In Testimony, Warren Calls out Private Equity’s Predatory Practices, Stands with Striking Warrior Met Workers
Warren’s Stop Wall Street Looting Act Would Protect Workers and Fix the Broken Private Equity Model
Washington, D.C. – Testifying before the Senate Committee on the Budget, U.S. Senator Elizabeth Warren (D-Mass.) called out private equity firms’ predatory practices of buying up distressed companies; stripping workers of benefits, fair pay, and safe working conditions; and reaping billions in profits. Senator Warren reiterated her support for the 1,100 striking coal miners at Warrior Met Coal (Warrior Met) whose benefits and salaries were stripped by private equity firms led by Apollo Global Management (Apollo) and Blackstone. The private equity firms swooped in, loaded the company with additional debt, and took nearly $800 million in dividends for themselves and other shareholders.
Senator Warren highlighted private equity’s troubling pattern of squeezing as much as they can out of companies, workers, and consumers in order to line their pockets. Private equity’s retail takeover has killed more than 1.3 million jobs over the last decade, and research shows that private equity ownership of nursing homes led to a 10% jump in short-term mortality rates.
Senator Warren called for the immediate passage of her Stop Wall Street Looting Act, which would fix the broken private equity model and protect the pay, benefits, and safety that workers deserve.
Testimony: Warrior Met and Wall Street Greed: What Corporate Raiders
are Doing to Workers and Consumers
U.S. Senate Committee on the Budget
Thursday, February 17, 2022
Senator Warren: Well, thank you very much, Mr. Chairman, I appreciate your inviting me to participate in this hearing, and I appreciate the powerful work that you have been doing on the issue of economic concentration. You are an extraordinary and a tireless leader, and I am honored to be in this fight with you. So, thanks to you, today we have the opportunity to discuss the very real impact that private equity and Wall Street giants have had on workers and communities across this country.
For nearly a year, more than 1,100 Warrior Met coal miners in Brookwood, Alabama have been on strike. They’re striking for nothing more than what they are owed: fair pay, fair benefits, and fair working conditions. All of these were stripped away when giant, vulture private equity firms swooped in to buy Warrior Met’s predecessor company, Walter Energy, as it went through bankruptcy.
Apollo, Blackstone, and the other private equity firms that bought Walter Energy in 2016 presented themselves as saviors — here to save the company. Here to save jobs. Here to save the day!
But it was all hype. They showed up because they smelled profits — and they planned to boost those profits by crushing the company’s workers. These private equity firms terminated the miners’ collective bargaining agreement with the United Mine Workers. They forced a pay cut of more than 20% on workers. They cut medical, leave, and retirement benefits. And, just to juice their profits a little more, they ended the company’s pension and health obligations to 2,800 retired coal miners and their families.
Private equity was the driving force behind all of this. The private equity investors in Warrior Met dictated the terms and conditions of the 2016 takeover of the company, and those same private equity investors continue to bear responsibility for the cuts in pay and the benefits that have pressed workers to the wall and led to the current Warrior Met miners’ strike.
Coal mining is dangerous work. The hours are long; the tasks are back-breaking. But when private equity took over, miners were told that all that hard work just didn’t produce enough revenue to give the workers the protections and the security that they had earned.
Money was supposedly tight, but the investors — Apollo, Blackstone, and the other private equity firms — what happened to them? They made out like bandits. They ran the same play that private equity has run over and over and over. They loaded Warrior Met up with debt, and then they used that debt to pay nearly $800 million in dividends to themselves and other shareholders. And then, after sucking out as much cash for themselves out as they possibly could, private equity sold off their shares and moved along to the next victims.
Warrior Met miners are on strike today because private equity ripped them off. What happened to Warrior Met workers is what happens when these billion-dollar Wall Street firms come to town: private equity squeezes as much as they can out of companies and their employees, and when they think there’s nothing left to squeeze, they leave everyone else in the dirt.
Nationwide, private equity’s takeover of retail has killed more than 1.3 million jobs over the last decade. It is responsible for jacking up prices for consumers in everything from education to health care. The arrival of private equity can even be a matter of life and death. Research shows that when private equity takes over a nursing home, short-term mortality rates jump by about 10%.
But even as they keep raking in billions of dollars in fees, the typical private equity fund hasn’t managed to outperform the stock market since at least 2006. Think about that: they strip assets and squeeze workers with frightening energy, but they don’t actually make a better rate of return than the average mutual fund. All that destruction comes with a lot of high overhead costs and the result is only modest returns to investors.
Now, this is why I introduced my Stop Wall Street Looting Act in 2019 and why I reintroduced it a few months ago: so we can put an end to predatory and dangerous private equity practices.
This is not about killing private equity — it’s about fixing the system and protecting workers and communities.
My bill would prevent private equity firms from walking away after driving companies into the ground and leaving the workers in the dirt.
My bill prioritizes worker pay in the bankruptcy process and strengthens the rules so that workers are more likely to receive severance, pensions, and other pay that they earned.
My bill creates incentives for job retention, so that workers, like Warrior Met’s, can benefit from a company’s second chance in bankruptcy.
And my bill ends the immunity of private equity firms from legal liabilities when those companies break the law. When workers at a plant are shortchanged or residents at a nursing home are hurt because private equity firms force it to cut corners, private equity should be on the hook.
So Mr. Chairman, I thank you again for allowing me to testify today, and I appreciate your partnership on these issues. I’m going to keep fighting to end the outrageous practices of private equity firms. I’m going to keep fighting to turn the Stop Wall Street Looting Act into law. And I’m going to keep fighting to make sure that Warrior Met workers get what they are rightfully owed. Thank you.
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