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State Governments Have Outsourced Legislation To Private Equity Firms But That’s Cool ‘Cause Fortress Has Your Best Interests At Heart

No really, it cares.
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By Adavyd (Own work) [CC BY-SA 3.0], via Wikimedia Commons

via Wikimedia Commons

You may have noticed an illustration of a big, scary-looking red building over at the New York Times recently. That structure, with a shadowy figure looking down at the proles from an upper-story window, apparently represents a state legislative office building or a private-equity firm’s headquarters or something, since it definitely represents the third part of the Times’ exposé on how private equity firms are secretly ruining all of our lives. This installment deals with how private equity firms have secretly and not-at-all-hostilely acquired most of our state governments, and then pushes them to do things like let them charge 36% interest on loans to poor people or entrust publicly-owned golf courses to portfolio companies that have never managed them before. But don’t worry too much. Fortress Investment Group co-founder Wes Edens is proud of the work he’s doing, since he’s being much nicer about charging 36% interest than other people charging 36% interest.

“We are proud of the impact that Fortress-related companies have provided to the individuals and communities that they serve,” Mr. Edens, who is also an owner of the Milwaukee Bucks basketball team, said in a statement.

In an interview, Mr. Edens said that Fortress did not create Springleaf’s lobbying campaign, but supported it. Springleaf said it needed to raise costs to modify outdated laws and compete with less regulated lenders. And although Springleaf wants to raise costs on borrowers at a time of historically low interest rates, he said that the company was “so much more humane” than others offering high-interest loans.

To wit:

Mr. Hundley repaid an earlier Springleaf loan, he said, and planned to chip away at the second, when medical problems forced him to miss work. About a month after taking out the second Springleaf loan, Mr. Hundley filed for bankruptcy, largely because of other debts unrelated to Springleaf.

Springleaf then sued him, arguing that he had never intended to repay. As a result, Mr. Hundley is still liable for part of the debt, according to his lawyer, Anthony Clark, who said Springleaf “is no stranger to bringing these kinds of suits.”

How Private Equity Found Power and Profit in State Capitols [NYT]

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