts & Co. and TPG Capital have all pulled back from plans for public offerings because of the tax bill, according to two bankers familiar with their efforts who spoke to Reuters on Friday on the condition they not be named. The firms declined to comment.

The bill comes after heavy media coverage over the last several months detailing Schwarzman's lavish lifestyle and after disclosure on Monday that he will be worth more than $7.7 billion after Blackstone's IPO, expected in the next few weeks.

Buyout executives, who also did not want to be named, said the attention he seized was not good for the industry's image. That regret only deepened with the introduction of what's being dubbed the Blackstone bill.

There is not a lot of sympathy for private equity because we are so highly compensated, said one executive of a leveraged buyout firm and hedge fund. But it really throws fuel on the fire when you rub people's noses in it.

Even more annoying for buyout firms seeking to go public is that while they would be taxed immediately if the bill passes, Blackstone is grandfathered into the bill, meaning the tax hike would not hit them for another five years.

It won't curtail the pricing of (Blackstone's) offering. If anything, it may cause peers to reconsider, said Richard Peterson, chief market strategist at Thomson Financial.

Blackstone declined to comment for this story.

Frothy debt markets and a steady economy have allowed private equity firms to earn huge sums of money in the past few years. Historically, buyout firms stuck to private transactions and remained largely out of the headlines.

But private equity's pursuit of large, publicly traded companies in the last year brought the sector out in the open. And media coverage of Schwarzman's multimillion dollar birthday party and his personal wealth shined an even brighter spotlight on the industry.

Like anything else in life, this just built up over time, said a private equity banker, also referring to the bill. I think a lot of people wished he hadn't done this, hadn't done that.

But the banker added that he didn't think that people were blaming Schwarzman for the recent tax issue.

In fact, fear of federal scrutiny has been percolating in the buyout community for at least a year, with Carlyle Group co-founder David Rubenstein among the biggest advocates of improving the industry's image.

That concern led to the formation late last year of the Washington D.C.-based Private Equity Council, a trade group whose mandate is to conduct research highlighting the industry's contribution to the economy and provide information to policy makers.

But the Private Equity Council was of little help on Friday, when they declined to comment for the second day in a row on the pending legislation.

The PEC's silence may reflect division among member firms over the legislation, with some enjoying the grandfather clause and others left behind.

Any membership organization has to find consensus and often there are diverse views. That's the risk you run with a membership organization, said Richard Myers, an executive vice president at PR consultants Edelman.

The fear among buyout executives is that legislation will extend from those seeking IPOs to raising taxes on all firms' profits.

Still, some were prepared to give Schwarzman at least a partial pass for now. Undoubtedly the attention on Steve increases the interest level from regulators and lawmakers somewhat. Some may blame him, but that's a little harsh, said one executive at a major rival.

(Additional reporting by Lilla Zuill, Jonathan Keehner, and Dan Wilchins)

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