The “feisty little paper” that was the Monterey Herald didn’t fall victim to the internet or changes in technology, as former reporter Julie Reynolds will tell you. What hurt the small California newspaper was Wall Street private equity.
Private equity, which used to call itself the “leveraged buyout industry,” raises money from pension funds, endowments, and wealthy individuals. Wall Streeters then use this money, plus a lot of debt, to buy companies. Sometimes they raise prices for consumers. They almost always squeeze workers. Other times, they sell off valuable assets to pay themselves. They are invariably focused on short-term profit. Bankruptcy is often the result.
When Alden Global Capital, a combination private equity and hedge fund, took over the Herald in 2012, there was no end to the shenanigans it pulled to extract money from the newspaper. It neglected maintenance of the newsroom, skimped on office supplies, and sold off the company’s real estate. Alden even invested employee pension money into its own funds, drawing a fine from the Labor Department.
Watch this cautionary short video to hear Julie’s story as well as the story of how private equity brought down the Monterey Herald.
Americans for Financial Reform is currently releasing a series of videos on private equity and the terrible impact of this Wall Street invention. Private equity has destroyed retail jobs that minority communities rely on, contributed to the affordable housing crisis by raising costs for mobile homes, hollowed-out local newspapers, and raised costs for families who want to speak with loved ones in prison.
The list of abuses of private equity grows daily. It has harmed national security, shortened life expectancies in nursing homes, and increased health care costs. These financiers buy up smaller companies to create monopoly power and raise prices. All in the name of profit.
For political and economic reasons, reforming Wall Street private equity must be part of the progressive agenda for economic justice. Polling shows that Wall Street reform is overwhelmingly popular with Democrats and wildly popular with Republicans and independents. Private equity is also a “billionaire factory,” in the words of one prominent scholar, contributing to the massive concentration of wealth that warps our economy and politics.
In 2019, Sen. Elizabeth Warren and Rep. Mark Pocan introduced the Stop Wall Street Looting Act in an effort to curb the worst abuses of private equity. Sign the petition to support reform at stopwallstreetlooting.org.
To stay involved, follow Americans for Financial Reform on Twitter, Facebook or Instagram and learn about how you can continue the fight against private equity. It’s time to raise our voices to demand a just and fair economy.
To learn more about Wall Street’s private equity barons, read Carter Dougherty’s earlier piece for DemCast.
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