Energy independence was a fever dream, fed by cheap debt and frothy capital markets. The reason is as simple as it is galling: while great private fortunes, such as that of Blackstones Stephen Schwarzman (net worth: $17.5 billion and Apollos Leon Black ($7.5 billion), have been made from private equitys march through the world, its losses, to a remarkable degree, will belong to all of us. All that's left to tally is the damage. Bethany McLean is a journalist and contributing editor for Vanity Fair. In September 2015, she published Shaky Ground: The Strange Saga of the U.S. Mortgage Giants which examines the governance and financial situation of Fannie Mae and Freddie Mac seven years after the 2008 financial crisis. If you need help with the Public File, call 540-512-1558. Thats because some of the major investors in private-equity funds are public pension plans; at Blackstone, roughly one-third of the firms money comes from retirement plans set up to provide for over 30 million working-class Americans, according to someone with knowledge of its portfolio. Bethany McLean was born on 12 December 1970 in Hibbing, Minnesota, USA. All rights reserved. How exactly did the alleged illegal activity go down? More than 100,000 people already have died in this country from the virus. So the era of low interest rates, which began with former Federal Reserve chairman Alan Greenspan and continues to this day, has been a huge boon to private-equity firms. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.The title and release date have not yet been determined. On April 20, oil prices did something theyve never done before. If you need help with the Public File, call (713) 778-4745. The industrys total assets under management have hit a record $4.1 trillion. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. So if Blackstones investments crater, the teachers, firefighters, and health care workers who are counting on those investments to generate the returns necessary to pay their pensions will suffer. But among those angling for a federal handout is one of the wealthiest sectors of the American economy: private equity. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.. Workers monitoring a hydraulic fracturing operation near Wink, Texas. She has suggestions for how to approach the problem. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. And President Trump reveled in the rhetoric: We hadnt merely achieved independence, his administration said, but rather energy dominance.. To revisit this article, select My Account, thenView saved stories. Yet an exemption for the private-equity industry did not make its way into the CARES Act; according to Bloomberg, Senate Majority Leader Mitch McConnell is trying to pass a $250 billion boost to the PPPwithout provisions opening it to private-equity-backed companies. But that didnt seem to matter, because low interest rates facilitated private equity in another way. More than 100,000 people already have died in this country from the virus. Bethany McLean. The Next Financial Crisis Lurks Underground (Bethany McLean, New York Times), Coronavirus May Kill Our Fracking Fever Dream (Bethany McLean, New York Times), Are Crude Oil & Natural Gas Prices Linked? [16] McLean resides in Chicago with her children. Following the trail of evidence, Louisiana Senator: Our Maternal Death Rates Are Only Bad If You Count Black Women, If you correct our population for race, were not as much of an outlier as itdotherwise appear.. But with super-low interest rates, investors in search of yield were still willing to buy debt. New revelations about how one Trump staffer helped preserve the transfer of powerfrom the forthcoming book on the Biden White House, COVID-19 Origins: Investigating a Complex and Grave Situation Inside a Wuhan Lab. McLean started her career as an investment banking analyst for Goldman Sachs[2] and joined Vanity Fair as a contributing editor in 2008. FILE - In this Friday, June 12, 2020 file photo, a nurse uses a swab to perform a coronavirus test in Salt Lake City. If private equity suffers, the blow will reverberate throughout the entire economy. After the United States engaged in a high-stakes negotiation with Russia and Saudi Arabia to curtail production, a tentative deal was struck on Thursday. The private-equity industry also wants the companies they have invested in to have access to the $454 billion being doled out through the Treasury, an amount that the Fed said could be leveraged into over $2 trillion. As a result, fracking stocks badly underperformed the market. In reality, the dream was always an illusion, and its collapse was already underway. Daily updates from Washington, Wall Street, and Silicon Valley. Its still unclear where most of this debt is held. The big banks emerged from the financial crisis victorious, but also subject to a host of new regulations designed to reduce leverage and stabilize the economy. Since that time, Oxys stock has plummeted almost 80 percent in part due to fears that the Anadarko acquisition is going to prove so wildly unprofitable that it sinks the company. In May 2008, she married attorney Sean Berkowitz, the former Director of the United States Department of Justice Enron Task Force. What the Theranos trial says about the blurred lines between visionaries and frauds. She is the co-author of the 2003 book, "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron," which was the basis for the Academy Award-nominated documentary of the same name. Traders last year at the New York Stock Exchange near the post that trades Anadarko Petroleum and Occidental Petroleum. But there are ways to make it work better. The industrys $1.5 trillion in cash on hand is also the highest on recordand more than double what it was five years ago, according to Preqin. NEW YORK (AP) Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Then came Covid-19, and, on March 8, the sudden and vicious end to the truce between Saudi Arabia and Russia, under which both countries limited production to prop up prices. These cookies are used to collect information on how users interact with Chicago Booth websites allowing us to improve the user experience and optimize our site where needed based on these interactions. Because rules for access to this money werent specified in the CARES Act, as ILPA notes, the executive branch will have a fair amount of discretion over who gets access to the moneyand private-equity firms want to take full advantage of that opening. https://www.cdc.gov/coronavirus/2019-ncov/your-health/covid-by-county.htm January 12, 2022 COVID Update Update on Bethany College COVID Response According to the CARES Act, companies can only receive loans from the Small Business Administration if they commit to preserving jobs. Free COVID-19 testing is available at the McLean County Health Department from 9 a.m. to noon every Tuesday and Wednesday in Room 400E of the MCHD building at 200 W. Front St. in Bloomington. Copyright 2020 The Associated Press. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.. If you like the episode and want to hear more, sign up as a monthly member at patreon.com/hotbotheredclimate today. According to the Institutional Limited Partners Association (ILPA), a lobbying group which represents CalPERs and other public investors, businesses backed by private equity employ more than 8.8 million Americans at over 35,000 companies, accounting for a staggering 5% of the United States GDP. Previous assignments include editor-at-large, columnist for Fortune, and a contributor to Slate. All we know for sure is that fracking company executives and private equity financiers have made a fortune by touting the myth of energy independence and they wont be the ones who have to pick up the pieces., Bethany McLean, a contributing editor at Vanity Fair, is the author of Saudi America: The Truth About Fracking and How Its Changing the World.. She is known for her writing on the Enron scandal and the 2008 financial crisis. We could also limit the deductibility of interest payments for tax purposes even more than President Donald Trumps new tax law already did, so companies arent encouraged to load up on debt. Whiting Petroleum, whose stock once traded for $150 a share, filed for bankruptcy. We need private equity, we need more of it, and we need it now, chief investment officer Ben Meng said in early 2019right before CalPERS hired a former private-equity guy, who began his career at Goldman Sachs, to head its private-equity efforts. In this episode, McLeanwho has tracked the industrys shaky footing for yearstraces the ups and downs of the industry from the 1970s to 2008 to today, and assesses whether a new recession will speed the transition away from fossil fuelsor hand oil barons a life raft. The value of West Texas Intermediate crude, a U.S. benchmark, dipped below zero for a few hourstrading as low as negative $40 a barrel. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. In a January 4 opinion piece for the New York Times, Bethany McLean had this to say about the outcome of the Elizabeth Holmes trial: "A jury's verdict is black-and-white, but the real story is . By signing up you agree to our User Agreement and Privacy Policy & Cookie Statement. Occidental is just one piece of the puzzle. [1] It details how the financial crisis bubbled up from a volatile, and bipartisan, mixture of government meddling and laissez-faire. The Wuhan Institute of Virology, the cutting-edge . Bethany McLean is a Vanity Fair contributing editor. McLean was born in Hibbing, Minnesota on December 12, 1970. The SHIELD saliva-based testing is available for all ages. The Times is committed to publishing a diversity of letters to the editor. As a result, the stocks that make up the S.&P. Bill White wants to restore Americas historical proclivity for balanced budgets. There are several pots of federal money that the private-equity industry is lobbying to access. And why not? 2023 Cond Nast. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. All information these cookies collect is aggregated and therefore anonymous . Bethany McLean is a Vanity Fair contributing editor. Fueled by debt and years of easy credit, Americas energy boom is on shaky footing. As early as 2018, some investors had begun to tell companies that they wanted to see free cash flow, and that they were tired of compensation models that rewarded executives with rich paydays for increasing production, but failed to take profits into account. [10][11] Latest trends. FILE - In this Friday, June 12, 2020 file photo, a nurse uses a swab to perform a coronavirus test in Salt Lake City. On Thursday's show: The job forecast for the region in 2022, lessons from the collapse of Enron, a conversation with the late Stephen Sondheim, and the best new restaurants from the past year. She is also a columnist at Yahoo Finance and a contributor to CNBC. Otherwise, the ILPA warned in a previous letter, there would be significant harm not only to employees that see their hours reduced or jobs eliminated, but also significantly reduced returns to the institutions providing retirement security through pensions, insurance policies and other investments that serve hundreds of thousands of Americans. To make matters worse, ILPA added, provisions in many private-equity investments allow private-equity firms to make additional capital calls when times are tough. COVID-19 Origins: Investigating a "Complex and Grave Situation" Inside a Wuhan Lab. Writer: Enron: The Smartest Guys in the Room. Even before the coronavirus crisis, the spigot was drying up. Joe Nocera is a journalist and column writer for Dealbook. Coronavirus May Kill Our Fracking Fever Dream, https://www.nytimes.com/2020/04/10/opinion/sunday/coronavirus-texas-fracking-layoffs.html. (AP Photo/Rick Bowmer), (Rick Bowmer, Copyright 2020 The Associated Press. Whats more, the Milken Institute reported, even by mid-2018, private equity owned more companies than the number of businesses listed on all of the U.S. stock exchanges combined, and have accounted for a more significant source of financing than initial public offerings in many recent years. Dont hesitate: sign up on Patreon today. By Bess Levin . A deal, and higher oil prices, might help the industry. Airlines, hotels, and restaurantsall of whose revenues have cratered in the wake of sweeping stay-home ordershave engaged in Hunger Gameslike lobbying to cash in on the CARES Act, making their case for a share of the disaster relief. We asked three experts two immunologists and an epidemiologist to weigh in on this and some of the hundreds of other, Thats a difficult question to answer definitely, writes the Opinion columnist Zeynep Tufekci, because of the lack of. Nocera is a columnist for Bloomberg Opinion and co-author of Indentured, about the NCAA. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Infuriatingly enough, the financial crisis in 2008 might even have saved private-equity firms from their sins. Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. Stopping that will require a creative effort to increase and sustain high levels of vaccination. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. All rights reserved). Americas largest public pension plan, the California Public Employees Retirement System, or CalPERS, put almost $7 billion into private equity during the 2018-2019 fiscal year, according to Institutional Investor. Americas energy independence was built on an industry that is the very definition of dependent dependent on investors to keeping pouring billions upon billions in capital into money-losing companies to fund their drilling. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Get COVID-19 vaccine updates from the CDC. Its a rich history of a company, and a case study in how a corporate culture can turn toxic. Actually, no. Blackstones Schwarzman has ties to Trump. NEW YORK (AP) Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. How concerning are things like long covid and reinfections? This week, Kate and Daniel talk to Bethany McLean, author most recently of Saudi America: The Truth about Fracking and How Its Changing the World as well as the bestselling The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, with Peter Elkind. Given how much of the economy will rise and fall on the investments that private-equity funds manage, we may be forced to let them share the federal handout. By early 2019, America was the worlds largest producer of crude oil, surpassing both Saudi Arabia and Russia. After nearly bringing down the economy in 2008, how is it possible that Fannie Mae and Freddie Mac are still around? The immunobiologist Akiko Iwasakiwrites that new vaccines, particular those delivered through the nose, may be part of the answer. Investors in the equity of these companies have already seen the value of their holdings decimated. Previous to her current roles, McLean was an editor-at-large at Fortune Magazine. In 2019, Oxy, as its known, topped a competing bid from Chevron and paid $38 billion to take over Anadarko Petroleum, which is one of the major shale companies. 8:00 a.m. - 4:30 p.m. 200 W Front StreetBloomington, IL 61701Phone: (309) 888-5450 HoursMonday - Friday8 a.m. - 4:30 p.m. - Manage notification subscriptions, save form progress and more. . Restaurants and hotels owned by big chains have already received exemptions granting them access to the relief funds, regardless of how many people their parent companies employ. That, too, is ending, as investors in such funds have become disillusioned. A college student in Indiana died in her dorm room after testing positive for the coronavirus, school officials and her family said. Moodys, the rating agency, said that in the third quarter of 2019, 91 percent of defaulted U.S. corporate debt was due to oil and gas companies. Deaths, active cases . Never mind that they often overpaid for the companies they acquired, and loaded them up with so much debt that even a mild economic downturn could make it nearly impossible for those companies to repay their loans, as Fortune put it. Not only should taxpayer funds not be used to pay management or consulting firms, she says, but companies that take the money should also, for instance, be required to include workers on their corporate boards and gradually increase their minimum wage to at least $15 an hour. Increasingly desperate to boost the portfolios of retiring workers, they too turned to private equity as their saviorurged on by private equitys promises that it alone could deliver the necessary returns. McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. [9], In September 2018, she published Saudi America: The Truth about Fracking and How It's Changing the World which examined the "fracking revolution" and U.S. energy independence. David Wallace Wells writes that by one estimate. To revist this article, visit My Profile, then View saved stories. And North American oil and gas drillers have almost $100 billion of debt that is set to mature in the next four years. The title and release date have not yet been determined. The problem is, existing rules at the Small Business Administration, which is overseeing the program, have been widely interpretedas excludingloaning money to most mom-and-pop businesses that are controlled by large parent companiesincluding private-equity firms. Private equity financiers typically get a 2 percent management fee on funds they can raise, so they are incentivized to take all the money that pension funds, desperate for returns to shore up their promises to retirees, have been willing to give them. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Smithfield Foods. Saudi America: The Truth About Fracking and How Its Changing the World., stocks that make up the S.&P. A journalist profiles the developers and devotees who have aided the rise of cybercurrency. The book, which she wrote from the couple's home, puts a human face to the crisis. Bethany McLean. Tens of thousands of Texans are being laid off in the Permian Basin and other parts of the state, and the whole industry is bracing for worse. The half decade from 2013 to 2018 saw the most private-equity deals over any five-year period in American history. She is a writer, known for Enron: The Smartest Guys in the Room (2005), Independent Lens (1999) and PBS NewsHour (1975). From 2015 through 2019, private equity firms raised almost $80 billion in funds focused mostly on shale production, according to Barclays. If private equity is handed billions in taxpayer money, it could use some of it to pay themselves hefty fees today, then pocket even more of it down the road, when they sell their portfolio companies and collect their 20% of the taxpayer-enabled gains. As for Pelosi, she doesnt want to see companies backed by venture capital excluded from federal relief, given her Silicon Valley constituents. So private equity is pushing to waive those rules, arguing that small firms should not be penalized for having been bought out by big investors. Certainly, President Trump, who has staked so much on the American shale industry, wants to save it. The Next Financial Crisis Lurks Underground, Coronavirus May Kill Our Fracking Fever Dream. Was Tiffany involved? Monday - Friday Nocera and McLean writing book on U.S. coronavirus response By The Associated Press June 24, 2020 NEW YORK (AP) Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Has its bubble finally burst? Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.The title and release date have not yet been determined. The technology of fracking in shale rock - particularly in the Permian Basin in Texas - has transformed America into the world's top producer of both oil and natural gas. Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. So why should they be permitted to raid the federal Treasury in a time of crisis? Even before the COVID crisis, there were questions about how well private-equity investments were actually performing. [17], Last edited on 21 November 2022, at 20:31, "Hibbing grad warns of economic crisis below ground", "What Working At Goldman Sachs Taught Legendary Business Journalist Bethany McLean", "Meet Patrick Byrne: Bitcoin Messiah, CEO of Overstock, Scourge of Wall Street", "BYRNE'S HOT MAIL; OVERSTOCK CHIEF'S TEMPER ERUPTS IN MESSAGES", Financial System's Top Risk, Hiding in Plain Sight, "U.S. mortgage giants under the microscope", "Loughlin, Giannulli lawyer is prosecutors' 'worst nightmare', "Q & A with Bethany McLean, Author of 'All the Devils Are Here', "Enron tale author Bethany McLean has a new book she wrote from her Chicago home", https://en.wikipedia.org/w/index.php?title=Bethany_McLean&oldid=1123096713, This page was last edited on 21 November 2022, at 20:31.
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