These Are the Plunderers

1. The Rise of the Plunderers: A New Breed of Financiers

Capitalism is the greatest thing going, but unchecked, it’s its own undoing.

Modern-day robber barons. A new class of financiers has emerged, amassing wealth through complex financial dealings rather than extracting natural resources. Unlike their predecessors, these modern barons mine their wealth from the poor and middle class, exploiting loopholes and undermining the nation's economy.

Private equity's deceptive name. The term "private equity" masks the true nature of their business, which is far from equitable, just, or fair. They use high-cost borrowed money to take over companies, prioritizing profit over people and leaving a trail of economic wreckage in their wake.

A small cohort with outsized impact. While globalization and technological innovations are often blamed for economic disparities, the activities of a core band of privateers and their use of excessive debt and dubious practices to undermine our nation’s economy have been largely overlooked. Their actions have had a devastating impact on workers, customers, pensioners, and taxpayers.

2. The Executive Life Debacle: A Blueprint for Wealth Extraction

Leon Black got the deal of the century on the backs of the handicapped and the brain-damaged.

A pivotal moment. Leon Black's acquisition of Executive Life's assets serves as a Rosetta stone for understanding how a small group of financiers has extracted wealth from Main Street America. This deal established a pattern of financial engineering and exploitation that would be repeated for decades.

Winners and losers. The Executive Life transaction enriched Black and his partners almost overnight, but it came at the expense of retirees, pensioners, and the disabled. These policyholders forfeited money as a result of the deal, highlighting the human cost of unchecked financial ambition.

Regulatory complicity and secrecy. Despite court oversight, the Executive Life deal was shrouded in secrecy and riddled with conflicts of interest. This lack of transparency allowed Black and his partners to put their interests ahead of policyholders, setting a precedent for future private equity practices.

3. Drexel's Legacy: From Junk Bonds to Private Equity

Known as leveraged buyouts, these deals were the early phase of the manic pursuit of profits that has subsequently become known as private equity.

Drexel's role in fueling takeovers. Drexel Burnham Lambert, where Leon Black made his name, pioneered the use of high-cost debt to finance corporate takeovers. These leveraged buyouts laid the foundation for the private equity industry's rise.

The "Greed Is Good" era. Drexel's aggressive pursuit of profits epitomized the "Greed Is Good" ethos of the 1980s. However, this unchecked avarice ultimately led to the firm's collapse amid scandal and market manipulation.

Black's reinvention. After Drexel's demise, Leon Black capitalized on his knowledge of distressed companies to launch Apollo Global Management. He transformed himself from a corporate financier into a vulture investor, profiting from the very problems he had helped create.

4. The American Middle Class Under Siege: A Shift in Economic Power

Wealth transfers like the Executive Life deal, where the assets of everyday Americans wind up in the hands of cunning financiers, are often blessed by government officials.

Erosion of middle-class wealth. The rise of leveraged buyouts and private equity coincided with a decline in the economic security of the American middle class. Workers lost jobs, pensions disappeared, and families took on heavier debt loads.

The rise of the 0.1%. While the middle class struggled, the wealthiest Americans saw their fortunes skyrocket. The top 0.1% of the population now controls a disproportionate share of the nation's wealth, highlighting the growing income inequality in the United States.

Government complicity. Deregulation, tax policies, and low interest rates have all contributed to the shift in economic power from Main Street to Wall Street. Regulatory complicity and complacency have been crucial to the successes of the financial elite.

5. Healthcare Hijacked: Profits Over Patients

Putting profits ahead of patient care is supposed to be barred in America.

Healthcare as a target. The healthcare industry, historically focused on quality and patient outcomes, has become a prime target for private equity firms. These firms prioritize profit margins over patient well-being, leading to compromised care and higher costs.

Corporate practice of medicine. Laws banning the "Corporate Practice of Medicine" are rarely enforced, allowing investment firms to buy up healthcare providers and implement tactics that generate profits but injure patients. They often hide their ownership amid a complex web of companies.

Consequences for patients and workers. Private equity ownership of hospitals and nursing homes has been linked to lower patient satisfaction, fewer employees per occupied bed, and increased mortality rates. Healthcare workers face pay cuts, benefit reductions, and increased workloads.

6. The Art of the Fleece: Exploiting Legal Loopholes and Regulatory Complicity

It’s said that in Washington, the real scandal is what’s actually legal. The same is true on Wall Street.

Operating within the law (mostly). Modern privateers plunder without physical violence, commandeering businesses armed with spreadsheets, debt financing, and high-priced lawyers. They operate (mostly) within the letter of the law, some of which they have helped to craft.

Regulatory capture. The real scandal lies in what is legal, as the financiers have mastered the art of exploiting loopholes and manipulating the system to their advantage. Regulatory complicity and complacency have been crucial to their success.

The revolving door. Government officials often move between the public and private sectors, creating a cozy relationship between regulators and the firms they are supposed to oversee. This revolving door further enables the plunderers' activities.

7. The Human Cost: Lives Disrupted, Communities Devastated

Workers, customers, pensioners, and taxpayers—all sense they’re being robbed. They just can’t be sure by whom. So they chalk up their misery to a “system” rigged against them.

Job losses and economic hardship. Private equity buyouts often result in job losses, wage cuts, and reduced benefits for workers. These actions disrupt families, devastate communities, and erode the social fabric of the nation.

Compromised care and patient safety. In healthcare, the pursuit of profits can lead to compromised patient care, increased mortality rates, and a decline in the quality of services. Vulnerable populations, such as nursing home residents, are particularly at risk.

Taxpayer burden. Bankruptcies and underfunded pensions add to government deficits, placing a greater burden on taxpayers. The costs of these financial schemes are ultimately borne by the American public.

8. The Enablers: How Washington and the Fed Fuel the Plunder

A crucial point that may not surprise you: this wrecking crew did not act alone. They had help from friends in high places, especially Washington.

Deregulation and inaction. The deregulation push during the Reagan, Bush, and Clinton administrations laid the groundwork for the private equity boom. Later, Washington's assistance came dressed as incompetence or inaction, with regulators choosing to look the other way.

Low interest rates. Every time the Federal Reserve Board reduced interest rates and kept them low, it boosted the buyout barons by giving them cheaper borrowing costs. This monetary policy fueled the debt-laden takeovers that enriched the financiers.

COVID-19 bailouts. In response to the pandemic, the U.S. government allocated trillions of dollars to "save" the economy. Many of these funds went to prop up the very financiers who had weakened the economy, rewarding them for their destructive practices.

9. The Secret Weapon: Opaque Fees and Self-Dealing

The model of acquiring a company, loading it with debt, cutting costs to pay that debt, extracting cash along the way, and selling it in five years is capitalism on steroids, short-termism to the max.

Hidden fees and conflicts of interest. Private equity firms operate in secrecy, with hidden ties to the companies they control. This lack of transparency makes it difficult to track the wreckage they leave behind and hold them accountable.

Money-for-nothing payments. Pensions typically pay asset managers based on dollars they have committed to invest but have not yet invested or "put to work." This translates to an annual wealth transfer from pensioners to profiteers.

Dividend recapitalizations. The buyout artists use debt financings to extract and repay themselves the often small amounts of cash they have put into the acquisitions, a practice known as dividend recapitalization. This gives the privateers quick gratification while making it harder for the companies to thrive.

10. The Call for Accountability: A Glimmer of Hope for Change

There is a chance that these raiders’ romp is nearing an end. But we can count on them and their enablers to work overtime, ensuring that their power and practices remain entrenched.

A growing awareness of the problem. Workers, customers, pensioners, and taxpayers are increasingly aware of the damage caused by private equity. This growing outrage may create the momentum needed for change.

Potential solutions. Congress, regulators, and policymakers can take action to stop the destruction and wrest American capitalism from the grip of the plunderers. These actions include closing tax loopholes, increasing transparency, and enforcing existing laws.

The future of capitalism. The future of American capitalism depends on whether there is enough outrage over the hardships and inequities produced by the privateers to create meaningful change. The question is whether the American people will demand accountability and a more equitable economic system.

Last updated: April 5, 2025