The Majority Report with Sam Seder - 2741 - Private Equity's Next Huge Bailout w/ Zachary Groz

Starting point is 00:00:00 Hey, folks, some fans of the show have a new album. It's called Kill the Truth by the band Major Spark. Major Spark is a Boston-based indie rock duo comprised of songwriter and vocalist Mark Goodman and producer Brian Charles. And together they have set out to write an album about the insane times we're experiencing. Mark Goodman explains when the executive is pushing the boundaries of norms attack. the media distorts truth, uses the courts to increase power, and the executive branch uses the military to pursue violence and engages in blatant corruption and abuse of power without any check from Congress.

Starting point is 00:00:42 We needed to speak out. In making kill the truth, Mark and Brian created a set of rules to guide them through the process. No use of proper contemporary names. That probably helps in terms of litigation. No sad, mopey, whiny songs. Add a bit of wit and comment on the current situation. from different angles. The result is 10 new songs that comprise Major Spark's new album,

Starting point is 00:01:05 Kill the Truth, available for streaming and purchase everywhere on October 2nd. Learn more. Please follow Major Spark at Major SparkMusic.com. I've heard the album. It's a little camper Beethoven-y, a little bit. I don't know if that's what they were thinking, but I liked it. Check it out. And now check out the show.

Starting point is 00:01:30 Report with Sam Cedar. It is Tuesday, September 29th, 2006. My name is Sam Cedar. This is the five-time award-winning majority report. We are broadcasting live steps from the industrially ravaged Gowanus Canal in the heartland of America, downtown Brooklyn, USA. On the program today, Zachary Graz, writing fellow at the U. American prospect on to discuss his piece. Private equity landlords double-dipping in imminent bailout. Also on the program today, polls show Democrats ahead in Ohio as Trump's strong disapproval number hits 50%.

Starting point is 00:02:20 Parties finally come together. Senate passes a bipartisan crappy bill aimed at supposedly protecting college sports. Meanwhile, the Education Department, starting in 2027, plans to ban student loans to students majoring in non-big-money-making degrees. Jack Smith testifies before the Senate Judiciary Committee defends his decision to charge Trump. Federal judge says FEMA can't withhold anti-terrorism money over election rules. County District Attorney reopens the case of alleged gang rape at Cornell University in 2024. Texas governor, Greg Abbott, declares a state of emergency

Starting point is 00:03:16 to try and water down diesel gas because of, in response to gas prices. Deputy director of the FBI quits. And the CDC reverses and recommends COVID vaccine for all adults. I wonder why that might be. Well, let's text this. Let's just check the stats. Oh, there isn't any stats. Huh. All this and more in today's majority report. Welcome, ladies and gentlemen. Thanks so much for joining us. It is Tuesday, sort of newsday, Tuesday. Emma Vigland out today on her big California dream and tour, as she's calling it. It's weird to name your trips, I guess, but that's what you want.

Starting point is 00:04:13 The resentment you have for Los Angeles. What's that? It's so funny to me. The resentment you have for Los Angeles just really makes me laugh. I can't stand L.A. I'm sorry. I mean, with all due respect, everybody's out there. Good for you.

Starting point is 00:04:23 I think it's important. People live there, but I'm just glad it's not me. It's a great city. Do you really like it? I lived in a different, I didn't live in Hollywood. I lived in East L.A., and I liked it. Whatever. You can live wherever you want.

Starting point is 00:04:39 I don't care, Brian. Do whatever you want. Let's take a look at this. We got a couple of things as we get. Look, let me just preface this by saying there's absolutely no reason to feel overconfident about anything at this point because there's no value in it. If there's a race that you think we can win, in some fashion in beating the Republicans, move on to the next race that you think is close

Starting point is 00:05:22 and focus on that one. I'm looking at you, Chuck Schumer and Florida, but we can talk more about that in a bit. Here is, oh, this is relevant. And I think we'll come back around to this graph maybe later when we talk about Tim Poole's theory of the case of these midterm elections. but it is very common after a convention to see a move in the polls where a party will get a bump from their convention. The Republicans tried something different this year, which was to do a midterm election convention.

Starting point is 00:06:13 I don't know if there's been one in the past. and it featured Donald Trump on both nights and of course the incredibly charismatic J.D. Vance. And in terms of getting a bump, I have to say, I can't tell a lie, it created a bump after the convention. Check this out. Democrats actually rose two and a half points after the Republican convention. expanded the democratic advantage in the generic ballot

Starting point is 00:06:50 from seven and a half to nine and a half points I think it was. So Trump Opleuza. It didn't work, huh? Oh, it did work. But not for the Republicans. This is just giving you a sense of what's going on

Starting point is 00:07:07 here. This is number two, this clip. And we had one more, too, I think. from Ohio in there. I'm not sure. That's out with the Maris poll. But nevertheless, here is Donald Trump almost 46. He is a negative 46 approval rating for inflation. Inflation was the thing that basically carried him into office. If you go back at the beginning of that graph, you can see It goes all the way to 2024. You will see that Trump was above zero.

Starting point is 00:07:50 And now he's at negative 46. I'm trying to do the math. I guess if you were like 75, it's essentially 75% or 70% of the country says we disapprove of you on inflation. And 30%, well, really 25%, I guess 72, whatever. People get it. I'm not going to do the math for you. here is Harry Anton and this is also something that I think is very difficult to assess. Traditionally, the youth vote is very fickle.

Starting point is 00:08:37 Although over the past maybe 20 years, we've seen a slow growth in terms of youth vote coming And we are also at an era where there is the highest possible turnout. We're not the highest possible. The highest turnout we've seen in modern times in terms of percentage of voting. So it's hard to assess. And particularly midterm elections, the youth vote is not generally something that you can count on in big numbers. but if they come out, it's going to be nuts. Here is Harry Anton.

Starting point is 00:09:27 Yeah, you know, I'm a big fan of the 1992 film, my cousin Vinny, the youths, the youths. And Donald Trump is in big trouble with the youths. That's what we're talking about here. I mean, just take a look here. Underage 30 Trump's Net approval rating. You know, back in October of 2024, the retrospective approval rating for Donald Trump,

Starting point is 00:09:43 among those under the age of 30, they weren't great, but it wasn't terrible. either. Minus seven points. He actually put in historically strong performance with those voters under the age of 34 Republican presidential candidate. But look where it is today. Down it goes into the skiddy pool. Look at this. Minus 47 points. That is a shift cape ball when I can do this math. It is a 40 point shift. I was like, wait, wait. This is the one time I can do the math, Harry. I'm so sorry. I ruined the point. It's a we could say it together. It's a 40 point. Exactly right. A 40 point shift away from the president of the United States and a group that he did

Starting point is 00:10:15 historically strong with back in the 2024 election for a Republican candidate. It is no bueno when you see shifts like this. This is a historic shift away from the President of the United States with the group he did historically well with back in the 2024 election. And dig into what's motivating it. It's the same thing we've been seeing across the board with every Democrat. You know what?

Starting point is 00:10:35 Sometimes I like playing the hits, right? I like my cousin Vinny. I like playing the hits when it comes to the economy because it just explains so much. I mean, just look at this. Look at young voters and Trump on the economy. underage 30 on Trump in the economy. Back in 2024, he was more trusted

Starting point is 00:10:49 than Kamal Harris in the economy by 11 points. Wow, wow, that's exactly right. That is the word that we can use for it. Wow, what a shift. Now it's minus 62 points. That is a shift of 73 points away from the president of the United States on the issue that got him reelected back in 2024.

Starting point is 00:11:08 It is now the issue that is dragging him down and maybe dragging down Republicans who are running for re-election as well. That's a look at Trump. how about for Congress? That's exactly right. I said it may drag down those Republicans as well, and I set myself up beautifully for this one. Take a look here. Age 18 to 29, choice for Congress margin. Back in October of 2024, look at that Democrats. We're ahead by 10 points. Look at that advantage now. It's now three times, more than three times as large. Now Democrats up by 33 points.

Starting point is 00:11:35 President Trump's terrible, terrible, terrible numbers with those under the age of 30 are likely to drag Republicans down with him we're running this year for Congress. What are you seeing in the prediction marks that's in terms of where the impact could be? Yeah, okay. Here's the thing. Okay, so plus 10 in 2024 for the Democrats and plus 33 for the Democrats now. The real question is what will be the turnout? Because that 33% may not have the impact that a plus 10%

Starting point is 00:12:13 will have in real numbers if you don't get the turnout. It's just very difficult to predict. And it's very difficult to predict whether you're going to see a consistent turnout between Republican young voters and Democratic young voters. But Tuesdays that Tuesday in November 2nd, I think, is going to be a funner evening than the ones that we've had in the past. But the point is to is that we could have a situation where we're going to have, it's conceivable, a realignment, which, and to the extent that it's possible in this day and age.

Starting point is 00:13:05 Again, you know, we have mentioned this many times that the house is so gerrymandered and both between gerrymandering and self-sorting and whatnot, there's just not that many districts that are in play on a typical election. There's very few where there is where you have a Republican in a district that Harris won, for instance, or a Democrat in a district that Trump won. Now, if the polling is correct,

Starting point is 00:13:43 those districts where a where Trump won by seven points where he won by 10 points those are in danger now of flipping but the big thing is going to be in the Senate Senate elections are every six years this map was supposed to be good for Republicans as far as you could tell two years ago here is a poll by NPR Marist in Ohio. Now, I should also say that if I remember correctly, Marist sort of like undercounted Republican votes in the runup of 2024. So it's difficult to assess. But Marist has Sherrod Brown up 51 to 43 percent.

Starting point is 00:14:38 Governor Amy Acton up 50 percent to 44 percent, even if they're off. by five points. The big number in this state is that Trump's favorability, there are 50% of the people who strongly have a strong unfavorable opinion of Trump. Generally, what you end up hearing is like the combination of both somewhat unfavorable and super unfavorable. And there is intense hatred of Trump in Ohio. I also would imagine you're going to see that in Iowa, too, as it sounds like the economy there is cratering and farmers are in deep despair.

Starting point is 00:15:35 Carolina Kami on the IMs tells me North Carolina has just moved about all college voting sites off campus. I don't think that's going to help them at the end of the day. Let's take a look at this. Oh, here we got one more. Again, this is NPR Marist polling, registered voters. You know, it's tough to develop likely voter models in this type of environment. But this is registered voters. And you got to think.

Starting point is 00:16:13 I don't know. My intuition says Republicans are going to be less motivated to vote in this election. Now, I imagine the Marist waits it, and they have their perspective on where Republican enthusiasm is. But this is registered voters. Iowa, Turrick, 50 to 42. Ohio, Brown, 51 to 43, Texas, Tall Rico, 50 to 44. It has... Iowa, the Democratic gubernatorial candidate, Sand, up by 12, acting up by 6.

Starting point is 00:16:56 In Texas, it's close. I don't even think I know the name of the Democrat running for Texas. Is it Rebecca Hinoza? But that's nuts if this happens this way. And it puts races into play that we didn't anticipate. participate. Gina and you know, so my apologies. Let's play this, uh, um, this clip from MS now, uh, because, uh, this has been, uh, people have considered this a controversial take that we had over the past couple of days about saying there's elements of the Democratic Party who actually

Starting point is 00:17:42 fear, uh, an Abdul El-Sayed, uh, win. I know. but that we've been talking about in the context of Abdul al-Sayed, but it, it, it, it goes across the board. I mean, we saw it with Mamdani. We forget now, because he's got like a 60% approval rating and all of a sudden, all those people who said he's going to ruin the Democrats' chance in the midterm. I mean, do people remember that? That was a huge refrain that we were hearing from the Democratic establishment. That's what Hakeem Jeffries was running around telling people so completely blinkered in their perspective.

Starting point is 00:18:29 Or it is not just their assessment, but rather it's their concern. And this is, you know, like, we don't have to be, you don't have to be too, you don't have to impart nefarious, things out to these people. It's just politics is a business. We make money off it here. But our money comes from our audience. Or it comes from ads. And we have no relationship with these corporations that advertise on here other than

Starting point is 00:19:13 I use their products and I like their products otherwise. We wouldn't advertise for them. But the point being that you're our audience. There are other elements of the Democratic Party who are not necessarily situated in the way that we are, but work within the context of politics. And they make their money, ad buys, consulting, working at think tanks that need funding, Their incentive structure is very, very different. And if they don't feel their politics too strongly, if they're not terribly concerned about

Starting point is 00:20:01 broad-based prosperity, but rather talking about broad-based prosperity, they can either have a warped perspective on what can work or a self-serving perspective on what can work. the way the consultants work in the Democratic Party and the Republican Party is very different. And the Democratic Party, I've mentioned this many times, consultants who buy media, they buy TV ads, etc., etc., they get 15% off the top. Like a general contractor, you know, upcharging on materials and on his subs or her subs. The Republicans don't do it that way. they have a different structure in the way that they get paid and if your whole capacity to make money and your worldview and who knows where those lines combined or don't is a function of having

Starting point is 00:21:10 to have big money in big media buys you have no idea how to run a field operation which doesn't make you any money. And you just don't know how to do it. And so it draws you to a certain type of candidate. And the reverse is true as well. And this dynamic's not just unique to politics. 25 years ago, I did the first high-definition video pilot for NBC productions. And the guy told me, the head of the studio, said, this is a suicide mission. because we were shooting on video. And it's just like they get used to a certain way of doing it. And they're afraid.

Starting point is 00:21:55 Like, what if we do go to video? Am I going to lose my job? That's the way it works. It works in every industry, I'm sure, in your business, you've come across this as well. Here is Nathan June, I'm in Molladine, Antonio Hilton, and Amara Jones on MS now, talking about the Angie Nixon race. She's had to come up to New York and do a lot of fundraisers, I think, because the Democratic establishment is not giving her money. Now, I don't know.

Starting point is 00:22:29 It sounds like they've just been like, oh, we'll get in touch if we're interested. I don't know if it's the same dynamic as it was up in Maine where they said, this money comes with some strings. But she's been able to run a campaign where she's had virtually no money, at least against Vindman in the primary. who knows if it will work in Florida and the general, but the fact is the polling is close. You know the state. I am from Tarpon Springs, Florida. I actually just met with Angie Nixon just a couple of days ago.

Starting point is 00:23:01 She was in New York at a couple fundraising events, which is indicative of what we're talking about, which is she is not getting currently the support levels that she, you would think she would be getting because the St. Pete Times poll actually has her neck and neck with Ashley Moody right now. And it's such a dire situation because for every $32 that Ashley Moody has right now, Angie Nixon has $1. And what we're seeing is over the course of the past decade,

Starting point is 00:23:28 you have, you know, Democratic leadership stating openly that black woman are the backbone of the Democratic Party. And what I don't understand is if you're going to say that they're the backbone of the Democratic Party when they saved us in Georgia during those Senate elections, you know, to give us the 50-50 split. Alabama. Yeah. If you're going to say they're the backbone, why can't you at least just give a portion of money to just try and support this candidate who is running a race that is closing the gap right now? And where they really need that funding is specifically with disenfranchised Latino voters in Florida as well. where Angie Nixon, she needs to be in South Florida.

Starting point is 00:24:12 She needs to be in Orange County, you know, in these areas where there are huge Latino populations who feel like the president has turned on them. And she doesn't have the funding. And she's having to come up to New York City to try and get fundraising for it. Amen, to what extent do you think the fact that Angie Nixon is also very progressive? Oh, pause. Is this rolls into part two? What's that?

Starting point is 00:24:38 Okay. Now, here's the thing, is that aside from the fact that black women are the backbone in terms of like voting reliability for the party, why wouldn't you fund this race? Florida has traditionally been well out of reach, but so hasn't Texas. And if you're funding in Mississippi, so isn't Mississippi. But the polling is there. And she has proven that she has some type of special sauce when it comes to campaigning. Because she had a similar money disadvantage in the primary. And why wouldn't you do this?

Starting point is 00:25:23 Is it conspiratorial thinking to think that actually it's a function of her politics? Well, that's what these guys think. But I have to ask, do you, some of you think that there are parts of the Democratic party that actually want someone like Angie Nixon to lose. Yes. Absolutely. Absolutely. Yes. Everyone that I was just referring to.

Starting point is 00:25:45 You would then have to be responsive to what that candidate is advocating for, right? If they win, it's like a groundswell. That's not just that, but they want to use it as maybe an example of like, this is why you don't have a DSA candidate running in a Senate race. Because what they want, they want, they want Tala Rico to be the template for Senate and Democrats across the country. They want him to win and these other people to lose. And then in primaries moving forward, they'll say, if you're not like the person who won in Texas, then you're not going to be receiving a support.

Starting point is 00:26:16 But I have to. I mean, now maybe these people are also all conspiratorial and they're audience captured by the MS now group. I have been sending them the majority of port Kool-Aid in giant jugs. So, yeah, they're drinking it. I mean, maybe they're all just so audience captured by all the, you know, 75-year-olds watching MS now, who have been for years screaming at their television going, we need more DSA representation on MS now. Or maybe they're just being honest about what they run into within these circles.

Starting point is 00:27:04 The Democratic Party, I mean, let's not use the Democratic Party because who knows what that means. the leadership of the party narrowly tailored the corporatists in the party they are afraid of an ascendant progressive broadly speaking however you want to define that and encompassing in the they are afraid of that brand taking over the party because it's going to mean loss of power for them, loss of money. That's it. And this is when you are faced with an opportunity like this, this is why you get this type of internecine fights.

Starting point is 00:28:08 And so what you can do to engage in this is to tweet it, Chuck Schumer. if you see him on the street, maybe mentioned something. How about you support Angie Nixon? Send money in any of these establishment types that you see like, I love what she's saying, Angie Nixon, she's great. They have more access to Chuck Schumer than you or me. And they could be pressuring Chuck Schumer publicly. It would be interesting to see if they do that.

Starting point is 00:28:45 Because people are being. forced to take positions. They're not necessarily full-throated, super excited about. But they don't want to be seen as hurting Democrats' chance. They hope that you don't notice that they're not funding Angie Nixon. So there's that. In the meantime, you know, go out. If you got to vote for Josh Turek, he's not going to be my favorite Democrat. Tala Rico is not going to be my favorite Democrat, but we want them to win. All right. In a moment. moment we're going to talk to Zachary Graz. He is a writing fellow at the

Starting point is 00:29:28 American prospect. He's got a new piece out. Private Equity Landlords' double dipping in imminent bailout. God knows how many bailouts we're going to see over the next two years. I have a feeling it's going to be a lot. Maybe the next four years.

Starting point is 00:29:46 I also saw something that said private equities takeover in hospitals has led to 13% more deaths. Anyways. We got a sponsor today. Rocket money at rocketmoney.com slash majority. Rocket money is an app that's free to download. They get several free features, subscription tracking, basic budgeting. They have other more sophisticated features for a premium subscription. But it is what the subscription tracking does is it basically tells you all the things you've been subscribed to. And inevitably, I guarantee you you will find like, oh my God, I'm still subscribed to the majority report. What the F?

Starting point is 00:30:49 And then it gives you the opportunity to cancel it. But there may be other things, too, that you're subscribed to you might want to get rid of. I found stuff. I don't even going to mention what it was. back in the hey well it doesn't let's just leave it at that but also

Starting point is 00:31:14 what rocket money does which is a great feature and um I mean particularly important I mean I don't know I don't have a sense of how well people budget I'm a big budgeter but um

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Starting point is 00:32:29 That's rocketmoney.com slash majority. Rocketmoney.com slash majority. we will put that in the podcast and YouTube description. Quick break, when we come back, Zachary Gros, writing fellow at the American Prospect on his piece, private equity landlords double dipping in imminent bailout. We'll be right back. We are back, Sam Cedar on the Majority Report.

Starting point is 00:34:05 Emma Vigland out today. I want to welcome to the program, Zach Groz, writing fellow at the American Prospect, who's written actually a couple of pieces about this. The latest is private equity landlords double dipping in imminent bailout. Zach, welcome to the program. Thanks so much for having me, Sam. Let's talk about the first piece you wrote about this was a planned landlord bailout by the Trump administration.

Starting point is 00:34:37 It's just shocking to see Donald Trump bailing out real estate owners. commercial real estate owners. I'm really surprised by that. But tell us what's going on with that. Yeah. So this is a five-year-old case that sort of deals with the extensive legal fallout from the pandemic, pandemic era of eviction moratorium that the CDC had declared, later declared on constitutional by the Supreme Court, but landlords were still subject to the state moratoria and they had still been subject to this national moratorium for about a year. So in about summer of 2021, July a coalition of a few dozen landlords sued the CDC, the federal government for about $50 billion. They were saying that they were owed in rental arrears during that time.

Starting point is 00:35:27 They were looking for $26 billion in damages. That number has come down dramatically since then to about $2 to $3 billion that they're looking for in settlement. Let's just stay there for a second. Yeah, sure. So they came in and, I mean, presumably, when they've got to, to come into court and they go through discovery, they're presenting the unpaid rent bills or invoices. And it sort of feels like when they first came in, they inflated that number by

Starting point is 00:36:04 25 or something like that, 25 times. Yeah. So one of the most interesting things about this, I think is that by this time, the class of landlords that, assuming the government has grown to about 2,600 at the time, it was a few dozen. I spoke with the lead council for this plaintiff class of landlords. And they basically said, we have no ability or real intention to go through every single rent role of every single property that's named in this. In many cases, I mean, there are multiple properties that are owned by enormous private equity investors or other real estate. state investors. And so this is basically going to be an estimate. They're getting together a group of economists to put together an economic model that will be generalizable across the entire class, but it's not actually going to dig in most likely into every single arrear or back payment that they say the road. And so this is going to be some kind of estimate. It's not going to be looking at

Starting point is 00:37:07 the kind of debts that they might be claiming. Okay. And so they can't. Damon asking for 50. Now it's down to two or three billion. Give us a sense of like, just remind people how much money the government spent in making landlords. And these aren't, are these like, are these like home landlords or domestic landlords? Yeah. So that's one of the most interesting things about this case, which is that early on it was presented as this kind of bailout that was intended to help support mom and pop landlords, people who own maybe one property, maybe have a couple of tenants or five properties and have a bit more than that. That's just not what's happening. If you look at the plaintiffs that are listed, many of them are LLCs that are

Starting point is 00:38:00 controlled by private equity landlords that have hundreds of thousands of units across the country. But so the notion of this was a mom and pop landlord, which bailout, which was how it was presented early on, is just really not the case if you look closely. Also, it doesn't really cover even close to the total number of landlords who are operating in the U.S., not even close to the total number of rental units. But if you look at how much money the federal government spent during the pandemic, it was enormous. It totally obscures this intended settlement, which is only going to be $2 to $3 billion. The federal government spent hundreds of billions of dollars during the pandemic to help support rental property owners and to support renters in various ways. So I think the larger question here is about what happened during the pandemic. How did the federal government help backstop the economy?

Starting point is 00:39:05 and that really isn't on the table in this settlement discussion. And is there, I mean, what were, were their programs where a big renter landlords were getting like actual cash payments, in other words, part of this smells a little bit scammie to me. I just so insofar as the fact that like people were made whole by the government. And frankly, like, I applaud the government for doing that across the board. in various areas. Certainly people took advantage of it and should be, you know, punished for taking advantage of it in certain instances. But mostly people made a whole and you're not coming in with

Starting point is 00:39:54 actual proof that you were subject to losses because of this eviction moratorium. You're just going to estimate it and you're at for early estimates were 25 times more than you're you're at uh it just sounds like scammy yeah so what's what's interesting also is that so the one of the initial uh kind of claims of this lawsuit was that at the height of the pandemic renters owed 56 billion dollars or something like that that was also a cherry picked number i mean other estimates showed it closer to $7 billion or somewhere in between. So that was part of this, and then they were asking for half of that in settlement money. And this plaintiff class doesn't even come close to representing half of rental landlords in the country.

Starting point is 00:40:44 So that number to begin with was just totally off base. I think what's really interesting to dig into here also is the kinds of landlords that are applying for this relief. I mean, a lot of them are nominally providers of affordable housing. to begin with they got, in some cases, preferential financing from state authorities or federal authorities to build affordable housing. They received subsidies from the federal government to begin with. And during the pandemic, they were receiving specific COVID relief funds in order to prevent mass evictions at a time when that was deemed a real priority of government, a real priority of public health experts, because it would have likely created a mass casualty event in the case of a real sort of tsunami of evictions at the height of the pandemic.

Starting point is 00:41:38 But I think what's also interesting to look at, if you look at some of these specific al-Cs that are owned by private equity landlords that are named in this case, if you look at their eviction history, at least in some cases during the pandemic, you just don't find evictions. they were not evicting people. And that's because they were signing agreements with tenants, with, it was a court-mediated process that said, we will accept federal rental assistance that might be paid either directly to the landlord or would be paid to a renter, a tenant who was, you know, making the landlord hole in one way or another,

Starting point is 00:42:12 in exchange for not evicting that person for a certain amount of time until a moratorium elapsed. And so when you look at the court records for many of these landlords, evictions ramp up, you know, in 2023 when rents are being hiked, when rents are being hiked. But you don't really see landlords claiming massive arrearages that are still downstream of the pandemic into 2022, at least in many cases, you don't see that. So that's also further evidence, I think, that these federal assistance programs actually did filter down to landlords in one way or another.

Starting point is 00:42:47 Let's talk about Starwood Capital Group. it is the country's third largest private equity apartment owner. They count for 10% of the property owners in investment vehicles that are suing the feds and close to 15% of the rental units covered so far. I mean, it sounds like they're the lead plaintiff in this thing. What can you tell us about them? So Starwood's an interesting case. I think it's also gone pretty much obscured that they are in the lead here.

Starting point is 00:43:20 I saw some other reporting around this after the latest announcement. So when I first wrote a story about this, the plaintiff class was about 1,500, 600, it's now grown to 2,600. So it grew by 1,000 in the span of a few months, still, as I said, not close to the total number of landlords. Starwood's an interesting case. Starwood is private equity investor in real estate. They've had a pretty big portfolio of rental properties, multifamily rental properties. They specialize often in affordable housing. They have a big portfolio in Florida in particular, and that's represented in the case, about half of their properties that are named in the case are in Florida.

Starting point is 00:43:59 And they're listing tens of thousands of units that they control. In Florida in particular, it's very hard in some cases to get a really clear sense of how this money trickled down because a lot of it was paid directly to tenants in a court-mediated process, either with a, you know, a court-appointed attorney or some other legally-aid attorney to help them apply for rental assistance, or it could be like a community group or something else. Some of those landlords were doing it themselves for tenants. I spoke with a crisis management expert who did this extensively with localities and municipalities to work in between, and that was in part paid for by federal assistance to kind of have an eagle's eye view of what was going on on the ground because it was very complicated.

Starting point is 00:44:47 But in the case of Starwood, at least in Florida, where a lot of these COVID relief fund agreements are public, you can see how the Florida Housing Agency, Florida Housing Finance Corporation, which is sort of a finance authority that helps build affordable housing in the state, they were directly paying some of these LLCs, not all of them, some of these LLCs that are tied to Starwood. More than $10 million dollars went directly to them. in that way. And that isn't covering the bottom-up way that most of this rental assistance came. So Starwood is a massive private equity firm that has more than $100 billion in assets under management. And they have a portfolio of rental properties, but they also have hotels and they had a big portfolio of shopping malls. They made a killing in the years after the apex of the pandemic. in 2022, they made hundreds of millions of dollars in revenue. And the same was true in 2021.

Starting point is 00:45:53 So this is a case of, you know, seemingly, you know, a highly profitable time for this major investor in rental properties in the country. So what, why is the DOJ just finally deciding like, oh, we're not going to pursue this, anymore? Like, what's going on? Have you talked to anybody in the DOJ? Do you have anybody who's giving you a sense of, like, they're pulling us off this case because they don't have enough lawyers to do anything in the DOJ? Or is it more like Donald Trump got a visit from his buddy and who, you know, decided to contribute money to the ballroom or something like that? And he just sent word, we're done with this case. And what, do you have an idea of like why settle now? It doesn't look like they have much leg to stand on. Yeah. So, I mean, this is an interesting case. I don't really have any insight into the thinking of the DOJ.

Starting point is 00:46:52 So they didn't comment from my story. I think, I mean, there was a lot of speculation I talked to some people who are very familiar with how these lawsuits can go. What kind of meritorious defenses the DOJ should have been making and or ought to have made in their view. really the legal history of this case is interesting or the process. It came before the federal claims court in 2021, 2022. The claims court dismissed this out of hand. The government made basically a jurisdictional argument saying that the landlords just didn't have any grounds to sue. And then that was overturned by an appellate court. They were sent back to the federal claims court.

Starting point is 00:47:37 And in that time, I mean, the DOJ could have taken this to the Supreme Court, could have mounted maybe a more substantial defense, but just didn't do it. So they've laid out what their broader case is, which is landlords were made whole or they had at their disposal, incredible resources to make up for their inability to evict tenants during the pandemic. I spoke with also a lot of people who specialize in housing law or housing policy. And basically the argument that they made to me was landlords were not in any kind of position to massive tenants who were behind on rent. We have to remember that at the beginning of the pandemic, no one knew what was going to happen. Millions of people were laid off and were struggling to make rent because many people are rent burdened and are basically one paycheck away from an eviction slip.

Starting point is 00:48:34 So the argument that was made to me was, well, if this is the case at many of these affordable housing developments where people are struggling to pay rent, landlords really didn't have much incentive to immediately evin tenants on the day that they couldn't make rent. Because who's going to move in? Yeah, exactly. I mean, nobody's moving into these places if everybody's not getting money. So the point is there's no damages. They can't prove damage.

Starting point is 00:49:04 because they would have to prove that but for this eviction moratorium, they would have made X amount of dollars and they didn't. But there's nobody to move back in. They can get these apartments empty. But if there's nobody moving in, they haven't lost any money. Totally. And the other thing is that, I mean, in many cases, these are subsidized apartments. And so the federal government already has a role to play in, in financing. these property owners. So yeah, I think that's kind of the thrust here. The DOJ has kind of had a streak of settling cases of this nature, major payouts. This would be one of the largest settlements in the history of this particular kind of lawsuit. It's a Fifth Amendment-taking clause lawsuit, and the money would be paid from this pot of money that the federal government keeps. It's

Starting point is 00:50:04 hugely discretionary called the Judgment Fund, which has now been speculated as a possible route for the Trump's sort of bailout for victims or purported victims of political targeting. Like J-6ers, essentially. Yeah, exactly. Yeah. So this is a highly discretionary pot of money that would be used to pay this settlement. There's so many different angles to the cruxswain.

Starting point is 00:50:34 corruption of this administration. It's difficult to keep track. This is an interesting one. Zach Rose, we will link to your piece, private equity landlords double dipping in imminent bailout, and the one that you wrote back in August on Trump's plan landlord bailout would cost billions. Both of those,

Starting point is 00:50:53 really appreciate your time today. Thanks so much, Sam. I really appreciate it. All right, folks. That's it for the first half of the program. We will move into the second half of the program, wherein we will talk about more. Tim Poole. Tim Poole and maybe some PBD.

Starting point is 00:51:17 PBD. We've got a lot of fun things. We'll take some phone calls. I got some time for some phone calls today. Also, we'll go over the loser majors that you can have in college, which will the education department is decided that you're not worthy of a loan because the only thing that matters when you go to college is that you pursue something that isn't necessarily socially beneficial, but we'll make money. Teachers, that's for losers.

Starting point is 00:51:53 We don't need no stinking teachers in this country. I will say taking out student loans for my English literature degree, I kind of regret it now that, like, I kind of wish I, was somebody who couldn't tell AI writing immediately. And it didn't drive me insane when people tried to. It's not just a blank. It's also a blank. Oh, God. It's a curse.

Starting point is 00:52:20 There you go. That's... Thank you, President Trump. He could have saved me. He could have saved you. Instead, you went on to get all pointy-headed. No point of being literate anymore. Exactly.

Starting point is 00:52:38 Should have done what the rest of us did and just watched a lot of TV. Folks, it's your support that makes this show possible. You can become a member at Join the Majority Report.com. When you do, you not only get the free show free of commercials, but you also get the fun half. And you can IAM us in the fun half. Rob from Dedham says Sox in two, I would say probably. Yeah.

Starting point is 00:53:02 I hope so. I'm going to be at the Liberty game tonight, but I will have the phone streaming the, Red Sox as well. Wow, that's nice. Whole setup in front of you. Also, just coffee.coop, fair trade coffee, hot chocolate, use the coupon code majority, get 10% off. Matt, what is happening in the Matt Leckian media universe?

Starting point is 00:53:24 Yeah, so people might think that DSA is only having success in places like New York City, but we have two DSA guests from Austin, Texas today on Left Racking. Mike Siegel, who's already a city council member, about socialism on the municipal level. And also, Missile Ramos, who is a candidate for city council, who was recently arrested after protesting ICE. And they showed up while he was walking his dog and detained him for a little bit. And looking at riot charges for him, which is outrageous.

Starting point is 00:53:56 And he is an active city council candidate. So kind of a little glimpse into the authoritarianism of 2006 there. So check that out if you're interested in what DSA looks. like outside of New York City. All right, folks. See you in the fun half. Three months from now, six months from now, nine months from now. And I don't think it's going to be the same as it looks like in six months from now.

Starting point is 00:54:23 And I don't know if it's necessarily going to be better six months from now than it is three months from now. But I think around 18 months out, we're going to look back and go like, wow. What? What is that going on? It's nuts. Wait a second. Hold on for a second. Emma, welcome to the program.

Starting point is 00:54:45 Hey. Fun hat. Matt. Who? Fun hack. What is up, everyone? Fun hat. No, me, teen.

Starting point is 00:54:54 You did it. Fun hack. Let's go Brandon. Let's go Brandon. Fun hat. Bradley, you want to say hello? Sorry to disappoint. Everyone, I'm just a random guy.

Starting point is 00:55:06 It's all the boys today. Fundamentally false. No, I'm sorry. Stop talking for a second. Let me finish. Where is this coming from, dude? But dude, you want to smoke this? Seven and eight?

Starting point is 00:55:18 Yes. Yes? It is you. Oliver's me? I think it is you. Who is you? No sound. Every single freaking day.

Starting point is 00:55:43 What's on your mind? We can discuss free markets and we can discuss capitalism. I'm going to go to life. Libertarians. They're so stupid, though. Common sense says, of course. Gobbled e-gook. We fucking nailed him.

Starting point is 00:55:55 So what's 79 plus 21? Challenge men. I'm positively quivering. Leave 96, I want to say. 857. 210. 35. 501.

Starting point is 00:56:04 One half. 3-8s. 9-11 for instance. $3,400. $1,900. $6.5,4, $3 trillion sold. It's a zero-sum game. Actually, you're making a think less.

Starting point is 00:56:16 But let me say this. Poop. You can call it satire. Sam goes satire. On top of it all? My favorite part about you is just like every day, all day, like everything you do. Without a doubt. Hey, buddy, we've seen you.

Starting point is 00:56:35 Folks, folks. It's just the week being weeded out, obviously. Yeah, sundial guns out. But you should know. People just don't like to entertain ideas anymore. I have a question. Who cares? Our chat is enabled, folks.

Starting point is 00:56:59 I love it. I do love that. Got to jump. I got to be quick. I get a jump. I'm losing it, bro. Two o'clock. We're already late, and the guy's being a dick.

Starting point is 00:57:12 So screw him. Sent to a good. What is wrong with you? Love you. Love you. Love you. Bye-bye.

The Majority Report with Sam Seder - 2741 - Private Equity's Next Huge Bailout w/ Zachary Groz

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