Wednesday, January 28, 2009

Dirty Max Comes to PEU's Aid

Senator Max Baucus D-Montana included a provision in the stimulus package allowing companies to defer income taxes triggered when they repurchase their own troubled debt at a discount.

What's the big strategy of private equity underwriters (PEU's)? Buying affiliate distressed debt on the cheap. Manor Care, owned by Carlyle Group, is attempting to purchase a portion of its debt for cash. Not only do companies lighten debt loads for pennies on the dollar, Max offered a tax break for doing so, $26 billion worth. No wonder Blackstone's Steve Schwarzman was so enthusiastic about CMBS repurchasing in today's CNBC interview with Maria Bartiromo. Pfftttt!

I shouldn't be surprised. Dirty Max accepts donations from eight for-profit health care companies with no, zero, zippo, nada facilities in his state. Yet, he doesn't accept e-mail from citizens outside Montana. Who knew a corporate check had more rights? Welcome to American corporatocracy!