Plunder

1. Private equity firms are transforming America's economy through predatory practices

"With its reliance on debt and fees and its focus on short-term profits, private equity is part of the reason why the quality of care at your dentist's office is going down and why your doctor seems perennially overbooked."

Predatory business model. Private equity firms typically buy companies using borrowed money, then extract value through tactics like:

• Loading companies with debt
• Selling off assets
• Cutting costs aggressively
• Charging high management fees

This model often leads to:

• Declining quality of goods/services
• Job losses
• Bankruptcy of acquired companies

Private equity's reach now extends across industries:

• Retail
• Healthcare
• Housing
• Prisons
• Financial services

2. The housing market has been reshaped by private equity's aggressive acquisitions

"In 2011, no landlord in America owned more than a thousand single-family home rental properties. By 2013, Blackstone bought more than that in a single day, at a cost of over $100 million."

Massive rental acquisitions. After the 2008 financial crisis, private equity firms capitalized on foreclosed homes:

• Bought hundreds of thousands of single-family homes
• Converted them to rentals
• Often with government support (e.g. Fannie Mae)

This has led to:

• Reduced homeownership rates, especially for minorities and young people
• Increased rents and fees for tenants
• Declining quality of rental properties

Private equity firms have also targeted:

• Mobile home parks
• Apartment complexes
• Student housing

3. Retail bankruptcies are often engineered by private equity for profit

"Fully 70 percent of the retail stores that closed in the first quarter of 2019 were owned by such firms."

Extracting value through bankruptcy. Private equity firms often acquire retail chains, then:

• Load them with debt
• Sell off real estate assets
• Cut costs aggressively
• Charge high fees

When retailers go bankrupt:

• Private equity firms often still profit
• Workers lose jobs and severance
• Suppliers and creditors go unpaid

Examples of private equity-driven retail bankruptcies:

• Toys "R" Us
• Payless ShoeSource
• Sears
• J.Crew

4. Private equity ownership of nursing homes has led to declining care and increased deaths

"Private equity ownership was associated with over twenty thousand premature deaths in nursing homes over twelve years."

Profit over care. When private equity firms acquire nursing homes, they often:

• Reduce staffing levels
• Cut costs on supplies and maintenance
• Increase fees for residents

This results in:

• Higher mortality rates
• More health code violations
• Declining quality of life for residents

Private equity tactics in nursing homes:

• Using complex corporate structures to avoid liability
• Extracting profits through real estate deals
• Resisting regulatory oversight

5. Healthcare costs are rising due to private equity's focus on profits over patient care

"After Blackstone-owned Envision took over staffing at nearly two hundred emergency rooms, most—and in some extraordinary cases, all—of their bills became out-of-network surprises."

Inflating medical bills. Private equity firms have acquired:

• Physician practices
• Emergency room staffing companies
• Ambulance services

This has led to:

• Surprise out-of-network billing
• Higher costs for patients and insurers
• Pressure on doctors to increase procedures/billing

Private equity's impact on healthcare:

• Consolidation of medical practices
• Focus on high-margin procedures
• Reduced access to care in some areas

6. Private equity is expanding into risky financial practices with little oversight

"Private equity firms are lending money to companies through the 'private credit' markets, which function as something of an alternative to the stock markets, albeit with far less transparency."

Systemic financial risk. Private equity firms are increasingly:

• Engaging in private lending
• Acquiring insurance companies
• Accessing retirement funds

This expansion creates risks:

• Less transparency than traditional finance
• Potential for overleveraged companies
• Conflicts of interest

Regulatory concerns:

• Private equity often operates outside traditional banking regulations
• Firms may be "too big to fail" without adequate oversight
• Potential for economic instability if private credit markets collapse

7. The prison system has become a lucrative target for private equity exploitation

"If you're incarcerated today, the food you eat at the cafeteria or buy at the commissary may be served by the Keefe Group or Trinity Services Group, both of which are owned by the private equity firm H.I.G. Capital."

Profiting from incarceration. Private equity firms have acquired companies providing:

• Prison phone services
• Food services
• Healthcare
• Commissary items

This has resulted in:

• Exorbitant costs for inmates and families
• Declining quality of services
• Increased financial burden on low-income communities

Examples of private equity in prisons:

• Charging up to $25 for a 15-minute phone call
• Serving low-quality or insufficient food
• Providing inadequate healthcare

8. Private equity wields enormous influence in Congress to protect its interests

"Since 1990, the industry has given over $896 million to congressional candidates and members."

Lobbying power. Private equity firms use their wealth and connections to:

• Influence legislation
• Block regulatory efforts
• Secure favorable tax treatment

Key issues private equity lobbies on:

• Preserving the carried interest tax loophole
• Blocking surprise medical billing legislation
• Accessing retirement funds

Private equity's political influence extends beyond donations:

• Hiring former government officials
• Providing lucrative post-government careers
• Shaping public policy narratives

9. Legal and regulatory systems often favor private equity at the expense of workers and consumers

"Private equity firms have both created and benefited from changes in the law and the legal profession."

Tilted playing field. Private equity benefits from:

• Weakened antitrust enforcement
• Bankruptcy laws that favor creditors
• Forced arbitration agreements

This results in:

• Difficulty holding firms accountable
• Reduced worker and consumer protections
• Increased economic inequality

Legal tactics used by private equity:

• Complex corporate structures to avoid liability
• Forum shopping for favorable bankruptcy courts
• Lobbying for regulatory exemptions

10. Grassroots efforts and policy changes are needed to curb private equity's worst excesses

"A better world is possible. We just need to demand it."

Path to reform. Potential solutions include:

• Strengthening antitrust enforcement
• Closing the carried interest tax loophole
• Improving transparency in private markets

Key policy proposals:

• The Stop Wall Street Looting Act
• Restrictions on leveraged buyouts
• Enhanced protections for workers in bankruptcies

Grassroots efforts making an impact:

• Organizing by former Toys "R" Us employees
• Campaigns against private equity ownership of housing
• Increased scrutiny of private equity in healthcare

Last updated: September 10, 2024