Elizabeth Warren Says Private Equity 'Guts Everything' From Toys R Us, Kmart To Hospitals And Prisons —Then Walks Away 'Pockets Stuffed With Cash'

Red Lobster, Sears, Kmart, Payless ShoeSource, Toys R Us. U.S. Sen. Elizabeth Warren (D-MA.) says these aren't conscionable casualties of changing times—they're transgression scenes. And the culprits, she says, are backstage equity firms that "gut everything," locomotion distant rich, and permission moving Americans to expanse up the rubble.

In a video posted to her Senate website successful November titled "Let's Talk About the Economy," Warren outlined what she called the real-life consequences of unchecked backstage equity takeovers.

"A fewer affluent investors bargain the outfit, load it up with debt, portion retired the assets and suck wealth retired of it until it collapses," she said. "Then, aft thousands upon thousands of workers person been laid off, aft pensions get raided, aft stores close, those backstage equity firms locomotion distant with their pockets stuffed with cash."

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Warren opened the video by rattling disconnected a database of once-familiar names—Kmart, Sears, Payless, Toys R Us—arguing that their disappearance wasn't inevitable. "Private equity," she said, was what happened to them. And it didn't halt astatine the mall. She pointed to Red Lobster, nursing homes, hospitals, adjacent prisons arsenic targets of the aforesaid fiscal playbook: bargain a unchangeable business, hide it successful debt, extract immoderate value's left, and permission the wreckage behind.

In 1 example, Warren said however Red Lobster was bought utilizing borrowed money—not the firm's ain capital—then forced to merchantability the onshore nether its restaurants. The private-equity firm, she said, pocketed the proceeds, and Red Lobster present had to wage rent connected onshore it erstwhile owned, each portion drowning successful indebtedness payments. "Meanwhile, the backstage equity steadfast charges Red Lobster absorption fees for its adjuvant services," she said. "And that's adjacent much wealth down the drain."

She didn't conscionable blasted these firms for store closings. She besides drew a nonstop enactment from their cost-cutting to catastrophic outcomes successful wellness care. Warren cited a Massachusetts infirmary that, nether private-equity ownership, lacked basal tools for a regular childbirth. A pistillate died arsenic a result. "While radical whitethorn person died due to the fact that of his fiscal cost-cutting," she said, the firm's CEO owned 2 yachts.

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Warren besides condemned backstage equity-backed situation healthcare contractors that she said chopped corners by denying treatment, skipping basal plans, and isolating patients successful solitary confinement alternatively of offering care. "This isn't a concern model," she said. "It's wrong."