National Public Radio (Oct. 7) reported that private equity companies, now allowed to own financial institutions and insurance companies, are having a hard time paying annuities to people who have given them a lump sum. NPR related that the problem was “due to high interest rates currently in the real estate market.” This sounds like smoke and mirrors. There’s usually only a shell of a company left when PEs have sucked companies dry of their assets and have showered the pickings over their millionaire hedge fund client investors. As you now may have surmised, one’s money may not be too safe when a PE buys the company one has invested in. PEs are owned by millionaire hedge funds looking to satisfy the appetite of wealthy clients who want extreme wealth.
PEs typically take more risks with assets. For higher profit, they burden the company with a high management fee, cut staff by laying off 50% of the workforce, and work lower-skilled workers harder, all under the guise of improving efficiency. Twenty percent of these companies fail. After five years of milking the company, the PEs are usually done and want to sell their shell of a company.
Can one recover one’s money from an investment company owned by a PE, and can one exchange future annuity payments for a lump sum? It would first be wise to know who is managing the financial institution before one makes further inquiries.
Gerald Staack
Former Santa Clarita resident
Wilmington, North Carolina
