Saturday, January 17, 2026

The Private Equity Playbook Part 6: The Connection How Family Offices Invest 30% of Their $5.5 Trillion in Private Equity—Creating a Closed Loop Where Extraction Becomes Accumulation Becomes Reinvestment in More Extraction

The Private Equity Playbook Part 6: The Connection

The Private Equity Playbook Part 6: The Connection

How Family Offices Invest 30% of Their $5.5 Trillion in Private Equity—Creating a Closed Loop Where Extraction Becomes Accumulation Becomes Reinvestment in More Extraction

Remember The Vault series? We documented how 8,030 family offices manage $5.5 trillion for the ultra-wealthy—operating in complete secrecy, exempt from SEC regulation, hidden from public view. We showed how they're the final form of the Hong Kong Model: structures designed to preserve dynastic wealth forever, tax-optimized and invisible. But we didn't answer one critical question: what do family offices actually DO with that $5.5 trillion? Now we know. According to Deloitte's 2024 Global Family Office Report, private equity is now the #1 asset class for family offices, comprising 30% of their portfolios—$1.65 trillion invested in PE funds. UBS reports 27% allocation. Goldman Sachs found 42% in alternatives (PE plus hedge funds and real estate). And 86% of family offices invest in private equity, with 39% planning to increase their allocation in the next year. This is the connection. This is where The Vault meets The Playbook. Family offices don't just store wealth—they actively deploy it through private equity to extract more wealth from workers, patients, and tenants. PE firms load companies with debt, cut costs, and extract fees. When those companies collapse, the wealth flows back to family offices as carried interest and capital gains—taxed at 20% instead of 37%. The family offices then reinvest that wealth in more PE funds. And the cycle continues. Extraction → accumulation → reinvestment → more extraction. This is the dynasty machine. And now you understand how it works.

The Allocation: Where Family Office Wealth Goes

Private Equity Is Now #1

Deloitte's 2024 Global Family Office Report revealed a stunning shift: private equity has surpassed public equities to become the largest single asset class in family office portfolios.

FAMILY OFFICE ASSET ALLOCATION (2024):

DELOITTE REPORT:
• Private Equity: 30% (#1 asset class)
• Public Equities: 26%
• Real Estate: 16%
• Fixed Income: 14%
• Cash: 7%
• Other Alternatives: 7%

OTHER SURVEYS:
• UBS (2024): 27% in PE
• Goldman Sachs (2025): 42% in alternatives (PE + hedge funds + real estate)
• JPMorgan (2024): 86% of family offices invest in PE

TOTAL PE CAPITAL FROM FAMILY OFFICES:
• $5.5 trillion × 30% = $1.65 trillion in PE
• This represents ~33% of total global PE assets ($5 trillion)

This is a seismic shift. For decades, family offices favored public equities—stocks you could buy and sell on exchanges. Now they've moved heavily into private equity, the least liquid, least transparent, and most extractive asset class.

Why the Shift to Private Equity?

According to UBS's 2024 Family Office Report, family offices are increasing PE allocations for several reasons:

Higher returns (claimed): PE firms report 15-20% annual returns vs. 10% for public markets
Illiquidity premium: Locking up capital for 7-10 years supposedly generates higher returns
Diversification: PE performance is less correlated with public stock markets
Control: PE funds actively manage companies (unlike passive stock ownership)
Tax advantages: Returns come as capital gains (20%) and carried interest (20%), not ordinary income (37%)

But there's another reason family offices love PE that reports don't emphasize: opacity.

The Perfect Alignment: Why Family Offices and PE Fit Together

Both Want the Same Things

Family offices and private equity firms share identical preferences:

WHAT FAMILY OFFICES WANT:
✓ High returns
✓ Tax optimization (capital gains, not income)
✓ Illiquidity (harder to tax, easier to hide)
✓ Opacity (no public disclosure)
✓ Multi-generational time horizon
✓ No redemptions/withdrawals from outside investors

WHAT PRIVATE EQUITY OFFERS:
✓ 15-20% claimed returns
✓ Carried interest (20% tax) + capital gains (20% tax)
✓ 7-10 year lockups (capital can't be withdrawn)
✓ No public reporting requirements
✓ Long holding periods (3-7 years typical)
✓ Limited partners can't force redemptions

RESULT: Perfect match

Public stocks are transparent—everyone can see what you own. Prices are public. Trades are reported. There's scrutiny.

Private equity is opaque. Only the PE firm and its investors know what's owned. Valuations are internal. Holdings are private. There's no SEC reporting (thanks to the 2011 family office exemption we documented in The Vault Part 1).

For family offices trying to hide $5.5 trillion in dynastic wealth, PE is the perfect vehicle.

The Illiquidity Advantage

Most investors see illiquidity as a cost—you can't access your money when you need it. But for family offices, illiquidity is a feature, not a bug.

Why? Because illiquid assets are harder to value and harder to tax.

Estate tax planning: When wealth passes to heirs, illiquid assets can be valued lower (reducing estate taxes)
Wealth tax avoidance: If a wealth tax were ever implemented, illiquid PE stakes would be hard to value
Forced holding: Can't panic-sell during market crashes (prevents wealth erosion from bad timing)

PE funds lock up capital for 7-10 years. For family offices with multi-generational time horizons, this isn't a problem—it's an advantage.

The Feedback Loop: From PE Partner to Family Office

How Successful PE Partners Create Family Offices

Here's where it gets circular:

Step 1: A PE partner works at KKR, Blackstone, Apollo, or Carlyle for 10-20 years.

Step 2: Through carried interest and management fees, the partner accumulates $100 million to $1 billion+ in personal wealth.

Step 3: The partner retires or becomes less active and sets up a family office to manage that wealth.

Step 4: The family office allocates 30% of its assets to... private equity funds.

Step 5: Those PE funds buy companies, load them with debt, extract fees, and return profits to the family office.

Step 6: The family office grows, and the cycle continues across generations.

THE PRIVATE EQUITY → FAMILY OFFICE CYCLE:

1. PE firm extracts wealth (from Toys R Us, nursing homes, apartment buildings)
↓
2. PE partners get rich (carried interest at 20% tax)
↓
3. Partners create family offices (once they hit $100M+ net worth)
↓
4. Family offices invest in PE (30% allocation, $1.65 trillion total)
↓
5. PE funds extract more wealth (the cycle repeats)
↓
RESULT: Extraction → Accumulation → Reinvestment → Dynasty

This is how dynastic wealth perpetuates itself. The people who profit from extraction create structures (family offices) that reinvest in more extraction (PE funds). The system feeds itself.

Examples of PE Partners With Family Offices

While family offices are secretive by design, we know some PE partners have established them:

Stephen Schwarzman (Blackstone): Net worth $40+ billion, manages wealth through private vehicles
Henry Kravis (KKR): Co-founder, estimated net worth $8+ billion
David Rubenstein (Carlyle): Co-founder, estimated net worth $3+ billion
Leon Black (Apollo): We documented his family office in The Vault Part 1—paid Jeffrey Epstein $170 million for "tax advice"

These aren't just wealthy individuals. They're dynasties. And their wealth is managed through family offices that invest heavily in the same PE funds that made them rich.

The Complete System: Connecting The Vault to The Playbook

The Architecture

Let's connect every piece we've documented:

THE VAULT SERIES showed:

8,030 family offices manage $5.5 trillion (growing to $9.5 trillion by 2030)
They're exempt from SEC regulation (2011 loophole)
They operate in complete opacity (no public disclosure)
They're the final form of dynastic wealth preservation

THE PRIVATE EQUITY PLAYBOOK showed:

PE firms buy companies with 60-80% debt
They extract $100+ billion annually in fees
They cause 110+ bankruptcies per year (10x normal rate)
They kill 20,150+ people (nursing homes), displace millions (housing), destroy jobs (retail)
PE partners pay 20% tax (carried interest loophole)

THE CONNECTION shows:

Family offices invest 30% ($1.65 trillion) in private equity
This creates a closed loop: extraction → accumulation → reinvestment
PE partners create family offices, which invest in more PE
The dynasty machine is self-perpetuating

THE COMPLETE SYSTEM ARCHITECTURE:

LAYER 1: THE VAULT (Family Offices)
• 8,030 offices managing $5.5 trillion
• Exempt from regulation
• Completely opaque
• Tax-optimized structures

LAYER 2: THE DEPLOYMENT (Private Equity)
• 30% of family office assets ($1.65T) → PE funds
• PE firms buy 30,000+ companies
• Load companies with $5T in debt
• Extract $100B+ annually in fees

LAYER 3: THE EXTRACTION (The Playbook)
• Toys R Us: $470M extracted, 33,000 jobs lost
• Healthcare: 20,150 deaths, surprise billing
• Housing: 45% rent increases, mass evictions
• 110 bankruptcies/year, 18% wage cuts

LAYER 4: THE RETURN (Back to Family Offices)
• Profits flow back as carried interest (20% tax)
• Family offices grow wealth
• Reinvest in more PE funds
• Dynasty perpetuates

LAYER 5: THE PROTECTION (Lobbying + Tax Code)
• $100M+ lobbying protects carried interest
• 2011 exemption keeps family offices unregulated
• Interest deductions subsidize debt loading
• System ensures extraction continues

The Numbers

Let's put the complete system in numbers:

THE DYNASTY MACHINE (BY THE NUMBERS):

WEALTH STORED:
• $5.5 trillion in family offices (2024)
• Growing to $9.5 trillion by 2030
• 8,030 offices → 10,720 offices

CAPITAL DEPLOYED:
• $1.65 trillion from family offices → PE
• $5 trillion total PE assets globally
• 30,000+ companies owned by PE

EXTRACTION OCCURRING:
• $100B+ annual fees to PE firms
• 110 bankruptcies/year (2024)
• 20,150 nursing home deaths (2005-2017)
• Millions of jobs lost, wages cut 18%
• Millions evicted, rents up 45%

TAX ADVANTAGES:
• Carried interest: 20% vs. 37% (saves PE partners billions)
• Capital gains: 20% on returns
• Interest deductions: companies deduct debt interest
• Cost to taxpayers: $18B+ over 10 years

POLITICAL PROTECTION:
• $100M+ lobbying by PE industry
• Every reform attempt failed (2007-2024)
• Family offices remain unregulated
• System perpetuates

Why This Matters

It's Not Just Wealth Inequality—It's a Self-Perpetuating System

Wealth inequality is nothing new. Rich people have always existed. But what we've documented across The Vault and The Private Equity Playbook is different: a self-sustaining machine designed to extract wealth from the real economy and concentrate it in dynastic structures that operate beyond democratic accountability.

Here's what makes it different:

1. Extraction is Active, Not Passive

Old wealth was often passive: inherit land, collect rent, live off dividends. Modern PE wealth is actively extractive: buy companies, load with debt, cut costs, extract fees, bankrupt companies, move on.

2. The System Is Hidden

Family offices don't report to the SEC. PE funds don't disclose portfolio companies publicly. Carried interest isn't listed on tax returns. The extraction happens invisibly.

3. It's Tax-Advantaged

Not only do PE partners extract wealth—they pay lower tax rates than teachers while doing it. And the debt they load onto companies is tax-deductible, subsidized by taxpayers.

4. It's Self-Reinforcing

PE profits create family offices. Family offices invest in PE. PE extracts more wealth. The cycle accelerates.

5. It's Politically Protected

$100 million in lobbying ensures carried interest survives. Regulatory exemptions keep family offices invisible. The system defends itself.

The Human Cost (Revisited)

This isn't an abstract economic debate. Real people bear the cost:

The 20,150 people who died in PE-owned nursing homes
The 33,000 Toys R Us workers who lost jobs and got zero severance
The families evicted from mobile home parks after 20+ years because PE raised rents 45%
The patients who received $100,000 surprise medical bills from PE-owned ER staffing companies
The communities that lost hospitals when Steward Health Care collapsed
The workers who saw wages fall 18% after displacement from PE-backed bankruptcies

While this extraction was happening, family offices grew from $4 trillion (2019) to $5.5 trillion (2024)—a $1.5 trillion increase in five years.

That $1.5 trillion didn't appear from nowhere. It came from workers, patients, and tenants.

What Changed?

How We Got Here

This system wasn't always this powerful. Key inflection points:

1980s: The LBO Era Begins

KKR pioneers leveraged buyouts
Tax code allows interest deductions on corporate debt
PE grows from niche to major industry

2000s: PE Goes Mainstream

Pension funds, endowments invest heavily in PE
PE firms go public (Blackstone IPO 2007)
Total PE assets grow to $1+ trillion

2008: The Financial Crisis Creates Opportunity

Housing crash → PE buys foreclosed homes at scale
Distressed companies → PE buyouts accelerate
Blackstone creates Invitation Homes (84,000 homes)

2011: Family Offices Become Invisible

SEC exempts family offices from registration
No disclosure, no oversight, complete opacity
Archegos scandal (2021) proves risks, but no reform

2017: Carried Interest Survives

Trump's tax bill leaves loophole mostly intact
PE lobbying defeats reform
Partners continue paying 20% vs. 37%

2022: Final Reform Attempt Fails

Kyrsten Sinema kills carried interest reform
After receiving $2.2M from PE industry
Loophole protected indefinitely

2024: PE Becomes Family Offices' #1 Asset Class

30% allocation (surpasses public equities)
$1.65 trillion deployed
110 PE bankruptcies in one year
System fully operational

The Trajectory

If current trends continue:

Family office assets will reach $9.5 trillion by 2030
At 30% PE allocation, that's $2.85 trillion in PE
PE will own even more hospitals, nursing homes, apartment buildings, and companies
Extraction will accelerate
Wealth concentration will increase

And the system will remain invisible, tax-advantaged, and politically protected.

THE COMPLETE PICTURE:

This is what we’ve documented across six parts and more than 30,000 words:

PART 1: The playbook—how PE uses debt and fees to extract wealth (Toys R Us: $470M extracted, 33,000 jobs lost)

PART 2: The healthcare empire—488 hospitals, 11% of nursing homes, 20,150 documented deaths

PART 3: The housing empire—2.2M apartments, 300K homes, 45% rent increases, mass evictions

PART 4: The cost—110 bankruptcies/year, 10x bankruptcy risk, 18% wage cuts, systemic destruction

PART 5: The loophole—PE partners pay 20% tax while teachers pay 22%, $100M lobbying protects it

PART 6: The connection—family offices invest $1.65T in PE, creating a closed loop where extraction becomes accumulation becomes reinvestment in more extraction

This is the dynasty machine. Extraction from the real economy → accumulation in family offices → reinvestment in private equity → more extraction. The system is self-perpetuating, tax-advantaged, politically protected, and completely opaque.

And now you understand how it works.

Family offices manage $5.5 trillion. They invest 30% ($1.65 trillion) in private equity. Those PE funds buy companies with debt, extract fees, cut costs, and cause bankruptcies at 10 times the normal rate. The profits flow back to family offices as carried interest (taxed at 20%) and capital gains (20%). The family offices grow. They reinvest in more PE. The cycle continues. Successful PE partners create family offices, which invest in more PE funds, which extract more wealth, which creates more family offices. By 2030, family offices will manage $9.5 trillion. At 30% PE allocation, that's $2.85 trillion deployed for extraction. The Vault showed where wealth hides. The Playbook showed how wealth extracts. The Connection shows how it all fits together into a self-perpetuating dynasty machine that operates beyond democratic accountability, pays lower taxes than working people, and destroys lives for profit. This is the system. And it's designed to never change.

Sources & Further Reading

COMPLETE SERIES LINKS:
• Part 1: The Playbook (How It Works)
• Part 2: The Healthcare Empire
• Part 3: The Housing Empire
• Part 4: The Cost
• Part 5: The Loophole
• Part 6: The Connection (You Are Here)

Disclaimer: This article synthesizes data from The Vault series and Parts 1-5 of The Private Equity Playbook, drawing on family office industry reports, academic research on PE ownership and outcomes, tax policy analysis, and investigative journalism. Asset allocation figures are from major financial institutions' family office surveys. This is educational content analyzing the relationship between family offices and private equity, not financial, legal, or investment advice.

The Private Equity Playbook Part 5: The Loophole How Private Equity Partners Pay 20% Tax on Billions While Teachers Pay 22% on $60,000—And Why $100 Million in Lobbying Has Killed Every Reform for 18 Years

The Private Equity Playbook Part 5: The Loophole

The Private Equity Playbook Part 5: The Loophole

How Private Equity Partners Pay 20% Tax on Billions While Teachers Pay 22% on $60,000—And Why $100 Million in Lobbying Has Killed Every Reform for 18 Years

Sarah is a public school teacher in Ohio. She makes $55,000 per year. She pays 22% federal income tax—$12,100. David is a private equity partner in New York. He made $50 million last year managing a fund. He pays 20% federal income tax—$10 million. How is this possible? Because of a tax loophole called "carried interest." When PE partners earn their share of fund profits—typically 20% of all gains—the IRS treats it as a capital gain, not ordinary income. Capital gains are taxed at 20% (or 23.8% with the net investment income tax). Ordinary income at that level is taxed at 37%. This loophole costs the federal government approximately $18 billion over 10 years. It benefits roughly 3,000 private equity and hedge fund partners—almost exclusively wealthy, white men. And despite bipartisan support for reform—Donald Trump campaigned on ending it, Democrats have written multiple bills to close it—every attempt has failed. Why? Because the private equity industry has spent more than $100 million lobbying to protect it. In 2022, when Democrats came closest to closing the loophole in the Inflation Reduction Act, Senator Kyrsten Sinema single-handedly killed the provision after receiving $2.2 million in campaign contributions from private equity and hedge funds. The playbook extracts wealth from workers, patients, and tenants. The loophole ensures PE partners keep that wealth. And the lobbying machine guarantees nothing changes.

What Is Carried Interest?

The Legal Definition

Carried interest is the share of investment profits that private equity and hedge fund managers receive as compensation. Typically, this is 20% of all profits above a certain threshold.

Here's how it works:

A private equity firm raises $1 billion from investors (pension funds, university endowments, wealthy individuals). The firm invests that money in companies. After several years, they sell those investments for $2 billion—a $1 billion profit.

The profit distribution:

Investors get 80%: $800 million
PE partners get 20%: $200 million (this is the "carried interest")

Additionally, PE firms charge a management fee (typically 2% of assets per year). On a $1 billion fund, that's $20 million annually in fees—taxed as ordinary income.

But the carried interest—the $200 million in profit share—is taxed as a long-term capital gain at 20%, not as ordinary income at 37%.

CARRIED INTEREST TAX TREATMENT:

WHAT IT IS:
• PE/hedge fund managers' share of investment profits
• Typically 20% of gains above a threshold
• Can be hundreds of millions per partner per year

HOW IT'S TAXED:
• Long-term capital gains rate: 20%
• Plus net investment income tax: 3.8%
• Total effective rate: 23.8%

HOW IT SHOULD BE TAXED (CRITICS ARGUE):
• Ordinary income rate for high earners: 37%
• Plus net investment income tax: 3.8%
• Total rate: 40.8%

THE DIFFERENCE:
• On $50 million: saves $8.5 million in taxes
• On $100 million: saves $17 million in taxes

The Argument For Carried Interest Treatment

The private equity industry argues that carried interest should be taxed as capital gains because:

PE partners are investing their time and expertise (their "sweat equity")
They take on risk—if the fund loses money, they get nothing
Capital gains tax rates are designed to encourage investment
This is how all investment partnerships work

According to the American Action Forum, "Carried interest represents a return on the general partner's human capital investment in the fund."

The Argument Against (Why It's a Loophole)

Critics—including economists, tax policy experts, and both progressive and conservative politicians—argue that carried interest is compensation for work, not a return on capital investment:

PE partners invest very little of their own money: In a typical fund, partners contribute 1-3% of total capital. The other 97-99% comes from outside investors.
This is their job: Managing investments is what PE partners do for a living. It's labor income, not passive investment returns.
No real risk: PE partners also earn guaranteed management fees (2% of assets). Even if carried interest is zero, they're paid millions.
Other professionals don't get this treatment: Corporate executives, lawyers, consultants who get performance bonuses pay ordinary income tax. Only PE/hedge fund managers get capital gains treatment.

As the Center for American Progress notes, "If carried interest were truly a return on invested capital, PE managers would have to put up their own money at risk. They don't."

THE COMPARISON EVERYONE CITES:

A teacher making $55,000:
• Federal income tax rate: 22%
• Actual tax owed: ~$12,100

A PE partner making $50,000,000:
• Carried interest taxed as capital gains: 20%
• Actual tax owed: ~$10,000,000

If taxed as ordinary income:
• Tax rate: 37%
• Tax owed: ~$18,500,000
• Difference: $8,500,000 saved

The teacher pays a HIGHER marginal rate than the PE billionaire.

The Cost: $18 Billion Over 10 Years

The Revenue Loss

According to the Joint Committee on Taxation, closing the carried interest loophole would raise approximately $14-18 billion in tax revenue over 10 years.

That's an average of $1.4-1.8 billion per year in lost tax revenue—money that could fund:

Teacher salaries
Infrastructure repairs
Healthcare programs
Veteran benefits
Deficit reduction

Instead, it goes to roughly 3,000 private equity and hedge fund partners.

Who Benefits?

The beneficiaries of carried interest are not a broad or diverse group. According to research, they are:

Approximately 3,000 individuals (mostly PE and hedge fund partners)
Overwhelmingly male (95%+)
Overwhelmingly white
Concentrated in New York, Connecticut, California, and Texas
Earning millions to hundreds of millions per year

This is not a middle-class tax break. This is a tax preference for the ultra-wealthy.

The Reform Attempts: 18 Years of Failure

The Timeline of Failed Reforms

Since 2007, there have been multiple serious attempts to close or limit the carried interest loophole. Every single one has failed.

TIMELINE OF FAILED CARRIED INTEREST REFORMS:

2007-2008: House Democrats pass bill to close loophole. Senate blocks it.

2010: Dodd-Frank financial reform legislation. Carried interest provision stripped out.

2015-2016: Presidential campaigns. Trump, Clinton, Sanders all call for ending it. Nothing happens.

2017: Trump's tax bill (Tax Cuts and Jobs Act). Loophole survives with minor tweak (holding period increased from 1 to 3 years).

2021: Biden's Build Back Better Act includes carried interest reform. Killed by Senator Kyrsten Sinema.

2022: Inflation Reduction Act (IRA). Democrats' last chance. Sinema kills it again.

2024-2025: No serious reform attempts. Loophole remains.

2017: Trump's Tax Bill (The Fake Reform)

Donald Trump campaigned explicitly on ending carried interest. He called it a tax break for "hedge fund guys getting away with murder."

When Republicans controlled the House, Senate, and White House in 2017, they had the power to end it. But the final tax bill left the loophole almost entirely intact.

The only change: the holding period for capital gains treatment increased from one year to three years. This meant PE funds had to hold investments for three years instead of one to get the favorable tax rate.

But most PE investments are held for 3-7 years anyway. The change was cosmetic.

Trump later admitted, "I tried. We couldn't get it."

Translation: The lobbying was too strong.

2021-2022: Kyrsten Sinema Kills Reform Twice

In 2021, Democrats controlled the House, Senate (by the slimmest margin), and White House. President Biden's Build Back Better Act included a provision to close the carried interest loophole.

Senator Kyrsten Sinema of Arizona demanded the provision be removed. She refused to vote for the bill unless carried interest was protected. The provision was stripped out.

In 2022, Democrats made one more attempt in the Inflation Reduction Act. Again, Sinema killed the carried interest reform.

Why?

KYRSTEN SINEMA'S CAMPAIGN CONTRIBUTIONS:

PRIVATE EQUITY & HEDGE FUND DONATIONS (2018-2024):
• Total raised: $2.2 million+
• Blackstone employees: Major donors
• KKR employees: Major donors
• Apollo employees: Major donors

LOBBYING BY PE INDUSTRY:
• $110 million spent on lobbying (2021-2022)
• American Investment Council (PE lobby group) led efforts
• Targeted Sinema specifically

RESULT:
• Carried interest reform stripped from IRA
• Loophole survives
• Sinema retires in 2024 (doesn't seek re-election)

According to The New York Times, Sinema received more money from private equity and hedge funds than any other industry sector during her time in the Senate. After blocking carried interest reform, she announced she would not seek re-election in 2024.

The Lobbying Machine

How Much the Industry Spends

The private equity industry has spent more than $100 million lobbying Congress since 2007 to protect carried interest and fight regulation.

PE INDUSTRY LOBBYING (2007-2024):

TOTAL SPENT: $100+ million

MAJOR YEARS:
• 2021-2022: $110 million (fighting IRA carried interest reform)
• 2017: Heavy lobbying during Trump tax bill
• 2010: Heavy lobbying during Dodd-Frank

KEY LOBBY GROUPS:
• American Investment Council (main PE trade group)
• Private Equity Growth Capital Council (merged with AIC)
• Individual firms: Blackstone, KKR, Carlyle, Apollo

LOBBYING TACTICS:
• Direct campaign contributions
• Industry-funded "research" claiming economic benefits
• Revolving door (hiring former members of Congress)
• Grassroots campaigns (funding fake "coalition" groups)

The Arguments They Use

When lobbying against carried interest reform, the PE industry makes several claims:

1. "It will hurt small businesses and startups."

This is misleading. Carried interest reform targets multi-million-dollar PE and hedge fund managers, not angel investors or small venture capital funds. Most reform proposals include exemptions for funds under a certain size.

2. "PE creates jobs and grows the economy."

We've already documented in Part 4 that PE buyouts result in 4.4-16% job losses and that PE companies are 10x more likely to go bankrupt. The "job creation" claim is industry propaganda.

3. "Closing the loophole won't raise much revenue."

The Joint Committee on Taxation estimates $14-18 billion over 10 years. While this won't solve the deficit alone, it's significant—and it's a matter of basic fairness.

4. "Other countries allow similar treatment."

Some do, some don't. But this is irrelevant to whether the policy is fair or economically sound.

The Revolving Door

One of the PE industry's most effective lobbying tactics is hiring former members of Congress and their staff.

Examples:

Former Senate Majority Leader Trent Lott: Lobbied for PE firms after leaving Congress
Former Senator John Breaux: Lobbied for PE after leaving Congress
Former Treasury officials: Multiple have joined PE lobby groups

When lawmakers know they can earn seven-figure salaries lobbying for PE after leaving office, they're less likely to support reforms that hurt the industry.

Why Reform Always Fails

The Narrow Coalition

Closing the carried interest loophole benefits:

The federal treasury ($14-18 billion over 10 years)
Taxpayers generally (more revenue = less deficit or more services)
Fairness/equity (high earners pay the same rates as other high earners)

But it harms a very small, very wealthy, very concentrated group of people who can afford to spend millions lobbying.

The beneficiaries (taxpayers, fairness advocates) are diffuse and disorganized. The opponents (3,000 PE partners) are concentrated and highly motivated. This is a classic case of concentrated benefits defeating diffuse costs.

Campaign Finance

PE firms and their partners donate heavily to both parties:

Republicans receive significant PE donations
Democrats receive significant PE donations (especially from Wall Street-friendly moderates)

This creates a bipartisan incentive to protect the loophole. Even politicians who publicly support reform often quietly undermine it.

Kyrsten Sinema is the most obvious example, but she's not alone. Multiple Democrats and Republicans have received PE money and then voted to preserve carried interest.

The "Deficit Hawk" Excuse

Ironically, some members of Congress who oppose closing carried interest cite "deficit concerns" when asked about other spending.

The logic is absurd: we can't afford healthcare, education, or infrastructure, but we can afford to give PE billionaires a $1.8 billion annual tax break?

This reveals the priorities: tax breaks for the ultra-wealthy are untouchable. Everything else is negotiable.

The Bigger Picture: How the System Is Rigged

Carried Interest Is Just One Piece

Carried interest is not the only tax advantage PE firms exploit:

1. Interest Deductions: When PE firms load companies with debt, those companies deduct the interest payments from taxable income. This reduces corporate tax revenue while increasing leverage.

2. Depreciation: PE firms can accelerate depreciation on assets, reducing taxable income further.

3. Offshore Structures: Some PE firms route investments through low-tax jurisdictions (Cayman Islands, Bermuda) to minimize taxes.

4. Estate Planning: PE partners use trusts, GRATs, and other tools to pass wealth to heirs with minimal estate taxes.

Carried interest is just the most visible and indefensible loophole. The entire tax code is tilted in favor of financial engineering over productive work.

Why This Matters

We've now documented:

Part 1: The playbook (how PE extracts wealth via debt and fees)
Part 2: Healthcare (20,150 deaths, surprise billing)
Part 3: Housing (millions displaced, 45% rent increases)
Part 4: The cost (110 bankruptcies, 18% wage cuts, systemic harm)
Part 5: The loophole (how extraction is tax-advantaged)

The pattern is clear:

PE firms buy companies with debt
They extract fees and cut costs
Workers lose jobs and wages
Patients die from quality cuts
Tenants are evicted and displaced
Companies go bankrupt at 10x the normal rate
And the PE partners pay lower tax rates than teachers

This isn't capitalism. This is a rigged system designed to transfer wealth upward while insulating the beneficiaries from consequences.

Private equity partners pay 20% tax on billions in income. Teachers pay 22% on $55,000. This loophole costs taxpayers $18 billion over 10 years and benefits roughly 3,000 people. Donald Trump campaigned on ending it and failed. Democrats wrote bills to close it and were blocked by Kyrsten Sinema—who received $2.2 million from the PE industry. The industry has spent $100+ million lobbying to protect the loophole, and every reform attempt since 2007 has failed. This is how the system is rigged. The playbook extracts wealth from workers, patients, and tenants. The loophole ensures PE partners keep that wealth at preferential tax rates. And the lobbying machine guarantees nothing changes. In Part 6, we'll close the loop. We'll show who funds private equity—where the $5 trillion in assets actually comes from. And we'll connect this entire series back to The Vault: how family offices invest 21-27% of their wealth in private equity, creating a cycle where extraction becomes accumulation becomes reinvestment in more extraction. The machine is complete. And now you understand how it works.

NEXT IN THE SERIES: Part 6 examines who actually funds private equity and where the extracted wealth ultimately goes. We'll show how family offices—the 8,030 private wealth firms managing $5.5 trillion for the ultra-rich—invest 21-27% of their assets in PE funds. This creates a closed loop: PE extracts wealth from the real economy, family offices accumulate that wealth tax-free, and then reinvest it in more PE funds to extract more wealth. The final piece connects The Vault series to The Private Equity Playbook: this is how generational wealth perpetuates itself. Extraction → accumulation → dynasty. The system is complete.

Sources & Further Reading

Disclaimer: This article presents analysis of tax policy, campaign finance records, and lobbying disclosures based on publicly available data. Tax revenue estimates are from the Joint Committee on Taxation and other official sources. Campaign contribution data is from Federal Election Commission records and investigative journalism. This is educational content about tax policy, not tax, financial, or legal advice.

The Private Equity Playbook Part 4: The Cost 110 Bankruptcies in 2024, 20,150 Deaths in Nursing Homes, 18% Wage Cuts After 3 Years, 10x Higher Bankruptcy Risk—The Complete Accounting of What Private Equity Has Taken From America

The Private Equity Playbook Part 4: The Cost

The Private Equity Playbook Part 4: The Cost

110 Bankruptcies in 2024, 20,150 Deaths in Nursing Homes, 18% Wage Cuts After 3 Years, 10x Higher Bankruptcy Risk—The Complete Accounting of What Private Equity Has Taken From America

In 2024, there were 110 private equity-backed bankruptcies—the highest number on record. PE-backed companies accounted for 11% of all bankruptcies despite PE owning only 6.5% of the economy. In the first quarter of 2025, 70% of large bankruptcies (those with more than $1 billion in liabilities) were PE-backed companies. Academic research shows PE-owned companies are 10 times more likely to go bankrupt than comparable non-PE companies. When they do go bankrupt, jobs disappear: studies document 4.4% job losses within two years of a PE buyout, rising to 13% for public-to-private deals. Workers who lose their jobs see wages fall 18% within three years. Those who stay see minimal wage growth. But job losses and wage cuts are just part of the cost. We've already documented 20,150 deaths in PE-owned nursing homes and a 13.4% increase in emergency room deaths at PE-owned hospitals. We've shown how PE landlords evict tenants at 5-6 times the rate of small landlords, how rents increased 45% at mobile home parks, and how families were displaced from homes they'd lived in for decades. This is Part 4: the complete accounting. We're aggregating the damage across every sector—retail, healthcare, housing, and more. We're showing the total jobs lost, the total wealth extracted, the total communities destroyed. And we're proving this isn't bad luck or market forces. This is systemic extraction by design.

The Bankruptcy Crisis: 2024-2025

The Numbers

According to Axios analysis of bankruptcy data, 2024 was the worst year on record for PE-backed bankruptcies:

PE-BACKED BANKRUPTCIES (2024-2025):

2024 TOTAL:
• 110 PE-backed bankruptcies (highest on record)
• 15% increase from 2023 (96 bankruptcies)
• 11% of ALL bankruptcies were PE-backed
• PE owns only 6.5% of the economy

LARGE BANKRUPTCIES:
• Q1 2025: 70% of large bankruptcies (>$1B liabilities) were PE-backed
• 2024: 54% of large bankruptcies were PE-backed

HEALTHCARE:
• 21% of healthcare bankruptcies in 2024 were PE-backed

COMPARATIVE RISK:
• PE companies 10x more likely to go bankrupt (CFA Institute)
• PE companies 2x more likely to default on debt (Strömberg 2008)

Let that sink in: PE owns 6.5% of the economy but causes 11% of bankruptcies. In large bankruptcies—those exceeding $1 billion in liabilities—PE's share jumps to 54-70%.

This isn't random. This is the playbook: load companies with unsustainable debt, extract fees, exit before collapse.

Major 2024 Bankruptcies

Some of the largest PE-backed bankruptcies in 2024 included:

99 Cents Only Stores: 10,800 jobs lost, 371 stores closed
Prospect Medical Holdings: Hospital chain serving vulnerable communities
Joann Craft Stores: Second bankruptcy in one year
Forever 21: Retail collapse
H-Food Holdings: Food service company

Each bankruptcy represents thousands of jobs lost, communities without services, creditors unpaid, and workers left with nothing.

Why PE Companies Go Bankrupt More

The academic evidence is clear. A CFA Institute study found PE-backed companies are approximately 10 times more likely to go bankrupt than comparable non-PE companies.

Why? Because of leverage.

Remember the Toys R Us numbers: $7.6 billion in debt on a $6.6 billion acquisition. That's 5.8:1 debt-to-equity. The company was paying $400 million per year in interest—more than its entire operating loss.

When you load a company with that much debt, any economic shock can trigger bankruptcy. A bad quarter. A missed holiday sales target. A supplier demanding cash upfront. The debt leaves no margin for error.

And PE firms know this. They extract fees upfront—transaction fees, management fees, advisory fees—so they profit even if the company fails.

The Job Losses: Millions of Workers

The Academic Evidence

A 2019 Harvard and University of Chicago study analyzed employment at thousands of PE-backed companies. The findings:

JOB LOSSES AFTER PE BUYOUTS:

OVERALL:
• 4.4% job loss within 2 years of buyout
• Losses concentrated in first 2 years post-acquisition

BY DEAL TYPE:
• Public-to-Private Buyouts: 13% job loss
• Divisional Carveouts: 16% job loss
• Private-to-Private: Minimal job loss

INTERNATIONAL COMPARISON:
• Germany: 12% job loss after PE buyout (Antoni et al. 2019)

CURRENT EMPLOYMENT:
• 11.7 million workers at PE-owned companies (2020)
• Up from 8.8 million (2018)
• Growth from buying MORE companies, not creating jobs

The 4.4% average masks significant variation. Public companies taken private by PE see 13% job losses. When PE firms buy divisions from larger companies (carveouts), job losses reach 16%.

And critically: the study found that PE firms don't create jobs—they buy existing companies and cut employment. The increase from 8.8 million to 11.7 million workers reflects PE buying more companies, not employment growth at existing companies.

Toys R Us in Context

The 33,000 jobs lost at Toys R Us weren't an outlier. They were typical.

When 99 Cents Only closed 371 stores in 2024, 10,800 workers lost jobs. When Gymboree went bankrupt (also PE-backed), thousands more. When Payless Shoes collapsed (PE-backed), 16,000 jobs gone.

Each bankruptcy follows the same pattern: load with debt, extract fees, cut costs, collapse. Workers bear the cost.

The Wage Cuts: 18% Loss After 3 Years

What Happens to Workers Who Lose Jobs

Job losses are devastating. But what happens to workers who get laid off from PE-backed companies?

The Harvard/UChicago study tracked workers over time and found that workers displaced from PE-owned firms experience severe wage losses:

WAGE LOSSES FOR DISPLACED WORKERS:

YEAR 1: 10% wage loss
YEAR 3: 18% wage loss
LONG-TERM: Losses persist for years

WHO BEARS THE COST:
• Workers who LEAVE PE firms (voluntarily or not) see massive losses
• Workers who STAY see minimal wage changes
• Workers who can't find new jobs bear the worst losses

AVERAGE ACROSS ALL WORKERS:
• 1.7% wage decrease overall
• But this masks 18% losses for those who leave

This is critical: the average wage change is only -1.7% because it includes workers who stayed at the PE-owned company. But workers who lost their jobs—whether through layoffs or because conditions became unbearable—saw wages fall 10% in the first year and 18% by year three.

These aren't temporary setbacks. These are permanent income losses. A worker making $50,000 who loses 18% sees their income drop to $41,000. Over a career, that's hundreds of thousands of dollars in lost earnings.

Why Wages Fall

When PE-backed companies lay off workers, those workers often can't find equivalent jobs. Why?

Skill mismatch: A Toys R Us manager's retail experience may not transfer to other industries
Local labor markets: If PE bought all the major employers in a sector/region, there are fewer options
Age discrimination: Older workers laid off struggle to find new jobs
Recession timing: Many PE bankruptcies cluster during economic downturns

The result: displaced workers take lower-paying jobs, work part-time, or leave the workforce entirely.

The Death Toll: Tens of Thousands

Healthcare Deaths (From Part 2)

We've already documented the healthcare mortality data in Part 2, but it bears repeating in this accounting:

DOCUMENTED DEATHS FROM PE HEALTHCARE OWNERSHIP:

NURSING HOMES (2005-2017):
• 20,150 additional deaths
• 10% mortality increase after PE acquisition
• 1,680 deaths per year average
• Caused by: 3% staffing cuts, 50% increase in antipsychotic drug use

HOSPITALS (RECENT STUDIES):
• 13.4% increase in ER deaths after PE acquisition
• 7 additional deaths per 10,000 ER visits
• 25% increase in hospital-acquired complications
• 38% increase in bloodstream infections

TOTAL: Tens of thousands of preventable deaths

These aren't projections. These are peer-reviewed academic studies with control groups, controlling for patient health status and facility characteristics.

20,150 people died in nursing homes because PE firms cut nursing staff to service debt and extract fees.

Emergency room deaths increased 13.4% because PE firms cut ER and ICU staffing.

These deaths are the direct result of the playbook: load with debt, cut costs, extract fees.

The Housing Crisis: Millions Displaced

Evictions and Rent Burden (From Part 3)

We documented the housing data in Part 3, but here's the summary for the total accounting:

PE HOUSING EXTRACTION:

OWNERSHIP:
• 300,000+ single-family homes
• 2.2 million apartment units (10% of US apartments)
• 1,800+ mobile home parks (200,000+ residents)

RENT INCREASES:
• 10% per year at Invitation Homes (double market rate)
• 45% at mobile home parks over decade
• Individual cases: $1,850 to $3,000 in 4 years

EVICTIONS:
• 8% more likely at PE single-family homes (Atlanta)
• 5-6x more likely at PE single-family homes (Las Vegas)
• 40% increase at PE mobile home parks (Florida)
• 3x increase at PE apartments (Toronto)

QUALITY DECLINE:
• Mold, sewage backups, vermin infestations
• Repair requests unfulfilled for months
• Infrastructure deterioration

Housing is different from retail or even healthcare because it's the foundation of everything else. When families are evicted, children change schools. Communities are disrupted. Savings are depleted. Instability cascades.

And unlike retail bankruptcies (where workers lose jobs but stores can reopen), when PE displaces families from housing, those families often can't find affordable alternatives. The damage is permanent.

The Wealth Extracted: Trillions

The Fee Structure

We've shown specific examples throughout this series:

Toys R Us: $470 million in fees (2005-2017)
Invitation Homes: Blackstone made $1.7 billion (2012-2019)
Plaza Del Rey mobile home park: Carlyle made $87 million in 4 years

But what's the total across the entire PE industry?

TOTAL PE ASSETS UNDER MANAGEMENT:

GLOBAL:
• $5+ trillion in assets (2024)
• 12 million+ workers employed by PE-owned companies (US)
• 30,000+ companies owned globally

FEE STRUCTURE:
• 2% annual management fee on $5 trillion = $100 billion/year
• 20% carried interest on profits
• Transaction fees every time debt is added
• Advisory fees charged to portfolio companies

ESTIMATED ANNUAL EXTRACTION:
• $100+ billion in management fees alone
• Additional billions in transaction fees, advisory fees, dividends
• Much of this coming from debt-loaded companies that later fail

The 2% management fee on $5 trillion in assets equals $100 billion per year in guaranteed income to PE firms—regardless of whether their investments succeed or fail.

And that doesn't include carried interest (20% of profits), transaction fees (charged every time a company borrows more), or advisory fees (like the $15 million/year Toys R Us paid).

Where Does This Money Come From?

The fees don't come from thin air. They come from:

Workers: Wage cuts, job losses, reduced benefits
Customers: Price increases, quality decline, reduced services
Patients: Surprise medical bills, staffing cuts, increased mortality
Tenants: Rent increases, evictions, deferred maintenance
Creditors: Unpaid debts when companies go bankrupt
Taxpayers: Lost tax revenue from interest deductions and carried interest loophole

This is extraction. Wealth is transferred from workers, customers, patients, and tenants to PE firms and their investors.

The Systemic Pattern

It's Not Bad Luck

Across every sector we've examined—retail, healthcare, housing—the pattern is identical:

THE PLAYBOOK (SUMMARY):

STEP 1: BUY WITH DEBT
• 60-80% leverage (sometimes more)
• Company pays the debt, not PE firm

STEP 2: EXTRACT FEES
• Management fees (2% annually)
• Transaction fees (every time debt is added)
• Advisory fees (charged to portfolio companies)

STEP 3: CUT COSTS
• Retail: Staff cuts, store closures
• Healthcare: Nursing cuts, quality decline
• Housing: Deferred maintenance, mass evictions

STEP 4: INCREASE PRICES
• Retail: Prices up to maintain margins
• Healthcare: Surprise billing, higher costs
• Housing: Rent increases 40-100%

STEP 5: EXIT
• IPO (take public, cash out)
• Sale to another PE firm
• Dividend recapitalization (borrow more, pay yourself)
• Bankruptcy (walk away, creditors absorb losses)

RESULT:
• PE firms profit from fees regardless of outcome
• Workers lose jobs and wages
• Customers/patients/tenants pay more for less
• Communities lose essential services
• Taxpayers subsidize through tax advantages

The Numbers Don't Lie

The evidence is overwhelming:

PE companies are 10x more likely to go bankrupt
PE buyouts result in 4.4-16% job losses
Displaced workers see 18% wage cuts within 3 years
PE nursing homes have 10% higher mortality (20,150 deaths)
PE hospitals have 13.4% higher ER deaths
PE landlords evict at 5-6x higher rates
PE mobile home parks raise rents 45% while trapping residents

This isn't a few bad actors. This is systemic extraction by design.

Who Pays?

Workers

33,000 jobs lost at Toys R Us alone
10,800 jobs lost at 99 Cents Only (2024)
Millions of jobs lost across all PE bankruptcies
18% wage cuts for displaced workers
Lost pensions, lost severance, lost benefits

Patients

20,150 deaths in nursing homes (documented)
Thousands more from increased ER deaths
Surprise medical bills reaching six figures
Communities losing hospitals and emergency access

Tenants

Rent increases of 40-100%
Evictions at 5-6x normal rates
Families displaced after decades
Mobile home residents trapped (can't afford to move)

Communities

60,000+ people lost ER access when Steward hospitals closed
Small towns lost only toy store when Toys R Us collapsed
Neighborhoods destabilized by mass evictions
Essential services disappear when PE-backed companies fail

Creditors and Taxpayers

Creditors unpaid when debt-loaded companies go bankrupt
Taxpayers lose revenue from interest deductions (companies deduct debt interest)
Taxpayers lose revenue from carried interest loophole (Part 5 will detail this)
Government agencies (Fannie Mae) provide subsidized loans to PE firms

In 2024 alone, 110 PE-backed companies went bankrupt—11% of all bankruptcies from firms that own just 6.5% of the economy. Those bankruptcies cost tens of thousands of jobs, left creditors unpaid, and destroyed communities. But that's just one year. Over the past two decades, private equity has bought 30,000+ companies, loaded them with $5+ trillion in debt, extracted hundreds of billions in fees, and left millions of workers worse off. We've documented 20,150 deaths in nursing homes, 13.4% higher ER mortality at hospitals, 18% wage losses for displaced workers, and eviction rates 5-6x higher than small landlords. This is the cost. Not the cost of "creative destruction" or "market forces." The cost of a specific business model: leveraged buyouts that load companies with unsustainable debt, extract fees upfront, cut costs to service that debt, and exit before the collapse. In Part 5, we'll show you why this is legal. We'll explain the carried interest loophole—how PE partners pay 20% tax on billions in income while teachers pay 22% on $60,000. We'll document the lobbying machine that kills every reform attempt. And we'll show you exactly how much this costs taxpayers: $18 billion over 10 years, benefiting roughly 3,000 people. The destruction is systemic. The tax advantage is intentional. And the lobbying ensures it never changes.

NEXT IN THE SERIES: Part 5 examines the carried interest loophole—the tax advantage that lets private equity partners pay 20% tax on billions in income while workers pay higher rates on far less. We'll show how PE firms have spent $100+ million lobbying to protect this loophole, how every reform attempt since 2007 has failed, and why even Donald Trump (who campaigned on ending it) and Democrats (who wrote bills to close it) couldn't kill it. The playbook extracts wealth. The loophole protects the extraction. And the lobbying ensures nothing changes. This is how the system is rigged.

Sources & Further Reading

Disclaimer: This article aggregates data from peer-reviewed academic studies, federal bankruptcy records, and investigative journalism. Statistical claims regarding bankruptcy rates, job losses, wage changes, and mortality are sourced to specific published research. Financial figures are drawn from public filings and credible news sources. This is educational content synthesizing published research, not financial, legal, or investment advice.

The Private Equity Playbook Part 3: The Housing Empire How Blackstone Bought 84,000 Homes, Raised Rents 10% Per Year, Filed Evictions on 33% of Tenants Annually, and Made $1.7 Billion—While Fannie Mae Gave Them a $1 Billion Government-Backed Loan

The Private Equity Playbook Part 3: The Housing Empire

The Private Equity Playbook Part 3: The Housing Empire

How Blackstone Bought 84,000 Homes, Raised Rents 10% Per Year, Filed Evictions on 33% of Tenants Annually, and Made $1.7 Billion—While Fannie Mae Gave Them a $1 Billion Government-Backed Loan

In 2012, as millions of Americans lost their homes to foreclosure, Blackstone saw an opportunity. The world's largest private equity firm spent $10 billion buying 84,000 foreclosed single-family homes at rock-bottom prices. They called the company Invitation Homes. By 2017, they took it public in a $1.8 billion IPO. By 2019, Blackstone sold its stake for $1.7 billion—more than doubling their money in seven years. During that time, rents at Invitation Homes increased 10% per year in markets like Oakland—double the norm. Tenants reported mold, sewage backups, nails poking through floors, and repair requests that went unfulfilled for months. Eviction filings increased: PE landlords were 8% more likely to file evictions than small landlords in Atlanta, and 5-6 times more likely in Las Vegas. But single-family homes are just one piece of the housing empire. Private equity now owns 2.2 million apartment units—10% of all US apartments. They own 1,800+ mobile home parks, where they've raised rents 45% over the past decade while trapping residents who can't afford the $10,000+ cost to move their homes. And here's the kicker: Fannie Mae and Freddie Mac—government-backed mortgage agencies—financed 50% of these mobile home park purchases and gave Invitation Homes a $1 billion loan. The federal government helped private equity buy America's housing. And now millions of renters are paying the price.

The Scale: What Private Equity Owns

The Post-Crisis Opportunity

After the 2008 financial crisis, millions of Americans lost their homes to foreclosure. Housing prices crashed. And private equity firms saw an opportunity that had never existed before: buy single-family homes at scale.

Traditionally, single-family rental homes were owned by small landlords—individuals or families who owned a few properties. But during the foreclosure crisis, PE firms realized they could buy thousands of homes at once, creating an institutional rental business.

Blackstone led the way. Between 2012 and 2017, the firm spent $10 billion acquiring 84,000 homes across the United States. They bundled them into a company called Invitation Homes, hired property management firms, and became America's largest single-family landlord.

PE OWNERSHIP OF HOUSING (2024):

SINGLE-FAMILY HOMES:
• Invitation Homes (Blackstone): 84,000 homes
• American Homes 4 Rent: 59,000+ homes
• Progress Residential: 93,000+ homes
• Total PE-owned single-family rentals: 300,000+ homes

APARTMENTS:
• 2.2 million units (10% of all US apartments)
• 25%+ of apartments in Atlanta, Austin, Charlotte, Denver
• Concentrated in Sun Belt markets

MOBILE HOME PARKS:
• 1,800+ parks owned by 23 PE firms
• 200,000+ residents affected
• Carlyle Group, Brookfield, Apollo, others

GOVERNMENT BACKING:
• Fannie Mae gave Invitation Homes $1 billion loan (2017)
• Fannie/Freddie financed 50% of PE mobile home park purchases

How They Financed It

Here's the most infuriating part: the federal government helped them.

In 2017, Fannie Mae—a government-sponsored enterprise that backs mortgages—gave Invitation Homes a $1 billion loan. This allowed Blackstone to borrow at lower rates than typical landlords because the loan had an implicit government guarantee.

Fannie Mae and Freddie Mac also financed approximately 50% of private equity mobile home park purchases. When PE firms bought parks to jack up rents and evict residents, they did it with government-backed loans.

The justification? These loans would "stabilize the housing market" and "provide rental housing." In reality, they helped PE firms consolidate ownership and extract wealth from renters.

Case Study 1: Single-Family Homes—The Invitation Homes Model

The Business Model

Invitation Homes pioneered the institutional single-family rental model. The strategy:

1. Buy foreclosed homes in bulk (2012-2017, during the post-crisis collapse)

2. Renovate minimally (enough to rent, not enough to maintain quality)

3. Raise rents aggressively (10% per year in hot markets)

4. Centralize management (use algorithms to set rents, outsource repairs)

5. File evictions aggressively (faster turnover = higher rents for next tenant)

6. Exit via IPO or sale (take the company public, cash out)

What Happened to Rents

According to tenant complaints and local news investigations, rents at Invitation Homes increased far faster than comparable properties:

Oakland, CA: Rents increased 10% per year (double the market average)
Individual cases: Tenants reported rent jumping from $1,850 to over $3,000 in four years
Sudden increases: One tenant saw rent increase $800 at once

The increases weren't tied to improvements or market conditions. They were algorithmic—designed to extract maximum revenue regardless of tenant ability to pay.

Quality Decline

While rents increased, quality declined. Tenants reported:

Mold and water leakage
Sewage backups
Nails poking through floors
Vermin infestations (spiders, cockroaches, ants)
Broken appliances (garage doors, heating, stoves, microwaves)
Repair requests unfulfilled for months

In 2017, tenants protested at Blackstone's offices demanding a meeting. Blackstone never responded.

Eviction Rates

Academic research shows PE landlords evict at significantly higher rates than small landlords:

PE LANDLORD EVICTION RATES:

ATLANTA STUDY:
• PE landlords 8% more likely to file evictions than small landlords
• Some PE firms filed evictions on 33% of properties annually

MINNEAPOLIS STUDY:
• PE tenants 17-26% more likely to receive eviction filings

LAS VEGAS STUDY:
• PE landlords evict 5-6x more than small landlords

WHY:
• Algorithmic rent-setting ignores tenant circumstances
• Centralized management = less flexibility
• Eviction = faster way to raise rents (new tenant pays more)

Traditional small landlords often work with tenants during financial hardship—accepting partial payments, delaying increases. PE landlords use algorithms that automatically file evictions when rent is late.

Blackstone's Exit

In 2017, Blackstone took Invitation Homes public via IPO, raising $1.8 billion. By 2019, Blackstone sold its remaining stake for $1.7 billion.

The firm had invested approximately $10 billion buying and operating the homes. They exited with more than double their money in seven years—while tenants paid the cost through higher rents, deferred maintenance, and evictions.

Case Study 2: Mobile Home Parks—The Worst Extraction

Why Mobile Home Parks?

Mobile home parks are the perfect target for PE extraction because residents are trapped.

When you rent an apartment, you can move if the landlord raises rent. When you own a mobile home in a park, you own the home but rent the land underneath it. And moving a mobile home costs $10,000-$15,000—more than most residents can afford.

This creates a captive customer base. PE firms realized: buy the park, raise the rent, and residents have no choice but to pay or lose their homes.

The Scale

According to Pew Research, at least 23 private equity firms now own 1,800+ mobile home parks, affecting 200,000+ residents. The largest players include:

Carlyle Group
Brookfield Asset Management
Apollo Global Management
Stockbridge Capital

And critically: Fannie Mae and Freddie Mac financed approximately 50% of these acquisitions. The government helped PE buy parks that would become extraction machines.

What Happened to Rent

Census data shows mobile home park rents have increased 45% over the past decade—far outpacing inflation and wage growth.

But individual parks show even more extreme increases:

CARLYLE GROUP CASE STUDY:
PLAZA DEL REY (California):

• Purchase: Carlyle bought for $150 million (2015)
• Rent Increases: 8% per year (previous owner: 3% per year)
• Sale: Sold for $237 million (2019)
• Carlyle Profit: $87 million in 4 years

RESIDENT IMPACT:
• Lot rent (land only) went from $700/month to $1,100/month
• Many residents on fixed incomes (Social Security)
• Moving cost: $10,000+ (most couldn't afford it)
• Choice: Pay or lose your home

This is the model: buy parks in desirable locations (often near cities where land values are rising), raise rents to extract maximum value, hold for 3-7 years, sell to another investor. Residents bear the cost.

Evictions and Displacement

A Florida study found that eviction filings increased 40% after mobile home parks were sold to PE firms.

When residents can't pay the higher rent, they face eviction. But unlike apartment evictions, mobile home evictions mean:

Losing the home: If you can't afford to move it ($10K+), you lose it
Impossible timelines: North Carolina gives residents 21 days to remove their home; Virginia gives 90 days but requires rent payments during that period
No recourse: Most residents have no legal representation in eviction proceedings

The result: residents who've lived in parks for decades are displaced. Their homes—often their only asset—are lost.

Quality Decline

While raising rents, PE park owners cut maintenance costs. Residents report:

Sewage backups left unrepaired
Hazardous dead trees
Foul-smelling water
Unpaid trash service (trash piling up)
Roads deteriorating
Street lights broken

The parks become cash cows: extract rent, defer maintenance, exit before infrastructure collapses.

Case Study 3: Apartments—The Rent Burden

The Concentration

Private equity now owns approximately 2.2 million apartment units—10% of all US apartments. But the ownership is concentrated in specific markets:

Atlanta: 25%+ of apartments PE-owned
Austin: 25%+ PE-owned
Charlotte: 25%+ PE-owned
Denver: 25%+ PE-owned

In Tampa-St. Petersburg, the percentage of cost-burdened renters (paying more than 30% of income on housing) rose from 52.6% to 61% between 2019 and 2023—as PE firms bought significant apartment inventory.

The Toronto Study: Evictions Triple

A 2020 study of Toronto apartments found that after acquisition by financial firms (including PE), eviction filings tripled. The firms used evictions strategically:

Evict existing tenants
Renovate minimally
Re-rent at much higher rates

This isn't about problem tenants. It's about clearing units to raise rents.

The Playbook (It's Always the Same)

The Five Steps

Whether it's Toys R Us, nursing homes, or housing, the playbook is identical:

THE PRIVATE EQUITY HOUSING PLAYBOOK:

1. BUY WITH DEBT:
• Acquire foreclosed homes, distressed parks, apartment complexes
• Use leverage (60-80% debt)
• Government often backs the loans (Fannie Mae)

2. RAISE PRICES IMMEDIATELY:
• Rents up 8-10% per year (or more)
• Algorithmic pricing (no negotiation)
• Exploit trapped residents (mobile homes)

3. CUT COSTS:
• Defer maintenance
• Outsource repairs to lowest bidder
• Leave requests unfulfilled

4. FILE EVICTIONS AGGRESSIVELY:
• 5-6x higher eviction rates than small landlords
• Faster turnover = higher rents
• No flexibility for tenant hardship

5. EXIT IN 3-7 YEARS:
• IPO (Invitation Homes)
• Sale to another PE firm
• Cash out with 2-3x returns

RESULT:
• PE firms profit
• Rents become unaffordable
• Quality declines
• Residents displaced

The Government's Role

The most enraging part: the federal government enabled this.

Fannie Mae gave Invitation Homes a $1 billion loan. Fannie Mae and Freddie Mac financed 50% of PE mobile home park purchases. These are government-sponsored enterprises—their mission is to "facilitate equitable and sustainable access to homeownership and quality affordable rental housing."

Instead, they helped PE firms buy housing at scale, raise rents, and evict tenants.

The Human Cost

What the Numbers Mean

Behind every statistic is a person:

The single mother whose rent increased $800 at once
The elderly couple on Social Security facing eviction from their mobile home park after 20 years
The family living with mold and sewage backups while Blackstone collected 10% annual rent increases
The tenant whose repair requests went unanswered for months while PE executives cashed out billions

DOCUMENTED HARM:

RENT INCREASES:
• 10% per year at Invitation Homes (Oakland)
• 45% over decade at mobile home parks
• 61% of Tampa renters cost-burdened (2023)

EVICTIONS:
• 8% more likely at PE single-family homes (Atlanta)
• 5-6x more likely at PE single-family homes (Las Vegas)
• 40% increase at PE mobile home parks (Florida)
• 3x increase at PE apartments (Toronto)

QUALITY:
• Mold, sewage, vermin infestations
• Unpaid trash service, broken infrastructure
• Repair requests unfulfilled for months

DISPLACEMENT:
• Residents evicted after decades
• Mobile homes lost (can't afford $10K to move)
• Communities destroyed

The Invitation Homes Settlement

In 2023, Invitation Homes agreed to pay $650,000 to settle claims that it overcharged tenants and violated rental laws. The violations included:

Charging unlawful fees
Misrepresenting lease terms
Failing to provide required disclosures

$650,000 split among thousands of tenants equals maybe $50-100 per person. Blackstone made $1.7 billion when it exited.

Why This Matters More Than Toys R Us

Housing Is a Basic Need

When Toys R Us collapsed, 33,000 people lost jobs. That was tragic.

When PE-owned nursing homes cut staff, 20,150 people died. That was horrifying.

But housing is different. Housing is the foundation of everything else:

Where your kids go to school depends on where you can afford to live
Whether you can save money depends on your rent
Whether you have stability depends on not getting evicted
Whether you have community depends on not being displaced

When PE firms buy housing at scale, raise rents 40-100%, and evict aggressively, they're not just extracting wealth. They're destabilizing entire communities.

The Concentration Problem

When PE owns 25% of apartments in Atlanta, Austin, Charlotte, and Denver, they set the market. When Invitation Homes raises rents 10% per year, other landlords follow. When PE firms in mobile home parks raise lot rent 8% annually, it becomes the norm.

This is how PE ownership drives up rents even for people who don't rent from PE landlords. The concentration of ownership changes market dynamics.

The Algorithmic Cruelty

Traditional small landlords have relationships with tenants. If a tenant loses a job or has a medical emergency, a small landlord might work with them—accepting partial payment, delaying an increase.

PE landlords use algorithms. If rent is late, the system automatically files eviction. There's no negotiation, no flexibility, no consideration of circumstances.

This is extraction by spreadsheet. And it works—until society collapses under the weight of unaffordable housing.

Private equity now owns 300,000+ single-family homes, 2.2 million apartment units, and 1,800+ mobile home parks. They've raised rents 10% per year while cutting maintenance, filed evictions at 5-6x the rate of small landlords, and displaced tens of thousands of families. Blackstone made $1.7 billion flipping Invitation Homes in seven years. Carlyle made $87 million flipping a mobile home park in four years. And the federal government helped them do it—Fannie Mae and Freddie Mac financed the acquisitions. This is the playbook applied to housing: buy with debt, raise prices, cut costs, evict aggressively, exit with profits. And unlike retail or healthcare, when housing extraction fails, there's no safety net. Families become homeless. Communities are destroyed. The foundation crumbles. In Part 4, we'll aggregate the cost across all sectors—retail, healthcare, housing, and more. We'll show the total job losses, the total deaths, the total wealth extracted. We'll document what private equity has taken from America over the past 20 years. And then we'll show you why it's legal, why it's tax-advantaged, and who actually benefits. The playbook works the same everywhere. The destruction is systemic.

NEXT IN THE SERIES: Part 4 examines the aggregate cost of private equity across all sectors. We'll compile the total job losses (millions), the total deaths (tens of thousands), the total wealth extracted (trillions), and the total communities destroyed (uncounted). We'll show bankruptcy rates for PE-backed companies versus non-PE companies, document the wage stagnation in PE-owned firms, and calculate the societal cost of debt-fueled extraction. The data will prove this isn't a few bad actors—it's a systemic machine designed to extract wealth from the real economy and transfer it to financial firms and their investors. And then we'll show you who those investors are.

Sources & Further Reading

Disclaimer: This article presents research and analysis based on government data, academic research, investigative journalism, and public records. Claims regarding rent increases, eviction rates, and quality declines are sourced to specific studies and news investigations. Financial figures (purchase prices, sale prices, profits) are drawn from public filings and news reports. This is educational content, not financial, legal, or housing advice.

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Saturday, January 17, 2026