When the Great Recession hit, Stephen Schwarzman, the "King of Private Equity," and his company the Blackstone Group bought thousands of foreclosed homes while lobbying against protections for renters, making billions by com-modifying basic human rights.
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00:01You have been defending for a very long time the reputation of the private equity industry
00:05and you happened to go visit with Angela Merkel, I think this was before she was running the
00:10entire country.
00:11No, she was running.
00:12She was running the country.
00:13Yeah, she was chancellor.
00:14Well, it was funny, there was a whole thing about private equity people being locusts
00:18and she said, you know, I understand you are locust.
00:27So I'm looking at her doing a locust and so I said, I said, well, I am good, good locust.
00:38Steven Schwartzman is the co-founder of Blackstone and Blackstone is the largest private equity
00:44firm in the world.
00:46This is a guy who wants to expand, who wants to win, right?
00:51Build the biggest firm with the biggest deals.
00:54The sun never sets on Blackstone.
00:56They don't have a part of the world that's not covered by their dealmakers and their
01:00investors.
01:01Private equity lurks one or two layers in the background from the things that we interface
01:07with in daily life.
01:10So Steve Schwartzman is fairly low profile compared to how powerful he is and it's kind of like
01:18the wizard of Oz.
01:19I am Oz, the great and powerful.
01:26Every door you open ultimately leads to Blackstone running larger and larger parts of the economy.
01:34You presume to criticize the great Oz?
01:38Pay no attention to that man behind the curtain.
01:41I mean, it really is the man behind the curtain.
01:46the king who's the king who's the king who's the king, who's the king.
01:49By the way, the king who's the king.
01:50You never get free.
01:51Pay them to the slaughter.
01:53What you gonna do when there's blood in the water?
01:56The price of your greed is your son and your daughter.
01:59What you gonna do when there's blood in the water?
02:04Look me in my eyes, tell me everything's not fine
02:09All the people ain't happy, and the river has run dry
02:16You saw you could go free, but that system is done for
02:22If you listen real closely, there's a knock that you'll find, no
02:28You'll never get free, man, to dislaughter
02:32What you gon' do, when there's blood in the water?
02:35The price of your greed is your son and your daughter
02:38What you gon' do, when there's blood in the water?
02:43When there's blood in the water
02:45When there's blood in the water
03:02I was born in Philadelphia, and I had sort of two lives
03:09The first was in the city
03:11I mean, I grew up in an area where, you know, there were broken bottles
03:15And if something bad didn't happen
03:16I moved to the suburbs, and, you know, it wasn't as difficult
03:22I became, you know, president of the school
03:25And, you know, the top athlete
03:27Life was astonishingly good
03:32Growing up in the suburbs of Philadelphia
03:36Your father ran a family business
03:38Schwarzman's, Curtains, and Lennons
03:39And the store looked like, um, sort of Bed Bath & Beyond
03:44Except there was no Bed Bath & Beyond
03:47And I'd watch all these customers
03:49And I said, hey, Dad
03:51Why don't we take the store all over the country?
03:54And he looked at me and he said
03:55Steve, I don't want to do that
03:58And I said, Dad, why don't you want to do that?
04:03And he said, because I'm happy
04:06The way I am
04:08I have two cars
04:10I have a house
04:12I have enough money to send you and your brothers to college
04:15That's really all I want
04:18And I couldn't, like, take that on board
04:23Why would that be all you want?
04:27Steve Schwarzman grew up in the town I grew up in
04:30He was known as a very ambitious guy
04:34Skull and bones and all that
04:35He was at Lehman Brothers in the 80s
04:38Which was the time of Gordon Gekko
04:40At the time of the go-go Wall Street experience
04:44Mom! I just bagged the elephant
04:47He met Pete Peterson
04:52They left and created their own company called Blackstone
04:57When I was 37, Pete Peterson and I started Blackstone
05:02We spent a lot of time thinking about the name
05:05We thought about Peterson Schwarzman
05:07But that seemed too long
05:09And it would make it hard to add partners
05:11So I figured out that Schwarz is German for black
05:15And Petros is Greek for rock or stone
05:17Which led us to our obvious first choice
05:21Stone-cold, black-hearted partners
05:25Really, it's important to know that
05:31This was the birth of the modern private equity industry
05:35Private equity started as
05:40This total alchemy
05:43Total wizardry
05:45Total financial manipulation
05:49If you unpack it, it was absolutely brilliant
05:52Private equity is basically a way
05:55For people just to make a shitload of money
05:59Private equity funds buy whole companies
06:03Most Americans have done business with a company that's owned by Blackstone
06:08If you stayed in a Hilton hotel
06:09If you bought a Leica camera, they just bought Spanx
06:13Their businesses and their tentacles into modern commerce
06:19They just sprawl
06:21It's not that complicated
06:23They want you to think it's complicated
06:25You borrow a lot of money from a bank
06:28You can buy a company
06:29And you use the cash flow from the company that you just bought
06:34To pay down the debt
06:35And then you sell the company
06:37So for a very little money
06:39You can turn that into a lot of money
06:42The mythology is that they go out and make companies better
06:48One of the things that they do is they add debt
06:52And this frees up cash flow
06:53And that makes the company look better on paper
06:56Some people call it putting lipstick on the pig
06:58And that's how they look at these companies
07:00Some will go up, some will go down
07:01We'll get rid of the ones that go down
07:03What's it to us?
07:05Like a lot of investors, they're looking for something that's undervalued
07:08Although me and you might say
07:10We think this company's going to do better in the future
07:12And this stock is not priced high enough
07:14We can't really affect change, right?
07:17We only own a little tiny sliver of that company in the shares
07:20When you own the whole thing, you can affect change
07:22They might have it do a merger
07:24They might split it apart into different divisions
07:26They may reduce the workforce
07:28They may expand into new businesses
07:30And the aim is to eventually sell the company later for more money
07:35People I worked with on Wall Street
07:38Who were once upon a time content to get wealthy
07:44Go into private equity and just get really, really rich
07:48I mean, we're talking private jets
07:49Full-block homes
07:51And then if you're like Steve Schwartzman on the top of Blackstone
07:55He's the king of private equity
07:58There was a time when private equity was very new
08:03And considered a very risky asset
08:05So can you talk about how did you overcome these early challenges?
08:11Well, you have to be fundamentally delusional
08:14To get out there on the field of battle
08:18And make it happen
08:19You know, somebody's always innovating
08:22Somebody's always trying to do better
08:24And if it's your expense
08:26Then you're just a victim
08:28And your jobs are not to be victims
08:31It's to have someone else be a victim
08:33That was very inspiring, Steve
08:36Thank you
08:38The Gilded Age icons
08:42Were building tangible things that have value
08:47Carnegie Steel
08:48Rockefeller Oil
08:51The Ford car
08:53Things that society wanted and needed
08:57It was not necessarily based on financial engineering
09:02And I go back to the movie Wall Street
09:04The line where Gordon Gekko says
09:07I don't make anything
09:08I don't produce anything
09:09I just own everything
09:11The richest 1% of this country
09:13Owns half our country's wealth
09:15Five trillion dollars
09:17You got 90% of the American public out there
09:20With little or no net worth
09:22I create nothing
09:24I own
09:26Private equity isn't making anything
09:32It's not producing or manufacturing anything
09:36It is just moving around money
09:38And taking a cut of that money
09:41To generate profits for itself
09:44His business is looking for businesses
09:50That are a good value
09:53To invest in, buy up, strip for assets
09:56And then sell off
09:57Steve Schwarzman's dad's store
10:01Is the kind of thing
10:03That Steve Schwarzman's private equity firm
10:05Would buy up, strip for assets
10:09Sell off
10:10Does it annoy you when you get criticized in an industry?
10:17And do you think from a comms perspective
10:19The private equity industry has perhaps failed
10:22To highlight successfully
10:24The good it has done in the last 20, 30 years?
10:26What we do is we buy assets
10:29Say we buy a company
10:30And we make them better
10:32Why do we make that company better?
10:35Because that's how you can sell it to someone else for more
10:38Private equity is completely opaque
10:40The whole point of this business
10:42Is that they operate in the shadows
10:44Nobody ever knows exactly what they're doing
10:46You know, why are we in business?
10:49We're in business
10:50I know why we're in business
10:51Because people give us money to manage
10:53Because they want us to earn a lot of money
10:56To give them back
10:58Or else they would give us nothing
11:00Schwarzman was sort of a private figure
11:03Who wasn't really well known
11:05But when his firm filed paperwork to go public
11:09That made him much more of a public figure
11:11Blackstone's CEO and co-founder Stephen Schwarzman
11:15$398 million last year
11:17From after it goes public
11:18That would make his stake for $7.73 billion
11:21The numbers were eye-popping
11:23They really showed the world
11:24There's a lot of wealth going on
11:27There's a lot of money behind these deals
11:28We knew about the deals
11:29Now we can see sort of what they're worth
11:32To the people doing them
11:33You're watching CNBC's Squawk on the Blackstone
11:37Live from the Blackstone capital of the world
11:40Where the opening Blackstone is at the ring
11:42In about five seconds
11:45Everybody is here
11:46Take a look at this giant story
11:49Steve had become a lightning rod
11:51And instead of laying low
11:53He decided
11:54What the hell
11:55I'm gonna throw myself a big party
11:57Already a billionaire
11:59Today he pocketed another $670 million
12:02And recently threw himself a $3 million birthday party
12:06Featuring performances by Rod Stewart and Patti LaBelle
12:10We know he earned a lot of money
12:17Because he threw that party
12:20What was the party?
12:20$23 million?
12:21He could throw a lot of those
12:22He could throw one every Friday
12:24Every Friday?
12:26He could
12:27And he could do it for a long time
12:28What about the $2 million
12:29Or $1 million birthday party
12:31For Steve Schwartzman?
12:32What about the $73 million Rothko?
12:35The rich really, really are different
12:38This was an actual event
12:44To celebrate his unbelievable wealth
12:49And it was seen as really an iconic example
12:52Of what the economy had become
12:54Steve is articulate
12:56Charming
12:58Taken with himself
13:00Narcissistic
13:01I mean, he puts his pants on one leg at a time
13:06Like everybody else
13:07He's just worth $40 billion
13:08How can you have so much suffering in the country
13:13And yet somebody who's able to throw a birthday party
13:18With all sorts of unbelievable displays of wealth
13:21How can you have these two things at the same time?
13:25The financial troubles the country is going through
13:28Began when the housing bubble burst
13:30Now it's official, we are in a recession
13:33213,000 homeowners got foreclosure notices just in July
13:39House after house, street after street
13:42Homes here are underwater
13:44No one is immune
13:45Many economists now believe this downturn
13:48Will be the most severe since the recession of the early 1980s
13:52So in 2008
13:54We call it the global financial crisis
13:57But it's really the housing financial crisis
14:01Because a huge swath of the population
14:04Ended up foreclosing on their mortgages
14:06They just couldn't make the payments
14:09And so banks had on their books
14:11Thousands and thousands of bad mortgages
14:17Bad debt
14:18Investors panicked, you know, across the board
14:21People withdrew money from hedge funds
14:23People took money out of banks
14:25Sold bonds, sold stocks
14:27It was a fire sale, everything goes
14:30Unlike a lot of other investment firms
14:32There had been no run on the bank at Blackstone
14:34Because Blackstone's private equity funds
14:36Lock up investors' money for 10 years or more
14:39So they had money ready to invest
14:43When everybody else was hitting the exits
14:45And that's something they look for
14:47It's like when other people leave
14:49We can step in and take advantage of the situation
14:52Because we have this capital here
14:54The world is on fire
14:55We have to invest this money somewhere
14:57We make a fee for managing it
14:59Where do we put it?
15:02The economies of the developed countries
15:05Are going to get hurt
15:07Over the next year or so
15:09And it ought to drive down asset values
15:12There should be a great opportunity
15:16There were a lot of foreclosure auctions happening
15:21And there were smaller investors
15:22That were buying these houses
15:23And, you know, I talked to one guy
15:25And he had his list
15:26I'm going to buy these houses
15:27And he gets there and he shows up
15:29And all of a sudden there's this new guy there
15:30And he's just buying everything
15:31Everything he can buy
15:33Every house that comes up
15:34Every bid that goes
15:36This guy, $1 over, $1 over
15:38And from what I heard
15:41He bought them all
15:41And that started happening
15:43In cities across the country
15:44Outside the Gwinnett County Courthouse
15:47In Lawrenceville, Georgia
15:48Auction bids fly thick and fast
15:50We have a ticket now
15:51$110,000
15:52$128,000
15:53Yep, $116
15:55Yep, $17
15:55The prices may at first seem high
15:58Look at the $228
15:59But for multi-billion dollar private equity firms
16:01This is a bargain
16:02Sold the property
16:03They didn't tiptoe in
16:04They made a splash, right?
16:06They would send these buyers
16:08With like duffel bags full of cash
16:10Buy all these houses for dirt cheap
16:12Deep discounts
16:1340, 50 cents on the dollar
16:14At some points
16:16They were buying
16:17More than $100 million
16:18With the houses a week
16:19Nothing like that
16:21Has ever happened in America before
16:22Sold it
16:23This woman acting as a proxy bidder
16:25She was one of more than
16:26A dozen bidders for Blackstone
16:28I haven't gotten into a building like that
16:29Across the state of Georgia
16:30In one day
16:31The firm purchased
16:32More than 170 homes
16:34After the financial crisis
16:37They have to be smarter than other people
16:39And they have to take risks
16:41That other people wouldn't take
16:42Steve has always thought outside the box
16:46Renting homes was a local business
16:49The local dentist might have
16:51A few investment properties
16:52There might be a company in town
16:54That has hundreds
16:55Or even a few thousand houses
16:56But no one had ever done pools
16:58Of tens of thousands of homes
17:00Across the country
17:01Blackstone's push into residential real estate
17:04That was the final frontier for them
17:06And it was like the granddaddy of them all
17:08By the time they finished
17:10There were some mergers
17:11And they built a company
17:12Called Invitation Homes
17:13Why is Invitation Homes
17:16The nation's premier home leasing company?
17:18Because we're curb appeal friendly
17:20Good school friendly
17:23It was originally perceived
17:24That these guys were helping
17:27And all around friendly friendly
17:29After the global financial crisis
17:31So many people had lost their homes
17:34And needed homes
17:36They were helping the banks
17:39Right?
17:39Getting bad loans off the bank's books
17:42And then they were providing
17:44Rental accommodation
17:44For a whole set of the population
17:46That needed rental
17:47One of the really interesting things
17:50They did first
17:51Was they thought about
17:52What sort of tenant
17:53Do they want to rent this home?
17:55Right?
17:56Usually a family with kids
17:58That won't move
17:59If the rent goes up
18:00Because they don't want to
18:01Take their kids out of school
18:02And they don't want to
18:03Upset their children's social lives
18:04So they'll pay a little more in rent
18:06We think of something like that
18:09They're a home buyer
18:09But we all know
18:10What's happened to home prices
18:11And young people starting out
18:13Their sort of adult lives
18:15Buried in student debt
18:16Blackstone saw that
18:18And said
18:19These people are going to
18:20Want to still live
18:21In the same kind of housing
18:22Let's buy the housing
18:23And rent it to them
18:24You know
18:25You could paint a lot of scenarios
18:26Where that becomes a trap
18:28For people
18:28I think that
18:30That sticky factor
18:31For our business
18:32Which is already
18:32Really sticky
18:33Customer stays with us
18:34For about three years
18:36I think that
18:37Will enhance
18:37As we continue to define
18:39What it means to lease
18:40A single family home
18:41Our residents today's
18:42Average age is 39
18:43So we want to capture
18:45A lot of that demographic
18:46Which quite frankly
18:47Wants flexibility
18:48Wants to be down payment light
18:50And we think that
18:50Will all play into our narrative
18:52Going forward
18:52It's generally been sold
18:57To families
18:58That the way
19:00To build wealth
19:02And to be financially secure
19:05Is through home ownership
19:06Save your pennies
19:08Save your dollars
19:09Put a down payment
19:10On a house
19:11Get a mortgage
19:12Build equity
19:14Pass that home
19:16On to your children
19:17I got married
19:18We had a kid
19:19And we bought
19:20A starter home
19:20Okay
19:23It wasn't the best
19:24Home you ever saw
19:25But it was ours
19:26It grew in value
19:28And it enabled us
19:29To make a step up
19:30Right
19:30They're not available
19:33Because in many communities
19:35They've been bought up
19:36By private equity
19:38You add to that
19:40How costly rent is
19:44How unaffordable rent is
19:46It means that most families
19:48Can't save any money
19:50The business model
19:57Is to buy low
19:58And then generate more
20:00And more profits
20:01So you ask yourself
20:04How would you go about doing that
20:06Well one thing you can do
20:08Is you can jack up
20:09People's rent
20:10You get them in
20:12At an affordable rent
20:14And then you just
20:14Slowly turn up the heat
20:18You turn up the rent
20:19More and more
20:20That's one way
20:21You can generate more money
20:22Another way you can generate
20:23More money
20:24Is to keep your
20:26Overhead costs low
20:27When somebody calls up
20:29And says
20:29Hey the pipe burst
20:31Or hey I got a crack
20:33In the wall
20:33Or hey the appliances
20:36Aren't working
20:36One way you keep
20:38Your costs low
20:39Is to not answer the call
20:41This hole has been here
20:44For three weeks now
20:46Over three weeks now
20:47You see the black mold
20:48Right there
20:48You can see it right there
20:49They haven't sent anybody
20:51Out here to test
20:52The black mold
20:53No one's called me back
20:54In Dallas, Texas
20:57Disaster in the living room
20:59Which is like
21:01It'd be alive
21:01In Broward County, Florida
21:04The parents of Brielle Nicholson
21:06Say in a lawsuit
21:08Their daughter's asthma
21:10Was caused by the very same landlord
21:12Who failed to remove toxic mold
21:14From their rental home
21:15Besides the rodent issues
21:18We had this harassment
21:18From the local office
21:19That they never seem to care about
21:21Tonight a Bay Area family
21:22Is worried that sinkholes
21:24Are now forming in their backyard
21:25But they say that their landlord
21:27Did not take their concerns seriously
21:28We see these horror stories
21:30Where houses fall off
21:31Into sinkholes
21:32Like when this rental home
21:36Collapses into a sinkhole
21:37In Lando Lakes a year ago
21:39I mean look
21:39Lots of people
21:41Don't like landlords
21:42They don't like their landlord
21:43They don't like the idea
21:44Of paying rent
21:44But what we're talking about
21:46Is there were various investigations
21:47Various lawsuits
21:49My family's safety is at stake
21:50It just seems like
21:51They don't care
21:52Talking about
21:52Steve Schwartzman
21:54As America's biggest landlord
21:56Look at that
21:57These slumlords don't care
22:00Guess what
22:01When Steve Schwartzman
22:02Is your landlord
22:03He's not going to be
22:04All that responsive
22:05To the plumbing not working
22:06This is just the quality
22:07That you should expect
22:08From all invitation homes
22:09Because well
22:10They are the literal
22:11Slumlord corporation
22:13Of America
22:15Thanks invitation homes
22:17This is not a long term
22:19Landlord tenant relationship
22:21If your landlord
22:23In the middle of the country
22:26Is a billionaire CEO
22:28On Wall Street
22:29When your water heater
22:32Doesn't work
22:33The billionaire CEO
22:34Sees you as a cost problem
22:37If they see you at all
22:39Tenants also told us
22:41The company is quick
22:42To threaten eviction
22:43Even if a tenant
22:45Is only a few days late
22:46With the rent
22:47When it happens
22:48They can end up in court
22:50And have to pay
22:51Additional fees
22:52And the company's lawyers
22:54To stave off eviction
22:55Is that true
22:56They have to pay those fees
22:58Yes it's true
22:59That's fair
23:01That's part of the
23:02Part of the process
23:02That we have
23:03It's part of your business
23:04It's part of the business
23:05You can't pay
23:06They evicted you
23:07There were no protections
23:09Coming from the federal government
23:10For the people
23:11Who are now renting
23:12Nothing
23:13This I will say
23:14Is a terrible blemish
23:16On the Obama administration
23:18We could have
23:19As a country
23:20Done this better
23:20And we did not
23:22Do it better
23:22There are a lot of people
23:24Who feel that
23:26They were not
23:27Taken care of
23:28Government did not
23:29Look out for them
23:29And what they saw
23:31Is that
23:32Companies like Blackstone
23:34Made out like bandits
23:35If you're evicted
23:37Because you don't
23:38Have enough money
23:38To pay your rent
23:39What's the next stop
23:41For you
23:42You can't just go
23:44And rent another apartment
23:45Because everything
23:46Is so unaffordable
23:47If you have a car
23:49That's the next stop
23:50And if you don't
23:52Have a car
23:52Homelessness is the next stop
23:54Think about that reality
23:57And then think about
23:58The billionaires
23:58Increasing their wealth
24:00Blackstone's responsibility
24:04Is to the people
24:06Who invested money
24:07With them
24:08That's their responsibility
24:10And those people
24:11Are expecting
24:12Not only to get
24:13Their money back
24:14But to get
24:14Many multiples
24:15Of their money back
24:16That's their bargain
24:19That's their promise
24:20So if I were
24:23Steve Schwartzman
24:24I would say
24:24Look
24:24You can criticize me
24:26All you want
24:27I'm going to live my life
24:29I have this obligation
24:31And I'm going to fulfill it
24:32To the best of my ability
24:33As it works out
24:35Over the last 30 years
24:37There's been enormous growth
24:38And companies like ourselves
24:41End up
24:42Having companies
24:43That we own
24:44That grow faster
24:45Than the S&P
24:46So we can sell them
24:47For much more
24:48So as it works Wilford
24:50We end up
24:52Earning about
24:53Double the S&P
24:54And the people
24:55Who benefit
24:56Are all the retired people
24:59Who give us money
25:00I started covering
25:02Blackstone
25:03When I stumbled
25:04Into the nexus
25:06Between private equity
25:07And the public
25:08Pension system
25:09This is a very
25:10Not well known
25:11Connection
25:12So when a public employee
25:14Pays their paycheck
25:15And you see
25:16On their paycheck
25:17A certain percentage
25:18Is going to the pension fund
25:19Multiply that
25:20Over millions of people
25:21And you get pools
25:23Of trillions of dollars
25:24With a T
25:25Trillions of dollars
25:27And the private equity industry
25:2930 years ago
25:30Began pushing
25:31Pension officials
25:33To move more of that money
25:36Into the private equity industry
25:39There's a deep irony
25:41In all of this
25:42Particularly where
25:43Pension funds are concerned
25:45So pension funds
25:46Will give their money
25:47To a private equity firm
25:50Like Blackstone
25:51And then Blackstone
25:52Will invest that money
25:54In let's say
25:55Residential real estate
25:56And they will make
25:58That residential real estate
25:59Very expensive
26:00For renters
26:02And some of those renters
26:04Will be on a pension
26:07From that pension fund
26:09The rent
26:10Is too damn high
26:12The rent
26:13The rent
26:14Is too damn high
26:16There's a major crisis here
26:18We cannot force people
26:20Out into the streets
26:21We cannot force people
26:23To become homeless
26:24The rent is too damn high
26:25There was a situation
26:29In California in 2018
26:30The state was considering
26:33A ballot measure
26:34To allow local communities
26:37To pass rent control initiatives
26:39So it wasn't even
26:40To create rent control
26:41It was just to simply say
26:42That local communities
26:44Could create rent control
26:46So the real question
26:48For proposition 10 is
26:49Do you trust your local government
26:51To decide whether
26:52To set new rent controls
26:54Blackstone ended up
26:57Funding
26:57The opposition
26:59To the ballot measures
27:01And the really important
27:03Wrinkle here was
27:04It pulled money
27:07Out of its investment vehicles
27:10To fund the opposition
27:12To the ballot measures
27:13This is important
27:14Because
27:15Look it's one thing
27:16If the executives
27:17In their own time
27:18Use their income
27:20To fund whatever
27:21Political cause they want
27:22It's a part of the
27:24Unfortunately
27:25A system of legalized bribery
27:26That we live in
27:27But
27:28Taking money
27:29Out of an investment pool
27:31Is a next step
27:33Blackstone was
27:34Effectively admitting
27:35It has
27:36A financial interest
27:38In keeping rent prices
27:39As high as possible
27:41And preventing local communities
27:43Outlawing local communities
27:45From voting
27:46To create affordable rent
27:48It really showed
27:49It really showed the interplay
27:50Between public policy
27:52Politics
27:53And Blackstone's
27:54Private financial interests
27:56Prop 10 failed
27:57State law will continue
27:59To limit the kinds
28:00Of rent control laws
28:01That cities and counties
28:01Can have
28:02The political power
28:04That they have
28:05The ability to
28:07Make or break
28:08Legislative reform
28:10The fact that they have
28:11A seat at the table
28:12I mean
28:13Stephen Schwartzman
28:14Was President Trump's
28:16Economic advisor
28:17Do the little people
28:20Have a seat at that table
28:22Can the tenants
28:23The millions of tenants
28:25Across the United States
28:26Who are suffering
28:27Do they have
28:27Any political power
28:29Thank you everybody
28:32For being here this morning
28:33This is a really
28:34World class group
28:35And I want to
28:37Thank and congratulate
28:39Steve
28:39You have done
28:40As usual
28:41An amazing job
28:42Steve called me up
28:43The day after the election
28:45It might have even been
28:46The same night, Jamie
28:47To be honest with you
28:48You know, Steve
28:49Look
28:51Schwartzman running
28:52The White House
28:53Advisory Council
28:54While Blackstone
28:56Has various business interests
28:59Before the federal government
29:00This is the kind of
29:01Conflict of interest
29:02That I think has been
29:03Normalized in America
29:05That we as a society
29:07Have come to
29:08Just accept that
29:09The purpose of this group
29:13Isn't for general discussion
29:15Which is okay
29:17But the real purpose
29:18Is to get things done
29:19To advise the government
29:22As to areas where we
29:24Can do things a lot better
29:25As a country for all Americans
29:28And we bottleneck some things
29:31If you have major business
29:33Before the federal government
29:35If you're spending
29:35Millions of dollars
29:37To lobby the federal government
29:39To change this or that policy
29:41And your CEO
29:44Is advising the White House
29:46On how to formulate its agenda
29:49That's not even a conflict of interest
29:51That's capture
29:52That's a company
29:54And an industry
29:55That has captured the government
29:57To call it a conflict
29:59Is to suggest that the government
30:02And the private equity industry
30:04Are separate
30:05When in fact
30:06What it really is
30:07Is it's a merger
30:08And as it works out
30:09We have all kinds
30:11Of different people
30:12From different backgrounds
30:13And different political persuasions
30:15Very big BlackRock
30:17Which left their
30:19Buster consulting group
30:20Jim McMurray
30:21The old blowing guy
30:23Do you ever feel like
30:35Washington and Wall Street
30:36Are too close
30:37Too close
30:38No I don't
30:39See them as too close
30:41You know
30:42I try and help out
30:44From time to time
30:45On certain types of issues
30:48I always try to do stuff
30:50That I think is good
30:51For the country
30:51It's not this president
30:53There have been other ones
30:54You know
30:55People need advice
30:56Or they need help
30:58In some area
31:00And so I'm
31:01I'm like an equal opportunity employer
31:03While it was most egregious
31:06Under Trump
31:06This is the kind of thing
31:08That now
31:09Is typical
31:10Of most presidential administrations
31:13Where
31:13The revolving door
31:15Between
31:16The private equity industry
31:17And the government
31:19And the regulators
31:20And the policy makers
31:21This revolving door
31:22Is spinning over
31:23And over
31:24And over again
31:25Capitalism is one
31:29Okay
31:29There's no debate
31:30About that
31:31Right
31:31Anymore
31:32So Wall Street
31:33Is the most important
31:34Engine of capitalism
31:36It's the left ventricle
31:38Of capitalism
31:39It's the intellectual
31:40Capital of capitalism
31:42You don't think
31:44That organization
31:45Is going to
31:46Get its way
31:48Politically
31:50Year in and year out
31:52Tonight
31:55Blackstone chairman
31:56And CEO
31:57Steven Schwartzman
31:58Will go to bed
31:59Several billion dollars richer
32:01And while the tax rate
32:03For most Americans
32:04Is 25 to 35 percent
32:06For billionaires like Schwartzman
32:0815 percent
32:10Executives from Blackstone
32:12And other elite
32:13Investment groups
32:14Often profit
32:15By investing
32:16Other people's money
32:18But they still claim
32:19That lower tax rate
32:20You have people out there
32:22Making half a billion dollars
32:23A year
32:24Who are paying
32:24Half the tax rate
32:25Of the people
32:26Who are driving their cars
32:27People who are
32:29In private equity world
32:30Small salary
32:32You know
32:32Relatively small
32:34They have to pay
32:35You know
32:35Regular taxes on that
32:36Then they get this
32:38Huge amount
32:39They're big
32:41For putting deals together
32:42And that is taxed
32:44At capital gains rates
32:45Which is much lower
32:46About half
32:48You know
32:48You and I
32:49We have to pay taxes
32:51At ordinary income rates
32:52So why is
32:54Our hard work
32:55Taxed at a higher rate
32:57Than
32:58Somebody who just
32:59Pushes a few buttons
33:01And invests
33:03A bunch of capital
33:04Why does it never
33:06Get reformed
33:07You know
33:09Have you heard
33:10Of money
33:11Members of congress
33:14Are being lobbied
33:15On behalf of these
33:16Millionaire and billionaire
33:17Interests right now
33:18More so than
33:19On any other issue
33:20Eleven of the biggest
33:21Private equity firms
33:22Have created a new
33:23Lobbying arm
33:24To argue in favor
33:25Of the lower rate
33:27This is about
33:28Growing businesses
33:29It is about
33:30Building more
33:31Competitive companies
33:32And these wealthy
33:33Interests are being
33:35Heard
33:35Politicians after all
33:37Have received millions
33:38In political donations
33:39From this industry
33:40Which has money
33:41To spare
33:42What they say
33:43On wall street
33:44Is we don't care
33:45Who's in the
33:46White house
33:46I mean we care
33:48A little bit
33:48We vote
33:49Right
33:50I mean people
33:50Won't believe this
33:51But probably
33:5275-80%
33:53Of wall street
33:54Votes democratic
33:55Probably the richest
33:57People vote republican
33:58But wall street
34:00Doesn't care
34:00Who's in the
34:02White house
34:03Or who's in
34:04Control of congress
34:04They're going to
34:06Lobby and get
34:07Their way
34:08Regardless
34:09We can look at
34:11Steve Schwartzman
34:12And his business
34:13Practices and say
34:14They're grotesque
34:15And greedy
34:16And all of that's true
34:18There's been greedy
34:19People
34:19Throughout history
34:21The real problem
34:23Is his
34:24Relationship
34:26With the political
34:27System
34:28That's supposed
34:29To regulate him
34:30Rather than
34:31Allowing him
34:31To profiteer
34:33Off of
34:35Bad things
34:36Happening in society
34:37Steve Schwartzman
34:40Made an opportunity
34:42For himself
34:43Out of the
34:44Financial crisis
34:45He has made
34:47An opportunity
34:48For himself
34:49Out of the
34:50Decimated
34:51Housing market
34:52He has made
34:54An opportunity
34:55For himself
34:56Out of the
34:57Pandemic
34:57He has made
35:01An opportunity
35:01Out of the
35:02Healthcare crisis
35:03That is the
35:06Talent of
35:07A vulture
35:07And another
35:12Takeover deal
35:13Just announced
35:14Team Health
35:15Holdings
35:15Is being bought
35:16By Blackstone
35:17The hospital
35:18Staffing company
35:19Jumped on the
35:19Trading session
35:20By better than
35:2016%
35:21Blackstone
35:23Saw an opportunity
35:24In the
35:25Companies that
35:26Provide
35:27Doctors and
35:28Staff
35:29To emergency
35:30Rooms
35:30At hospitals
35:31Now
35:32You may think
35:34I don't even
35:36Understand what
35:36That means
35:37When you go to
35:38An emergency
35:39Room in a
35:39Hospital
35:40It doesn't
35:40Necessarily mean
35:41That the
35:41Doctors in the
35:42Emergency room
35:43And the staff
35:44In the emergency
35:45Room
35:45Are employees
35:46Of the hospital
35:47Good morning
35:51Dr. Lin
35:52Hey Heather
35:52I'm actually
35:53Heading to Pine Ridge
35:54Today
35:55Are you
35:55Available
35:56To talk
35:57A little bit
35:57I am
35:59So
36:00The power
36:01Is out
36:01Here
36:02And I don't
36:03Know when
36:04We're going
36:04To get it
36:04Back on
36:05Okay
36:06But we're
36:06Here
36:07Tony's
36:08With me
36:08My name
36:13Is Dr.
36:14Ming Lin
36:14I'm an
36:16Emergency
36:16Physician
36:17I've been
36:17Doing it
36:17For about
36:1730 years
36:18Emergency
36:19Medicine
36:19Is something
36:19I really
36:20Fell in love
36:21With
36:21I love
36:21To help
36:22People
36:22But you
36:23Know
36:23Emergency
36:23Medicine
36:24Is the
36:24Only
36:25Specialty
36:26That I
36:26Know
36:26Of
36:26That
36:27Treats
36:27Everybody
36:27Equally
36:28Everybody
36:29Waits
36:30In line
36:30And you
36:30Know
36:30Depends
36:31On
36:31How
36:31Sick
36:31You
36:31Are
36:32You
36:32Get
36:32Seen
36:32First
36:32One
36:36Of
36:36My
36:37Most
36:37Memorable
36:37Experiences
36:38Was
36:38Working
36:38In
36:39New York
36:39City
36:39During
36:399-11
36:40Afterwards
36:42When
36:42The
36:42Whole
36:43Community
36:43Pulled
36:43Together
36:44To
36:45Support
36:45The
36:45Hospital
36:46It
36:46Felt
36:46Really
36:46Good
36:47To
36:47Be
36:47Part
36:47Of
36:47The
36:47Community
36:48After
36:499-11
36:50I
36:50Moved
36:50To
36:50Washington
36:51State
36:51I
36:52Was
36:53Working
36:53For
36:53St.
36:54Joseph's
36:54In
36:54Bellingham
36:55Team
36:56Health
36:57Runs
36:57The
36:57Contract
36:58They
36:59Basically
36:59Provide
37:00Emergency
37:00Physicians
37:01For
37:01The
37:01Hospital
37:02Working
37:04For
37:04Them
37:05Is
37:05Kind
37:05Of
37:05An
37:05All
37:06Inclusive
37:06Thing
37:07They
37:07Do
37:07Pretty
37:07Much
37:07Everything
37:08For
37:08You
37:08They
37:08Get
37:09You
37:09Credential
37:09And
37:10They
37:11Do
37:11All
37:11Your
37:11Billing
37:11So
37:12It's
37:12Kind
37:12Of
37:12Like
37:13Going
37:13To
37:13Club
37:13Med
37:13You
37:14Know
37:14Everything
37:14Is
37:14Included
37:15The
37:16Only
37:16Catch
37:16About
37:16Working
37:17For
37:17These
37:17Companies
37:17Is
37:18That
37:18You
37:18Really
37:18Don't
37:19Know
37:19What
37:20They're
37:20Billing
37:21Patients
37:21For
37:21Team
37:23Health
37:24That's
37:24Blackstone's
37:25Emergency
37:25Room
37:26Services
37:26And
37:26So
37:27The
37:32In
37:32The
37:32Transactions
37:33That
37:33Happen
37:34When
37:34People
37:34Come
37:35Into
37:35The
37:35Emergency
37:35Room
37:36When
37:41Somebody
37:42Comes
37:42To
37:42An
37:42Emergency
37:43Room
37:43They
37:43Don't
37:43Have
37:43The
37:43Luxury
37:44Of
37:44Shopping
37:45For
37:46The
37:46Best
37:47Price
37:48They
37:49Don't
37:49Have
37:49The
37:49Luxury
37:49Of
37:50Shopping
37:50Necessarily
37:51For
37:51An
37:52In
37:52Network
37:52Doctor
37:53On
37:54Their
37:54Particular
37:55Insurance
37:55Plan
37:56And
37:57That
37:57Is
37:58A
37:59Profit
37:59Opportunity
38:00There
38:02Have
38:02Been
38:02More
38:02And
38:02More
38:03Reports
38:03Of
38:03People
38:03Showing
38:04Up
38:04To
38:04Emergency
38:04Rooms
38:05To
38:05Get
38:06Relatively
38:07Straightforward
38:07Standard
38:08Procedures
38:09And
38:10Them
38:10Being
38:10Hit
38:10With
38:11What's
38:12Now
38:12Known
38:12As
38:12Surprise
38:13Bills
38:13They
38:14Get
38:14Hit
38:14With
38:14A
38:14Giant
38:15Bill
38:15Outrage
38:16Outrage
38:16Bills
38:19Even
38:19Bigger
38:20Than
38:20Expected
38:21In
38:21Our
38:21Irrational
38:22Healthcare
38:22System
38:23We're
38:23Talking
38:23About
38:24Crazy
38:25High
38:25Bills
38:26They're
38:26A
38:27Surprise
38:27Because
38:28You
38:28Are
38:28Insured
38:29You
38:29Went
38:29To
38:30A
38:30Hospital
38:30In
38:30Your
38:30Network
38:31How
38:31Did
38:31You
38:32Get
38:32A
38:32Bill
38:32Their
38:33Whole
38:33Business
38:34Model
38:34Is
38:35Built
38:35On
38:35These
38:35Surprise
38:36Medical
38:36Bills
38:36I
38:38Just
38:38Think
38:38Surprise
38:39Billing
38:39Is
38:39Such
38:41A
38:41Immoral
38:43Thing
38:44Right
38:44You
38:44You
38:44You
38:44You
38:45You
38:45You
38:45You
38:45You
38:45You
38:45You
38:46You
38:47You
38:47You
38:48Charging
38:49Them
38:49Whatever
38:49You
38:49Whatever
38:50You
38:50Want
38:50It's
38:51It's
38:52Like
38:52Somebody
38:52That
38:52Came
38:52Out
38:53Of
38:53An
38:54Icy
38:54Cold
38:54Water
38:55And
38:55Offer
38:55Them
38:55A
38:55Towel
38:56And
38:56Say
38:56Hey
38:56That
38:57Was
38:58$2,000
38:58I'm
38:59Sorry
38:59Patients
39:02Get
39:02Charged
39:03The
39:03Price
39:03Of
39:03Your
39:03Mortgage
39:04For
39:04Hospitalization
39:05They're
39:06Going
39:06To
39:06See
39:06An
39:07Ankle
39:07Sprain
39:07As
39:07Some
39:08Kind
39:08Of
39:08Significant
39:09Ankle
39:09Injury
39:09They
39:10May
39:10See
39:11A
39:11Cut
39:11To
39:11The
39:12Face
39:12As
39:12Something
39:12Like
39:13A
39:13Complex
39:14Laceration
39:15Repair
39:15So
39:16They're
39:17Going
39:17To
39:17Try
39:18To
39:18Get
39:18As
39:18Much
39:18Money
39:19As
39:19They
39:19Can
39:19And
39:20Yet
39:21The
39:21Whole
39:21Concept
39:22Of
39:22Private
39:22Equity
39:22It's
39:23To
39:23Cut
39:23Cost
39:24When
39:25You
39:25Work
39:25For
39:25Them
39:29The
39:29Amount
39:29Of
39:29Patients
39:30We
39:30Saw
39:30In
39:31Private
39:32Equity
39:32World
39:32They
39:33Sit
39:33In
39:33The
39:33Board
39:33Meetings
39:34And
39:34They're
39:34Not
39:34Thinking
39:35About
39:35Someone's
39:36Pain
39:37Or
39:37Someone's
39:38Agony
39:38To
39:39Them
39:39It's
39:40How
39:40Much
39:40Can
39:40We
39:41Capitalize
39:41You
39:42Know
39:42When
39:43You
39:43Put
39:43That
39:43In
39:43Healthcare
39:44It's
39:44Like
39:45Putting
39:45A
39:45Fox
39:46In
39:46A
39:47Hen
39:47Cage
39:47You
39:48Know
39:48It's
39:49Going
39:49To
39:49Be
39:49Disaster
39:50So
39:54Let's
39:54Talk
39:55About
39:55Specifically
39:55What
39:56Happened
39:56With
39:56You
39:56And
39:58Your
39:58Termination
39:58I
40:00Think
40:00I
40:01Don't
40:01Want
40:02To
40:02Drive
40:02And
40:02Think
40:02About
40:02My
40:03Termination
40:03At
40:03Same
40:03Time
40:04It
40:07Might
40:07Not
40:07Be
40:07Safe
40:07For
40:07You
40:08Yeah
40:18You
40:18Know
40:18I
40:19Saw
40:21This
40:21Pandemic
40:22Coming
40:22I
40:23Knew
40:24That
40:24This
40:24Was
40:24Going
40:24To
40:24Be
40:24Really
40:25Bad
40:25And
40:26So
40:26I
40:26Started
40:26Calling
40:27Around
40:27Different
40:27Hospitals
40:28And
40:29I
40:29Realized
40:29That
40:29Hey
40:29They're
40:30Doing
40:31A
40:31Lot
40:31More
40:31Than
40:31My
40:32Hospital
40:32So
40:34At
40:35That
40:35Point
40:35I
40:35Just
40:35Decided
40:36You
40:36Know
40:36I
40:36Need
40:36To
40:36Speak
40:37Out
40:37For
40:37The
40:37Safety
40:37Of
40:38My
40:38Staff
40:38And
40:38My
40:39Patients
40:39And
40:40So
40:40I
40:41Sent
40:41A
40:41Email
40:42To
40:42My
40:43Administrators
40:44And
40:44Decided
40:45To
40:45Post
40:45On
40:45Facebook
40:46As
40:46Well
40:46Our
40:48Objective
40:48Physicians
40:49Is
40:49To
40:49Help
40:49Our
40:50Patients
40:50And
40:50Protect
40:50Our
40:50Patients
40:51And
40:52When
40:52You
40:52Know
40:52That
40:53Your
40:53Employer
40:54Is
40:54Doing
40:55Something
40:55Morally
40:56Unjustified
40:57I
40:57Do
40:58Feel
40:58That
40:58It's
40:59Our
40:59Duty
41:00To
41:00Try
41:00To
41:00Rectify
41:00That
41:01But
41:04You
41:04Know
41:04Obviously
41:05Peace
41:06Health
41:06Wasn't
41:06Very
41:07Appreciative
41:07Of
41:07That
41:07And
41:09What
41:09Was
41:09Their
41:10Response
41:10It
41:11Was
41:11Like
41:11Hitting
41:12A
41:12Beehive
41:12At
41:13The
41:14Time
41:14COVID
41:14Was
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50:18So
50:18For
50:19To
50:20Somebody
50:21Who's
50:21Accumulated
50:23More
50:23To
50:25Say
50:25The
50:25Least
50:25These
50:26People
50:27Are
50:27Referred
50:27To
50:28As
50:28Business
50:29People
50:30Philanthropists
50:32They're
50:32Not
50:33Referred
50:33To
50:33As
50:34Oligarchs
50:35That's
50:35Kind
50:36Of
50:36Whitewashing
50:37Unto
50:37Itself
50:37Isn't
50:39It
50:39Just
50:39Unfair
50:40To
50:41Tax
50:41Regular
50:42Income
50:42Differently
50:43Than
50:44Capital
50:44Gains
50:44Well
50:45That's
50:45That's
50:46An
50:46Argument
50:47For
50:47Economists
50:48You
50:49Could
50:49Make
50:50An
50:50Alternative
50:51Argument
50:51If
50:51You
50:52Want
50:52It
50:53Just
50:53Seems
50:53Spectacular
50:57It
50:58Just
50:58Seems
50:58Spectacular
50:59Global
51:00Housing
51:01Affordability
51:01Crisis
51:02You
51:03Can't
51:03See
51:03It
51:03Shut up
51:04Millions
51:05And
51:05Millions
51:05Of
51:06Dollars
51:06Stopping
51:07Legislation
51:08Which
51:09Is
51:10Fueling
51:10Homelessness
51:10And
51:11Displacement
51:11Schwartzman's
51:12Wealth
51:13Is
51:13Built
51:14On
51:14On
51:14The
51:14Back
51:14Of
51:15Low
51:15Income
51:16And
51:16Working
51:17Class
51:17Communities
51:18Every
51:20Age
51:21Has
51:21Its
51:21Media
51:22Villain
51:23People
51:25Can
51:25Criticize
51:26Anything
51:26That
51:26Anybody
51:27Does
51:27At
51:27Anytime
51:28And
51:29They
51:29Do
51:29Right
51:30There's
51:30Nothing
51:31You
51:32Know
51:32That
51:32You
51:32Can
51:32Do
51:32Now
51:33That
51:33You
51:33Won't
51:34Get
51:34Criticized
51:34For
51:35Schwartzman
51:35Shame
51:36On
51:37You
51:37Shame
51:39On
51:39You
51:40Shame
51:41On
51:42You
51:42If
51:43You
51:45Don't
51:45Like
51:45What
51:46Steve
51:46Schwartzman
51:47Does
51:48Or
51:48What
51:48The
51:48Private
51:49Equity
51:49Industry
51:49Does
51:50You
51:52Know
51:52Let's
51:52Put
51:53On
51:53Our
51:53Big
51:53Boy
51:53Pants
51:54And
51:55Pass
51:55Laws
51:55In
51:55Congress
51:56To
51:56Get
51:57Rid
51:57Of
51:57It
51:57Who
52:00Is
52:00Leading
52:00Who
52:01Do
52:02Governments
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52:05Equity
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52:16A
52:16Better
52:16Mousetrap
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52:17Up
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52:17Idea
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52:18You
52:18Can
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52:21Son
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52:23Shop
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52:24The
52:24Outskirts
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52:25To
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52:26Of
52:26The
52:27Richest
52:27Guys
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52:27The
52:27World
52:28We
52:29Love
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52:30Guy
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52:33American
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52:34It's
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52:40Kind
52:41Of
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52:41We
52:41Do
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52:58Let's
52:59It
53:07It
53:09I
53:11Can
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53:11It
53:13Can
53:13It
53:15It
53:15It
53:16It
53:17It
53:17It
53:18It
53:18It
53:19It
53:20It
53:20It
53:23It