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Gretchen Morgenson

lines on the record: 88
first: 2023-06-16
most recent: 2023-06-16
sittings or episodes: 1
sources: podcast

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“Well, let's see. So, what's about the world of finance that I wish I knew 30 years ago is that it isn't as hard as you think, that it isn't, you know, a lot of people come out of college if they're not a financial person. Like I was a humanities major, you know, and you have this mental block about numbers. I can't do numbers or it's not that hard. It really isn't that hard. It's common sense. Now there are people who are really extra special good at it, but it's something that you can tackle, don't feel like you have a mental block against finance. And don't think that finance is an important. Finance is not a backwater. It touches everyone. It touches everybody in this country. It is political. It is everywhere. And so just don't discount the importance of finance.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would, of course, say go with investigative reporting because I think we need more of it in this country. I think we don't have as much as we need. We have seen newspapers hollowed out, of course. Closed down left and right. Closed down. We've also seen that the costs of associated with investigative reporting. It's not easy. It's not something that happens overnight. So it really is costly. And we've seen that fewer and fewer of those folks. So I would say gung-ho, if you can get a job doing that, that it is going to be the most fun that you're going to have. And also doing a service.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and you know, that's a guy who's been kind of, he was kind of slimed, you know, and, you know, as being this terrible, you know, marauder and everything, and it's a different story altogether. So I'm really enjoying that.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“I like nineteenth century fiction. So Anthony Twollop, the way we live now, which is a really wonderful book about a tycoon who is, you know, sort of a scoundrel. Who sells shares in a railroad company that doesn't really exist anyway? Well, if you want.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Jim Michaels, who was the editor of Forbes magazine, he was a very tough old newspaper reporter. He was at UPI and he was the guy who broke the story of Gandhi's assassination. So, really knew how to do that kind of reporting, but he took his expertise to business and really taught me how to look at businesses, analyze balance sheets, income statements, really do contrarian reporting. He was a guy who didn't want the conventional wisdom. He wanted to question the conventional wisdom. He was very difficult, very irrascible, very demanding, but you really learned a lot.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“What am I streaming? Well, gosh, I really like the BBC show Happy Valley. I don't know if you've seen that. No. It's kind of a detective, a pretty tough female detective like that. I like Ted Lasso. I know that's very mundane. So those are the two right now”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I really after that decided that I really wanted to give people a lot more time to respond to my questions because I would be asked to answer questions that were quite comprehensive and or tricky difficult to come up with the answer in minutes. And so it was very frustrating to not be able to do that. And so I came away from that experience saying, okay, from now on, I'm going to give everybody that I'm writing about more time to respond because I don't want to be in that, put them in the situation that I was in.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Even to this day, you know, now we had a, he did very well in New Hampshire. And so for a frenzied moment, it was, you know, like this, you know, maybe he has a chance or a shot. But anyway, it was a very trying time for me. But I really became a better journalist because of it. Well, I was going to.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“I would have to explain these to the Washington Press Corps. The Washington Press Corps not being financially oriented and probably not that interested. They were just interested in the horse race.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, when Steve asked me to be his press secretary, it was, I thought, wow, this is going to be interesting. You know, I even maybe thought this is going to be fun. Now, I'm a financial reporter. I am not a Washington reporter. I'm not a political reporter. And so I had a different, you know, idea of what it might be like. But anyway, it was a very, very tough six months. I can imagine. And, you know, it was, so Steve was a candidate that had economic ideas, okay? Flat tax. One of them was the flat tax, which by the way would have gotten rid of lobbyists. That was the big benefit. And all those loopholes, right? Flat tax. He was also for medical savings accounts and health savings accounts. Anyway, and so I would have.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“It stopped outperforming in like the mid-2000s or so or, you know, towards 2008. And so you really have to wonder what the purpose of the continued infatuation with private equity among pensions is if they can get the same return in a S&P 500 with five basis points as a cost and total transparency, by the way, and a mark-to-market that you see at the end of every business day. And so you know where you stand. So it's not one of these fuzzy math situations where you don't really know what the value of the fund is because it's got private companies in it that are being marked by individuals who have an axe to grind in the mark.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“I just don't think it's a good thing to have this coderie of extreme, extreme wealth at the top of the pyramid. I mean, it's just not healthy. An economy does better if the most people are prosperous, right? And so these multi, multi, multi-billionaires are really outliers, but it points to a problem with the entire society. And perhaps it's because we laud wealthy people, but part of it is this tax loophole that really is unfair. Part of it is some of the practices that really are aggressive and that end up harming companies and workers and pensioners. And let's not forget the huge fees that pensions pay to buy into private equity funds. And for years, those private equity funds outperformed the S&P, but they no longer do.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“That was the peak. And one of the reasons for that very big, considerable growth, and that was, you know, people were able to have a family without having to wage earners. You were able to buy a house, et cetera. That moment in time also a huge contributor to that was pensions. So corporate pensions that gave a worker reasonable shot at a prosperous retirement. And those started disappearing. In the mid to late 80s. And so that's a big factor in why the wealth held by the Main Street America, the middle class, the big broad brush America, that's why that has declined.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think you have to say then if you're going to say, okay, they're not, these companies are not being banked properly Then that's great if you can get money from private equity, but let's not bankrupt them in the process. I mean, you have a study that shows that bankruptcies occur far more with companies that are private equitized than it does with other companies. So I think that you, yes, if you want to have the resources or the capital is not being assigned to these companies, but that doesn't mean that they should be abused or that some of these practices can't be questioned.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“we can maybe put some of it on them. Right. Yeah. And obviously, you know, the shift to online hurt some folks. Toys R Us is an example of that. And more and more.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Retailing, you know, that's a big force that a big area that private equity has been very forceful in. Almost 600,000 jobs lost in retailing. Now, yes, some of that would have happened with the shift to online, but honestly, you know, there have been consequences like that. So you look at that and then you look at the problems with healthcare and what it's doing to patients. And so I do think that it is a force to be reckoned with here. Right.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“And so there has been a lot of discussion. And of course the defanging or the diminishment of unions so you don't have a balance of power between the worker and the corporation, but you look at some of the forces behind those forces, right? Pensions great example If you're starting to see private equity firms taking over pensions, you know and or stripping the pensions of the companies that they bankrupt, that is a definite wealth gulf, right? That is a definite impact on everyday people, Main Street America that I just don't think we've really examined. So you just have to look behind some of the practices. When you have”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the reason we think it's important to include them in the mix is that we haven't really had that discussion. I mean, private equity was not really mentioned as a force in the inequality, in the gulf between rich and poor in America. You know, you would hear about offshoring of jobs, you would hear about companies going to Ireland so that they wouldn't have to pay the high taxes.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if you look at these firms, these folks, these really titans of industry, right? They're celebrated in the business pages, they are, you know, on TV all the time. I mean, these are the people leading the way on this industry. Now, again, there are others who are doing it right and doing it in a better way, yes. But what you want to focus on, these are the folks that set the tone. These are the folks that say, here's how we're going to operate this. And these are the folks that do have the biggest impact, Larry, because of their size. And so that's why we really want to focus on them. So when you have, you know, two firms. Controlling thirty percent of emergency departments in this country.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“It started out, I think, as a special treatment for real estate and it sort of morphed into this bigger thing as the private equity venture world expanded. And it essentially is that the managers, executives of these companies just end up paying a far, far lower rate on their very beneficent payouts than you or I do. And it's a loophole that people have tried to get rid of for decades. We've had congressional hearings about it, and yet it continues to stay on the books. And boy, they cry bloody murder when it comes time for people to say, look, maybe we should rethink this and not let these guys. I mean, it's like a billionaire minting machine to have this kind of a lower tax rate on these folks.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Because you haven't had a mark, you haven't had a buyer tell you exactly what it's worth until the end of the line when you actually do buy the company.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, these are private companies, not the firms. How they mark the value of that company is, you know, there's leeway there, Barry. They can value it a certain way that, let's just say, the stock market wouldn't value it.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what happened was a lot of people did not get. 90 cents on the dollar. And there were quite a few people who were up in arms, who wanted to be this to be investigated. But it is sort of a moment in time that you look at and you say, this is what can happen if an insurance company takes risks with their policyholders' money.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, California at the time said, we think this is a great deal. You're going to get at least 90 cents on the dollar. Everybody's going to get at least 90 cents on the dollar. And that is their story, and they're sticking to that. And that's what they say.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“California. Well, it was with a French bank, actually. They were representing the bank. They were acting as the investment manager for the bank. And so it was going to be taken over by this French bank. But anyway, so the Department of Insurance sold it. Sold the company on the cheap, absolutely, absolutely. And so the people that bought it, in this case the French bank and Apollo, were able to ride the recovery of those junk bonds.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“And so he knew the numbers, he knew the companies, and so he knew that they were just distressed and that they could be restructured and reorganized. And so he buys this portfolio of John.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, let's go launch our own company. Right. But I mean, it was obviously a dire circumstance. So anyway, long story short, he ends up getting a hold of this huge junk bond portfolio, which was a lot of paper that he had put into Fred Carr's, that's the name of the guy who ran executive life, that paper that Apollo really knew what it was. They knew number six.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“What the hell was that? Well, okay, so let's just remember this happened in 1991. The insurance department took it over in 1991. Then we had Apollo, Leon Black's new firm after he flees from Drexel. Edge is burning at Drexel.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a big chunk for many people. You know, I mean, I know of some cases where it was 40% haircut for some policyholders. It's very hard to, you know, getting numbers on this stuff, they really don't want to help.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, it's still to this day, we don't know, but it certainly is in the three or four billion dollar, maybe even what percentage?”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, you have to run. I don't see how that could go bad, right? Anyway, so he won the big job. And the minute he got in the door, it was, you know, junk bonds were, you know, cratering and everybody was concerned about executive life. And would it be able to pay its policy holders? And so he seized the company. Now, keep in mind, Barry, that he seized it probably at or very near the bottom. So junk bonds were starting to come back after he seized it. And so if it had been worked out another way, It's possible”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“They blow up. The Department of Insurance for the State of California was at the time run by John Giramendi, who is now a representative in the House of Representatives from California in Washington. And he was just brand new in the job. It was a new elected position. Prior to that, it had been appointees of the governor.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“This was a highly rated insurance company. It had the highest rating, but it was run by a guy who was kind of what we used to call in the old days a gunslinger. He was a guy who was more of a risk-taker than your average insurance company executive. And he bought a ton of junk bonds from Drexel. He was one of their top clients when they were selling these bonds of slightly lower quality, lesserly lower quality. lesser known companies he was there to buy okay so his firm his insurance company had a ton of junk bonds and when that market turned right”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Executive life is where we start sort of the book because it was such a massive failure and of course it was coming at the time of the junk bond collapse.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“That does happen now they do have to disclose in their statutory filings with the insurance regulators how much of their investment portfolio in the insurance company is related transactions or related stocks or bonds or mortgages or whatever. So they do have to disclose that, but I'm going to guess that very few people read those disclosures.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“And so you have pensioners at Bristol Myers or Lockheed or Cours is another who are really relying on private equity to do the right thing for their pensions going forward, for their retirement, for their payouts when they need them. And that, I think, is something that we really don't understand the entire nature of. And unfortunately, we'll see. We may see some problems with rising interest rates if some of the investments that these private equity firms have made in their insurance companies start having problems.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Correct. It's called a pension risk transfer, and they have been happening like crazy. And private equity firms are the ones doing a lot of the pension risk transfers.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Them And the private equity firm takes over that risk, but now you don't have the pension benefit guarantee corporation backing you if the pension should fail.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Really huge pools of very stable money for these companies, for these private equity companies. And it's interesting because you're supposed to, in insurance, be very conservative. And most, I think most people who buy insurance policies really would prefer that their insurer be a conservative entity, that not taking risks, we're not swinging for the fences here. You know, yeah, if I can get a higher yield, that's awesome. But I really want to know that I'm going to get a payout when it comes time for my claim. So what these companies are doing is buying these insurance companies. They're also buying up pension assets, Barry. So a corporation has a pension. Let's say it's Lockheed, Bristol Myers, or a couple. And the private equity firm will buy those pension obligations, Lockheed or Bristol Myers gets it off their books, they're happy, they transfer the risk that those obligations had.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think it's spotty. Let's just say that there are some states where the regulation is aggressive, but there are a lot where it is not. And as you might guess, some of these companies flock to the ones, to the states, where the oversight is more of the minimalistic. Now, the problem with insurance companies being owned by private equity is that you can understand why they want to own them because this is a pool of assets. It's a pool of money that they can really generate immense assets on. It's unlike banks. It's not fast money or hot money. It isn't likely to leave quickly, Barry, like we've seen in some of the recent bank problems. So insurance companies are”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Going to keep from, you know, a problem of putting profits ahead of patients. But very, very, very few state AGs have enforced laws against the corporate practice of medicine. And when they do bring cases, they are so tiny and so minimalistic in the wrist slap that they deliver to these companies that it really is not even a cost of doing business. And so it's just like, okay, fine, I'll do it again and even bigger next time.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“This is a sixty four trillion dollar question, Barry, and I would love for you to ask every state attorney general, for instance, why haven't you gone after for-profit medicine? There are statutes in more than 30 states across the country that bar what's called the corporate practice of medicine. And these laws came into effect 100 years ago when you had quack medicine show guys out there selling crazy cures for everything. And they decided these states decided that you can't have profits potentially coming ahead of patient care. And so doctors actually have to run these organizations. And that is supposedly”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. And so, but all those years leading up to 2020, when the whole world collapsed in March, all those years leading up to it, we had kind of a draining of healthcare, a bleeding of healthcare companies because getting the fat out, cutting the cost down.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“That costs money, and it's money that sits on a shelf, and these guys don't like money sitting on a shelf. And so, you know, you have this, you actually had a study in Congress that had, you know, what might happen if we were to experience a pandemic. And this is back in 2005 or six. And it said”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, as you know, health care was a disaster. And partly because we were so unprepared for the pandemic. And I would argue, Barry, that one of the reasons we were so unprepared was because healthcare had been a focus of private equity since really the mid two thousands. That's a company that went private in an LBO. And so what you had is these firms again focusing on cost cutting. And so they were not likely to, you know, stockpile PPE masks to buy ventilators to prepare for a pandemic.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“And so these academics found that there were twenty thousand lives, that they said were lost because at private equity owned nursing homes, nursing facilities. And so you have this situation the academic said where the Focus the extreme focus on cost cutting meant lower staffs meant, you know, lesser care essentially translated to lesser care. And this was just a striking, striking study of the difference between, and they were comparing it to other for-profit nursing homes. So this was not just for-profit versus nonprofit. This was private equity for-profit and nonprofit.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“There's so much more efficient because maybe they hire fewer people to take care of the residents that the mortality rate is higher. The mortality rate is 10%.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“This is perhaps the biggest crisis, I think. And it really became very evident in a 2021 study by academics, I think University of Chicago, UPenn, NYU, that studied long-term mortality at nursing homes that were owned by private equity and compared that with nursing homes. They're so much more.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely, absolutely. Rural hospitals have really been hit by this practice. The other thing, Barry, is that they don't put the name on the door over the emergency department. They don't say team health is here or they don't say envision or KKR or Blackstone is running this. And so try to find out if your emergency department is run by one of these companies. It's very difficult to do. So again, it's opaque. Again, the consumer does not know that this is happening. And so much of what private equity has taken over is kind of like this, a stealth takeover because they don't put their names on the door.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source
“Seems sort of if you're talking about the coffee and donut that private equity owns, okay, if you don't like the coffee and the donut, don't go somewhere else. But if you're in need of an emergency department and this is the only one in your town and you have to go there and it's run by a private equity firm that is putting profits ahead of patients, that's a problem.”
2023-06-16 · Masters in Business · Gretchen Morgenson: From Wall Street to Journalism · IDENTIFIED FROM THE TRANSCRIPT · source