The possible acquisition of drugstore chain Walgreens risks writing a new chapter in the long-running saga of private equity’s looting of the American retail sector, a trend that has caused the loss of over half a million jobs, numerous bankruptcies, and extensive consolidation that leads to higher prices, lower quality for consumers, and more precarious conditions for workers.
Last month’s settlement agreement with Invitation Homes confirms what their tenants have been telling us: our country’s largest landlord of single family homes has a consistent track record of ripping off its tenants.
As landlords, private equity firms raise rents, impose new fees, skimp on property maintenance and pursue tenants more aggressively in court, the Americans for Financial Reform research noted. “The cumulative effect is a massive transfer of wealth from mainly low- and middle-income renters, who can’t afford the onerous barriers to homeownership, to some of the wealthiest men in America,” it said.
NEW YORK – Today, New York City Comptroller Brad Lander announced a commitment to exclude new pension investments in private equity-backed fossil fuel midstream and downstream companies and projects, addressing a significant loophole in the funds’ Net-Zero Implementation Plan. This makes NYCERS, NYCTRS, and NYCBERS – three of New York City public pensions representing $207 billion in assets – the first-in-the-nation to make such a commitment, setting precedent for funds across the country and around the world to follow suit.
It also has the support of labor and financial-policy groups, including the AFL-CIO, the American Federation of Teachers and National Nurses United. Lisa Donner, executive director of financial watchdog group Americans for Financial Reform, said the bill “takes important, much-needed steps to rein in Wall Street predatory practices and promote a more just and sustainable economy.”
The Stop Wall Street Looting Act of 2024 includes new measures to curb the growing power of private equity across the board and in key sectors of the economy like healthcare, and to penalize private equity firms and executives for their actions that harm a company and its workers even after they no longer control it. Lessons from the 2023 collapse of Steward Health Care, which stemmed from its 2010 buyout by private equity firm Cerberus Capital Management, shaped the new provisions.
Researchers at Americans for Financial Reform Education Fund, Global Energy Monitor and Private Equity Stakeholder Project assessed the holdings of 21 private equity firms, overseeing a combined $6tn in assets under management.
The 2024 Private Equity Climate Risks Scorecard studied 21 private equity firms that manage $6 trillion worth of companies, and found that two-thirds of the energy companies in their portfolios are invested in fossil fuels, using hundreds of millions of dollars from pension funds. Their gigaton of carbon emissions is over three times as much as from the energy used to power all the homes in America and exceeds those of the global aviation industry.
Problems are brewing in a scheme that is bigger than the Australian economy and almost completely without federal oversight. It is called private credit — large scale lending, but not by banks — and has surged from less than $300 billion in loans in 2013 to over $2.1 trillion globally today. This unregulated market has become yet another tool for the private equity industry to pursue leveraged buyouts and leaves target companies on the hook to repay the new mountains of debt. If this large pool of unregulated loans go sour, the distress could spread into the broader financial system, including traditional banks, and pose systemic risk to the financial system.
As the focus on the American voter intensifies with the coming election, a new poll released today shows voters across the political spectrum overwhelmingly support the mission of the Consumer Financial Protection Bureau (CFPB), financial regulation generally, and a variety of specific CFPB actions, including efforts to limit credit card late fees, reduce overdraft charges, and prohibit medical debt from appearing on credit reports.