CBS News program 60 Minutes has been absent without leave for decades on The Carlyle Group. It finally found Carlyle co-founder David Rubenstein. The piece fawns over Rubenstein's patriotic philanthropy.
"Well, the government doesn't have the resources it once had," says Rubenstein. "We have gigantic budget deficits and large debt and I think private citizens now need to pitch in."David Rubenstein did his part to ensure gigantic budget deficits and large debt with his annual pilgrimage to Congress to preserve his preferred taxation on carried interest. The Carlyle Group is a virtual nonprofit and Rubenstein's pay from Carlyle is setup for tax avoidance. Their recent 10-K states:
The Carlyle Holdings partnerships and their subsidiaries primarily operate as pass-through entities for U.S. income tax purpose. Prior to our initial public offering in May 2012, we operated as a group of pass-through entities for U.S. income tax purposes and our profits and losses were allocated to the individual senior Carlyle professionals, who were individually responsible for reporting such amounts.60 Minutes had plenty of opportunities to tell investigative stories on The Carlyle Group. There are several generations of pension pay to play scandals, sewage sludge bribery to a Congressman's wife, the implosion of Carlyle Capital Corporation and subsequent investor lawsuits, losing a pipeline firm to billions in bad energy bets, over 150 Carlyle affiliates based in the Cayman Islands, twenty five hospital deaths after Hurricane Katrina, dumping British pensioners, free use of Texas taxpayers' $35 million for six years without providing a single new job at Vought Aircraft, and the announced demise of two Carlyle Group mutual fund offerings.
Rather than self-made billionaire I would refer to Mr. Rubenstein as a tax preferred, government subsidized billionaire. Don't believe me? Look at how many Carlyle affiliates supply Uncle Sam and the number garnering direct government subsidies. Boston Private received TARP funds while the FDIC granted BankUnited massive amounts of free money.
Here's another reason Rubenstein should be tarred and feathered, not lionized:
It estimated that more than half of private equity costs charged to United States pension funds were not being disclosed.
CBS News joins CNN, FT, WSJ, NYT and many more in offering puff pieces on a man that has done much to destroy America's middle class, increase our deficits, utilize offshore tax havens and send management theory back decades in the quality arena.
Greed is as greed does. That includes smearing makeup on it so it looks like something else. Makeup hides Carlyle's second quarterly decline in assets under management. Once over $202.7 billion assets under management are now $192.7 billion. That last happened after the 2008 financial crisis. Let's ignore the underbelly of the PEU beast and enjoy the roaring 2015's. Bully, bully Mr. Rubenstein!