buyout firms at Brave New Films

The Homes of Henry Kravis

2008-03-22T21:55:01Z

Let’s take another peek [Lifestyles theme] into the “Lifestyles of the Rich and Cranky.”

The old rich pride themselves in … well, in having some pride. For example, they tend to set their venerable mansions behind tall walls and shrubs that discreetly obscure their wealth. It's a matter of class. On the other hand, the new rich are more inclined to crassly flaunt their abundance, building garish houses that amount to neon signs screaming; “Look how rich I am, sucker!”

How surprising then that one of the showiest of these look-at-me celebrities of wealth has gotten pouty about being featured in a movie that, after all, is about him. He's Henry Kravis of Manhattan, South Hampton, and... well, so many places. In Henry’s life, everything is about him. He heads an eponymous Wall Street equity firm that essentially borrows money to take over corporations that other people built. To pay off his lenders, Kravis sells off whole chunks of the captured corporation. Then he fires thousands of workers, slashes the wages and benefits of those who remain, and pockets the savings for himself.

Super Return '08: Private Equity's Stake

2008-03-08T01:14:01Z

Will private equity lose a part of their “WE ARE THE GOOD GUYS!” argument?

Private equity heads converge in Munich this week. The conference has a far more somber tone than in prior years.

Limited partners at the meeting acknowledge that returns will be lower because of the credit crunch. We won’t go into private equity’s hand in creating that phenomena; we’ll just stay with the fact that fewer deals will get done.

An interesting debate has developed regarding sovereign wealth funds and their participation as investors in private equity funds. The head of pension fund CALPERS, (the California Public Employees’ Retirement System) acknowledged that the presence of such investors will require additional scrutiny.

Legislation is being presented this week in the California State Assembly that would preclude CALPERS from investing alongside these sovereign wealth funds.

If this passes and becomes a standard across all public pension money, private equity will lose a key foundation of its argument that the ultimate beneficiaries of their success are the millions of workers who receive these pensions.

With whom will the private equity funds side? Clearly, the ones with the deeper pockets.

The Greatest Greed

2008-03-08T01:14:09Z

As a former partner in a private equity firm, I have seen greed at all levels.

In my opinion, there is no greater exemplification of private equity greed than the taking public of a portion of the management companies of private equity firms. Blackstone and Fortress were two that pulled it off. KKR filed documents to go public and several others, including The Carlyle Group, were rumored to do IPOs; however, market conditions kept the latter few from swindling the public markets to line their pockets. The moves by Blackstone and Fortress proved prescient: They made out like bandits.

Blackstone went public at $31 a share on June 22, 2007. This netted the firm’s partners $3.7 billion. The two founders had the best paydays. Steve Schwarzman had a nearly $450 million payday with a residual 24% ownership in the company valued at $7.5 billion. According to public filings, Schwarzman received cash payouts of $400 million the year prior. His co-founder partner, Peter Peterson, cashed out $1.9 billion and retained a 4% stake in the company.

Fortress came out in February 2007. Their five founders had a payday of $409 million. This was after taking combined distributions of $447 million the year prior.

Both companies had a short spike in stock price post-close and have since been trading below its IPO price. Did most institutions cash out at the spike leaving the crumbs for the average investor that has lost money?

Articles on Steve Schwarzman estimated his net worth at $10 billion before the IPO. The IPO nearly doubled his net worth.

Stay tuned – how the Blackstone partners cashed out $3.7 billion in its IPO and avoided paying taxes on it.

What you may not know about Dr. Martin Luther King

2008-07-13T21:27:57Z

Today we honor Dr. King's birthday. We all know him because of his historic impact on civil rights, but many don't realize that later in life he fought just as passionately for the rights of workers and against the entrenched institutions of injustice.

"Equality means dignity. And dignity demands a job and a paycheck that lasts through the week."

The War on Greed is exactly this kind of fight. The livelihoods of families have been directly attacked by the actions of buyout billionaires like Henry Kravis putting Wall Street's special interests ahead of his 800,000 employees... and pocketing $51,000 an hour in the process.

Watch the video

The first step must be taxing these buyout billionaires at a fair tax rate. It will not solve all the problems, but it is a strong and forceful beginning. With the presidential campaigns underway, it is the perfect time to force this issue into the campaigns the way we did with Wal-Mart and Iraq for Sale.

As our friend Rev. Yearwood, leader of the Hip Hop Caucus, has said: "We are facing a lunch counter moment for the 21st century."

Please join us at our virtual lunch counter by signing the petition to presidential candidates demanding they pledge to close the loopholes and tax the tax dodgers. Buyout billionaires are a menace to our economy. People are hurting, badly, and we must take beginning steps to bring the issue of corporate greed and economic equality to the nation's attention.

War on Greed: Fight for the Dream

2008-09-27T18:28:52Z

On this day celebrating the birth of Dr. Martin Luther King who immortalized the words “I have a dream”, we should all stop and take a moment to remember the compelling message of hope that he gave as a gift to us all.

To Dr. King, racial equality was just part of the inspired and virtuous future he envisioned for our nation. He also dreamt of a society where economic fairness would become part of the essential fabric of our democracy. Dr. King’s stirring and inspirational words allowed every man, woman and child to visualize their deserved place in the sun, a society of inclusion without the divisions of class built with the brotherhood and generosity that he believed all men and women capable of. That was his dream for us, and it should be our dream to honor him by fulfilling that.

Today, the reality is that the goals of ending poverty and economic disparity that Dr. King articulated so eloquently have still not been achieved. There are still formidable obstacles built upon foundations of greed standing in the way, and a growing economic disparity that prevents millions of Americans from being able to realize his dream.

Nothing represents these obstacles more than leveraged buyout (private equity) firms such as KKR, led by billionaire Henry Kravis. Companies like KKR and men like Kravis are the antithesis of what Dr. King stood for, seekers of limitless wealth for the few at the expense of the many. Private equity firms like KKR generate huge profits by acquiring public companies with primarily borrowed money. They then take them private to ensure secrecy and often dissect and restructure them for the purpose of selling the company later. In the process, these firms sometimes lay off workers, cut wages and restrict medical benefits to drive up the stock price and increase profitability, insuring a higher sales price. Kravis and others like him also benefit from tax breaks unavailable to the average American. He pays a tax rate of only 15% on a majority of his $450,000,000 annual income, percentage-wise, less tax than many teachers, firemen, and policemen pay.

Brave New Films ongoing “War on Greed” campaign seeks to educate the public about how leveraged buyout firms like KKR operate and the damage that they often do. This new video in the series, “Fight For The Dream” tells the story of the workers at Accuride’s Rockford, Illinois plant; a company bought by KKR, and contrasts the exploitation they faced with Dr. King’s message of equality and dignity.

Congress needs to close the buyout industry's tax loopholes

2008-06-10T18:39:33Z

http://warongreed.org/facts.php

Jeff Faux explains that Congress has the power to change the tax code and close the buyout industry's tax loopholes that let them rake in millions while paying less percentage in taxes than regular people.

Watch the video

The Winner of the War on Greed contest

2008-09-26T17:31:18Z

Two weeks ago, we released the "War on Greed Starring Henry Kravis' Homes" and asked what you would do with one of Kravis' mansions for a day during the holidays.

We received thousands of responses, but Carolyn's idea clearly stood out.

Listen to her story.. and Merry Christmas!

Watch the video

Robert Greenwald discusses the War on Greed on CNBC

2008-09-26T17:22:07Z

CNBC's "Closing Bell" did a segment on our new documentary series the "War on Greed" today, including an interview with Robert, shots of the video's premiere outside Henry Kravis' house and clips from the video.

Watch the video

War on Greed: Starring Henry Kravis and his Homes

2008-10-08T10:15:13Z

Henry Kravis is a billionaire, the 57th richest person in America. He acquired this wealth by purchasing public companies with borrowed money. To pay off the debt, he cuts benefits at the company, sells its assets, and lays off employees.

This get-rich-quick scheme made him $450 million last year. Meanwhile, his tax rate is lower than teachers, firemen, nurses, even his own cleaning staff!

Yet everyday we hear another story, we live another experience, we see another example of the horrific economic pain our country is being devastated by.

It's time all of us started a WAR ON GREED.