Episode 1855: The Quiet Billion-Dollar Machine Behind Job Loss, Higher Rents, and Vanishing Services

Podcast: So Money with Farnoosh Torabi
Host: Farnoosh Torabi
Guest: Megan Greenwell, Author of Bad Company: Private Equity and the Death of the American Dream
Release Date: July 21, 2025

Introduction

In Episode 1855 of So Money, host Farnoosh Torabi delves into the opaque world of private equity and its profound impact on various sectors of the American economy. Joined by veteran journalist Megan Greenwell, the discussion uncovers how private equity firms influence job markets, housing, healthcare, and more, often to the detriment of workers and communities.

Understanding Private Equity

Megan Greenwell opens the conversation by explaining the mechanics of private equity:

"Private equity funds pool money from outside investors—like university endowments, public pension funds, sovereign wealth funds, ultra-wealthy individuals—and combine that with bank loans to buy companies." ([10:19])

She distinguishes private equity from venture capital, emphasizing that private equity typically involves leveraged buyouts aiming for full control of companies. This model often leads to significant debt burdens on the acquired companies, prioritizing profit extraction over sustainable business growth.

Farnoosh Torabi adds:

"This is a corruption of what our free market capitalism system was supposed to be because you end up with all of the power, all of the information and none of the risk in the hands of these firms." ([13:34])

Case Study: Deadspin Acquisition

Drawing from her personal experience, Megan recounts the acquisition of Deadspin by a private equity firm, Great Hill Partners:

"On literally day one that I started to suspect. We were excited to be bought, but all of a sudden, there are these guys walking around our office asking the dumbest questions in a very harsh, critical way." ([04:56])

The immediate shift in company culture and strategy signaled trouble. Despite Deadspin's existing success metrics, the new CEO dismissed data-driven approaches, focusing solely on profit extraction. Within months, the company was downsized drastically and ultimately sold to a Malta-based shell company, repurposing Deadspin to drive traffic to offshore online casinos ([08:52]).

Impact on Communities and Industries

Megan transitions to discussing the broader implications of private equity ownership through the stories of real individuals:

1. Liz and Toys R Us:

   • Liz, an Indigenous Alaskan and dedicated Toys R Us employee, believed in the stability and community roots of the company. The takeover by private equity resulted in massive debt, leading to store closures without prior employee notification.
   • Farnoosh notes:

     "A crying customer runs up to her and says, what am I going to do without you? And that's how she found out that this huge American institution was liquidating just because they were buried under so much debt." ([16:58])

2. Roger and Healthcare:

   • Roger, a small-town doctor in rural Wyoming, witnessed his hospital’s decline under private equity ownership. Promised improvements never materialized, leading to critical services like labor and delivery being shut down.
   • Megan describes:

     "He found a PowerPoint from years ago that revealed that this was their plan the entire time. They wanted to strip all of the services." ([30:26])

These narratives highlight how private equity’s pursuit of profit undermines essential services and destabilizes communities.

Accountability and Potential Solutions

Farnoosh emphasizes the need for systemic change rather than placing the onus solely on consumers:

"It's less about lecturing people to make ethical choices and more about just making people aware." ([19:21])

Suggestions for Accountability:

1. Regulatory Measures:

   • Elizabeth Warren's proposed Stop Wall Street Looting Bill aims to regulate or dismantle exploitative practices within private equity.

2. Financial Responsibility:

   • Farnoosh advocates for private equity firms to share the burden of the debt they impose, ensuring they are accountable if companies fail:

     "If the company goes under, you have to pay back the money." ([34:14])

3. Tax Reforms:

   • Closing the carried interest loophole would subject private equity earnings to standard income tax rates, reducing their financial incentives to prioritize short-term profits over long-term sustainability.

4. Local and State-Level Interventions:

   • Implementing measures like rent control can deter private equity from acquiring and exploiting housing markets ([36:19]).

Megan highlights successful instances where communities have pushed back, such as Liz and her group lobbying public pension funds to cease investments in unethical private equity practices ([19:21]).

Inspiring Change Through Local Action

Farnoosh underscores the importance of grassroots movements and local governance in combating the pervasive influence of private equity:

"Local elected officials are seeing this as a problem, realizing that they can't necessarily rely on Congress to do something about it, but saying we want our community to be healthier and so we're going to think about creative solutions." ([26:30])

Megan shares her enthusiasm about starting a local news platform to foster community-driven solutions and resist external private equity pressures:

"I'm just learning about how much power local residents actually have, you know, in steering the decisions that are being made about even private equity." ([25:23])

Conclusion

Episode 1855 of So Money offers a compelling examination of the hidden forces shaping America’s economic landscape. Through Megan Greenwell’s incisive analysis and poignant personal stories, listeners gain a deeper understanding of how private equity impacts everyday lives. The discussion not only exposes the systemic issues but also highlights avenues for resistance and change, empowering individuals and communities to advocate for more equitable and sustainable economic practices.

Notable Quotes with Timestamps:

• Farnoosh Torabi:

  "This is a corruption of what our free market capitalism system was supposed to be because you end up with all of the power, all of the information and none of the risk in the hands of these firms." ([13:34])

• Megan Greenwell:

  "Private equity... has quietly reshaped entire industries. Healthcare, housing, local news, retail, daycare, even emergency services." ([02:42])

• Farnoosh Torabi:

  "Deadspin did look like a good opportunity for them to make money. It just, I didn't realize that didn't require making our business stronger." ([08:00])

• Megan Greenwell:

  "20% of all companies owned by private equity go bankrupt." ([31:30])

• Farnoosh Torabi:

  "There's a lot of interesting work being done on the state and local level. When people overlook that in favor of just 'we have to do it for the entire country,' they miss opportunities to make change." ([26:30])

About the Book: Bad Company: Private Equity and the Death of the American Dream

Megan Greenwell’s Bad Company serves as a critical lens into the shadowy operations of private equity firms and their detrimental effects on American industries and communities. Through meticulous reporting and heartfelt storytelling, Greenwell illuminates the human cost of profit-driven acquisitions, making a compelling case for increased transparency and accountability in the private equity sector.

Thank you for tuning in to So Money with Farnoosh Torabi. Stay informed, stay empowered, and strive for a more equitable financial future.