One of the key principles behind private equity is that increased leverageaka more debtcan make a business function more efficiently. By Bess Levin . 1. The taxpayer handouts will also help private equity continue its relentless march through the global economy, snapping up troubled companies at bargain prices or extending high-priced credit as other investors, including hedge funds, are forced to sell off their holdings in the post-corona landscape. Thats because oil fracking has never been financially viable. But with super-low interest rates, investors in search of yield were still willing to buy debt. All rights reserved. Like so many other facets of the COVID-19 crisis, however, this unprecedented crash exposed long-running cracks in the facade. She is known for her writing on the Enron scandal and the 2008 financial crisis. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Cond Nast. Exclusive: Inside the S--tshow That Was the Trump-Biden Transition. And heres our email: letters@nytimes.com. Its thanks to those who are able to contribute that were able to make the podcast free for anyone to listen to. governor announced on Tuesday that he will convene a grand jury to investigate "crimes and wrongdoing" related to COVID-19 vaccines. in English and mathematics from Williams College. The book, which she wrote from the couple's home, puts a human face to the crisis. (This may not surprise anyone who is attempting to be productive while working in close quarters with their children.). Bethany McLean. They have two children. Bethany McLean, a contributing editor at Vanity Fair, is the author of "Saudi America: The Truth About Fracking and How It's Changing the World." The Times is committed to publishing a. sure to go down in history as one of the wildest business stories ever. Its essential that we do the same today. TDD: (800) 526-0844 By Bethany McLean. Copyright 2023 Click2Houston.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. In April, the Energy Information Administration cut its forecast for U.S. oil production, estimating that it will fall both this year and next suggesting that the days of huge growth in production from shale are over. Clients who show symptoms of COVID-19 (for example have a fever, cough, or difficulty breathing) and/or are waiting for their test results. She co-authored a book on the 2008 financial crisis titled All the Devils Are Here. Airlines, hotels, and restaurantsall of whose revenues have cratered in the wake of sweeping stay-home ordershave engaged in Hunger Gameslike lobbying to cash in on the CARES Act, making their case for a share of the disaster relief. More than 100,000 people already have died in this country from the virus. Bethany Lee McLean (born December 12, 1970) is an American journalist and contributing editor for Vanity Fair magazine. Smithfield Foods. Investors in the equity of these companies have already seen the value of their holdings decimated. The typical fee structure in private equity is the so-called 2 and 20, which means that a fund collects a fee of 2% of the total assets it manages, as well as 20% of any gains on its investments after a certain return is achieved. 2023 Cond Nast. Like the big banks in 2008, private equity is holding us all hostage. Not only should taxpayer funds not be used to pay management or consulting firms, she says, but companies that take the money should also, for instance, be required to include workers on their corporate boards and gradually increase their minimum wage to at least $15 an hour. No food or drink for one hour prior to testing. To revisit this article, select My Account, thenView saved stories. The SHIELD saliva-based testing is available for all ages. He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. More than 100,000 people already have died in this country from the virus. 1 FOR PHARMACISTS PRESCRIBING PAXLOVID: This service is available in all locations, with the exception of those in New Hampshire. All information these cookies collect is aggregated and therefore anonymous . Portfolio, a Penguin Random House imprint . The total number of . The Wuhan Institute of Virology, the cutting-edge . She has suggestions for how to approach the problem. I dont think any of us can really believe what we saw today, one industry analyst told AP. Even as the public equity and debt markets grew cautious, drilling continued. Bethany McLean is a Vanity Fair contributing editor. There are several pots of federal money that the private-equity industry is lobbying to access. Ms. McLean is the author of Saudi America: The Truth About Fracking and How Its Changing the World., Ever since the oil shocks of the 1970s, the idea of energy independence, which in its grandest incarnation meant freedom from the worlds oil-rich trouble spots, has been a dream for Democrats and Republicans alike. The key issue is the parent child problem. When wells are clustered tightly together, with so-called child wells drilled around the parent, the wells interfere with one another, resulting in less oil, not more. Has its bubble finally burst? On Thursday's show: The job forecast for the region in 2022, lessons from the collapse of Enron, a conversation with the late Stephen Sondheim, and the best new restaurants from the past year. McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. She resides in Chicago with her children. All the Devils Are Here: The Hidden History of the Financial Crisis is a nonfiction book by authors Bethany McLean and Joseph Nocera about the 2008 financial crisis. Pension funds that have poured money into private equity firms may take a hit soon, too. Months into the outbreak, no one really knows how well many of the screening tests work, and experts at top medical centers say it is time to do the studies to find out. Colombias Amazing Race to Build a $1,000 Ventilator Frontline Doctors Race to Learn the Mysteries of Coronavirus How Dr. Anthony Faucis Media Strategy Is Revolutionizing Coronavirus Messaging Can Americas Crowd-Driven Spectacles Return for the Fall Season? From the Archive: Following the Psychological Contagion That Fed the 2014 Ebola Outbreak. 2 FOR DRIVE-THRU TESTING RESULTS: Lab samples are sent to an off-site laboratory and results may take 1 to 2 days or even longer in some instances or in times of peak demand. All thats left to tally is the damage. More than 100,000 people already have died in this country from the virus. Well continue to work with the administration and Congress to request that federal programs support all businesses, regardless of ownership structure, and their workers, says the AICs CEO, Drew Maloney. By signing up you agree to our User Agreement and Privacy Policy & Cookie Statement. NEW YORK (AP) Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. We could go even further. In the five years ending in April, there were 215 bankruptcies for oil and gas companies, involving $130 billion in debt, according to the law firm Haynes and Boone. From 2015 through 2019, private equity firms raised almost $80 billion in funds focused mostly on shale production, according to Barclays. Workers monitoring a hydraulic fracturing operation near Wink, Texas. In this episode, McLeanwho has tracked the industrys shaky footing for yearstraces the ups and downs of the industry from the 1970s to 2008 to today, and assesses whether a new recession will speed the transition away from fossil fuelsor hand oil barons a life raft. Bethany Nesbitt, 20, was found dead in a residence hall at. On the other hand, Democrats, including House Speaker Nancy Pelosi and powerful Representative Maxine Waters, have weighed in loudlyon the industrys behalf. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. All thats left to tally is the damage. Americas largest public pension plan, the California Public Employees Retirement System, or CalPERS, put almost $7 billion into private equity during the 2018-2019 fiscal year, according to Institutional Investor. Then came Covid-19, and, on March 8, the sudden and vicious end to the truce between Saudi Arabia and Russia, under which both countries limited production to prop up prices. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.The title and release date have not yet been determined. In 2018, according to analytics firm eVestment, pension funds in the U.S. and the U.K. pumped 27% of their fresh allocations of money into private-equity funds, up from 25% the year before. By early 2019, America was the worlds largest producer of crude oil, surpassing both Saudi Arabia and Russia. In early 2015, the hedge fund manager David Einhorn announced at an investment conference that he had looked at the financial statements of 16 publicly traded shale producers and found that from 2006 to 2014, they spent $80 billion more than they received from selling oil. To revist this article, visit My Profile, then View saved stories. Yet an exemption for the private-equity industry did not make its way into the CARES Act; according to Bloomberg, Senate Majority Leader Mitch McConnell is trying to pass a $250 billion boost to the PPPwithout provisions opening it to private-equity-backed companies. Which explains why ILPA wrote to Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell last week, arguing that companies backed by private equity should be allowed to access the relief funds provided in the CARES Act. By Bethany McLean Coronavirus May Kill Our Fracking Fever Dream America's energy independence was an illusion created by cheap debt. Blackstones Schwarzman has ties to Trump. If you need help with the Public File, call 540-512-1558. Private-equity managers won the financial crisis, as Bloomberg put it last fall. Never mind that they often overpaid for the companies they acquired, and loaded them up with so much debt that even a mild economic downturn could make it nearly impossible for those companies to repay their loans, as Fortune put it. Here are some tips. 8:00 a.m. - 4:30 p.m. 200 W Front StreetBloomington, IL 61701Phone: (309) 888-5450 HoursMonday - Friday8 a.m. - 4:30 p.m. - Manage notification subscriptions, save form progress and more. The man who shot his girlfriend and five relatives at a birthday celebration had "control issues". (AP Photo/Rick Bowmer), Connect with the definitive source for global and local news. And more! He and McLean previously worked together on All the Devils Are Here: The Hidden History of the Financial Crisis, about the 2008 market crash. Latest trends. The Next Financial Crisis Lurks Underground (Bethany McLean, New York Times), Coronavirus May Kill Our Fracking Fever Dream (Bethany McLean, New York Times), Are Crude Oil & Natural Gas Prices Linked? The fear, of course, is that private equity will do what private equity does best, which is pocket the money themselves rather than devoting it to the businesses theyve invested in. The man who shot his girlfriend and five relatives at a birthday celebration had "control issues". McLean is a contributing editor at Vanity Fair and co-author of the Enron book The Smartest Guys in the Room. The promised profits havent materialized. Given how much of the economy will rise and fall on the investments that private-equity funds manage, we may be forced to let them share the federal handout. The technology of fracking in shale rock - particularly in the Permian Basin in Texas - has transformed America into the world's top producer of both oil and natural gas. Mortgages should be used to buy homes, not for refinancing. In each of the past four years, according to data-provider Preqin, private-capital managers raised over $500 billion of new money to invest. Its thanks to those who are able to contribute that were able to make the podcast free for anyone to listen to. But among those angling for a federal handout is one of the wealthiest sectors of the American economy: private equity. COVID-19 Origins: Investigating a "Complex and Grave Situation" Inside a Wuhan Lab. Vanity Fair may earn a portion of sales from products that are purchased through our site as part of our Affiliate Partnerships with retailers. Certainly, President Trump, who has staked so much on the American shale industry, wants to save it. How Screwed Are Donald Trump and His Adult Children, and Other Questions You Might Have About the Staggering Fraud Lawsuit Against Them. Click here to take a moment and familiarize yourself with our Community Guidelines. She has co-authored multiple bestselling books, including The Smartest Guys in the Room and All the Devils Are Here. Otherwise, the ILPA warned in a previous letter, there would be significant harm not only to employees that see their hours reduced or jobs eliminated, but also significantly reduced returns to the institutions providing retirement security through pensions, insurance policies and other investments that serve hundreds of thousands of Americans. To make matters worse, ILPA added, provisions in many private-equity investments allow private-equity firms to make additional capital calls when times are tough. Contents 1 Early life and education 2 Career MCHD offers free COVID-19 (PCR) testing every Tuesday and Wednesday from 9am-12pm inside the McLean County Health Department building, 200 W. Front Street in downtown Bloomington, Room 400E. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. Its a rich history of a company, and a case study in how a corporate culture can turn toxic. That, too, is ending, as investors in such funds have become disillusioned. Veuer's Tony Spitz has the details. There were rumblings that shale companies would seek a federal lifeline. Portfolio, a Penguin Random House imprint, announced Wednesday that the two had reached an agreement for a news-breaking, character-driven narrative revealing the forces that rendered critical American institutions ill-equipped to cope with the deadliest pandemic since the 1918 Spanish flu and the economic consequences of that failure.. By Patrick Semansky/AP Photo (Mnuchin); By Mark Wilson (Pelosi), Jason Alden (Shwarzman), Patrick T. Fallon/Bloomberg (Black), by Johannes EISELE/AFP (stocks), by Christina Horsten (tents), by John Nacion (ambulance); All from Getty Images. Driven partly by public pensions, the private-equity industry has mushroomed. NEW YORK Business writers Bethany McLean and Joe Nocera are collaborating on a critical take of the U.S. response to the coronavirus pandemic. The Next Financial Crisis Lurks Underground, Coronavirus May Kill Our Fracking Fever Dream. Whats more, the Milken Institute reported, even by mid-2018, private equity owned more companies than the number of businesses listed on all of the U.S. stock exchanges combined, and have accounted for a more significant source of financing than initial public offerings in many recent years. Thats because some of the major investors in private-equity funds are public pension plans; at Blackstone, roughly one-third of the firms money comes from retirement plans set up to provide for over 30 million working-class Americans, according to someone with knowledge of its portfolio. This week, Kate and Daniel talk to Bethany McLean, author most recently of Saudi America: The Truth about Fracking and How Its Changing the World as well as the bestselling The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, with Peter Elkind. The half decade from 2013 to 2018 saw the most private-equity deals over any five-year period in American history. Previous assignments include editor-at-large, columnist for Fortune, and a contributor to Slate . How will the virus continue to change? Copyright 2023 WSLS.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. Unfortunately, there isnt really an alternative to providing private equity with federal funds. Whiting Petroleum, whose stock once traded for $150 a share, filed for bankruptcy. In 2019, Mclean launched a podcast titled Making a Killing on Luminary. Private equity has made multibillionaires of executives like Blackstones Steve Schwarzman (net worth: $17.5 billion) and Apollos Leon Black ($7.5 billion). Increasingly desperate to boost the portfolios of retiring workers, they too turned to private equity as their saviorurged on by private equitys promises that it alone could deliver the necessary returns. 500 energy sector fell 20 percent, marking the sectors largest drop on record. She is known for her writing on the Enron scandal and the 2008 financial crisis. Her two books are the The Smartest Guys in the Room: The Amazing. [9], In September 2018, she published Saudi America: The Truth about Fracking and How It's Changing the World which examined the "fracking revolution" and U.S. energy independence. On March 10, the company announced that it would slash its dividend for the first time since the early 1990s, when Saddam Husseins invasion of Kuwait sent oil prices plummeting. Confirmed case data are from the Department of Public Health's communicable disease surveillance database. Investors were willing to do this only as long as oil prices, which are not under Americas control, were high and when they believed that one day, profits would materialize. [citation needed] She began as a contributor to Slate's Moneybox column, in 2010 and "The Bulldog" column in Fortune. Hot & Bothered is produced by Colin Kinniburgh. To keep growing, companies have to keep plowing billions back into the ground. This week, Kate and Daniel talk to Bethany McLean, author most recently of Saudi America: The Truth about Fracking and How It's Changing the World as well as the bestselling The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, with Peter Elkind. Stopping that will require a creative effort to increase and sustain high levels of vaccination. Wed like to hear what you think about this or any of our articles.