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KMart. Sears. Payless. Toys-R-Us. JOANN Fabrics. Party City.

Whatever happened to them? Private equity.

Private equity firms like to tell a nice story about how they buy up
failing businesses and make them better.

That’s a lie.

Over and over again, they buy up businesses doing just fine and run them
into the ground. In fact, companies bought by private equity firms are 10
times more likely to go bankrupt than those that aren’t.

Here’s how it works:

Step one: A private equity firm buys a business like Red Lobster. But they
typically don’t buy it with their own cash. Instead, they force the
business, Red Lobster, to take out a massive loan to pay for its own sale.
Now the business is staggering under a huge debt load.

Step two: They strip the company of its assets to turn a profit. This can
look like selling the land under the Red Lobster stores, then private
equity will pocket that money, and then Red Lobster has to pay rent on
land it used to own. So now Red Lobster is stuck paying the initial loan,
and now their rent for the land, all while the private equity firm charges
them a management fee for its services. So Red Lobster is stretched to the
breaking point. It can’t pay its bills. It lays off workers and stores
close.

Step three: After all the life has been sucked out of the company and it's
saddled with debt, Red Lobster is forced to file for bankruptcy. You’d
think the private equity firm would have to pony up and help pay off the
debt, right? No. Our system lets private equity firms collect all the
benefits of owning the other companies while taking on none of the risk
associated with running those companies straight into the ground.

So who has to shoulder the consequences? Workers — nearly all of whom have
lost their jobs and who’ve had their pensions completely wiped out by the
bankruptcy. And consumers — who get stuck with higher prices and worse
experiences.

Private equity doesn’t discriminate when it comes to following this same
playbook to loot entire industries. We often hear about how private equity
sucks up entire franchises — but they also sink their teeth into
life-or-death industries like hospital systems, nursing homes, veterinary
clinics, or fire truck manufacturing.

And these private equity firms are living large while their cost-cutting
and efficiency-boosting schemes put lives at risk. The CEO of the private
equity firm that wiped out hospitals — yes, hospitals — in Massachusetts
owned not one, but two yachts, while patients were bleeding out because of
his financial cost-cutting.

This isn’t a business model — it’s legalized looting. And it’s wrong.

I believe these practices should be illegal. There should be at least some
level of accountability for the people pillaging our stores, restaurants,
hospitals, nursing homes, and prisons. But Washington has done next to
nothing to rein in these firms. That’s why I’m working on a few different
bills to stop this.

I wrote my Stop Wall Street Looting Act to make sure these private equity
firms are held accountable for the debt they saddle companies with — and
it’s a start. My Corporate Crimes Against Healthcare Act specifically
addresses the problem of private equity in the healthcare industry so no
one can bankrupt a hospital and get away on their not one but two yachts
scot-free.

These private equity firms are buying off politicians and spending
millions on lobbying to ensure they can continue making millions off of
these practices. The workers and the hospital patients and the consumers
do not have an army of lobbyists to watch out for them — but this issue
impacts people all across America, and it’s time we do something about it.

[ [link removed] ]It’s going to take all of us continuing to raise the alarm to rein this
legalized looting in. If you’re also sick and tired of these private
equity firms raking in the big bucks while everyone else pays the price,
chip in $28 or
anything you can strengthen our grassroots movement for bold, systemic
reform?

Thanks for being a part of this,

Elizabeth







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