Wealthion's Adam Taggert interviewed Gretchen Morgenson, author of "These Are the Plunderers: How Private Equity Runs―and Wrecks―America."
Morgenson's book details the harm done by private equity underwriters (PEU). She shared the mortal damage The Carlyle Group inflicted on ManorCare, a giant nursing home provider. That was done under the watchful eye of former Medicare Chief Gail Wilensky, who made millions on her stock holding from Carlyle's buyout. Morgenson did not mention this fact.
Taggert looked uncomfortable in the first third of the interview. Not long ago Adam interviewed a StepStone private equity underwriter and asked viewers to share any interest in private equity investing. It struck me there might be an internal conflict occurring.
Adam's viewers offered numerous comments and I resonated with several:
This hit a nerve, I have lost a lot of money in the past in the UK invested in stuff that PE had been involved with...
This speaks to the financial fragility PEU's inflict on affiliates. Once public, small economic or market changes can sink a company.
Morgenson mentioned the lack of regulation and lack of consequences for bad actors. The comment also struck me:
I was severely disappointed by the lack of any mention of the high-level political connections that these firms, notably Carlyle, employ; and their role in tilting the playing field. Seems like a serious oversight.
PEU Report has tried to reveal private equity's gross distortions of our political and economic systems since 2007.
Hats off to Adam for having Morgenson on and shining "disinfecting sunlight" on private equity. Unfortunately, there's a lot of night left and the PEU boys are fast erecting sunshades.
Congress is full of PEUs, especially newer members. President Biden's cabinet is dominated by PEUs and he frequently spends Thanksgiving at Carlyle co-founder David Rubenstein's Nantucket estate. Many influential Washington officials have a PEU opportunity post public service.
One cannot cover all the evils of private equity in an hour interview, much less outline how they've co-opted government. It's to the point I regularly say the following.
Politicians Red and Blue love PEU and increasingly, more are one.
Update 8-14-23: KKR is buying Gretchen's publisher Simon and Schuster. That's one way to prevent books from coming out that don't support the PEU narrative.
Update 8-18-23: Yet another study shows private equity outperformance to be a myth, a PEU "puffery" claim.
