General Growth Properties. Greedheads destroy another company

Fresh on the heels of the bankruptcy filing by the Tribune after Sam Zell bought it, took it private with mountains of debt, then carefully tried to destroy any quality journalism that still survived, comes news of another once-healthy company driven to its knees by greed and incompetence.

General Growth Properties
(GGP) owns large numbers of shopping malls. The Bucksbaum family that controlled it though, wasn’t content with just a few billion, so the company started taking huge, insane risks. Rather than borrow money from a bank, they took out short-term mortgages and used the money to buy more properties. Which works until credit dries up. Then you are screwed. Some of the management also leveraged personally on buying stock in the company (they borrowed money to buy the stock.)

Are you getting the picture? Buy more properties. This (temporarily) pumps up earnings which in turn pushes the stock price higher. So, seems to me, they were primarily beholden to themselves, not to the stockholders and certainly not to their employees or those companies renting space from them. Irresponsible, reckless, and selfish, is what I’d call it.

So, when the inevitable drop in the stock happened, their financial wizard, Bernie Freibaum, found himself facing huge margin calls on company stock he’d bought on leverage. Goodness, can’t let word of that slip out. So CEO and family member John Bucksbaum lent him and others $100 million from the family trust to make the margin calls. Didn’t help. GGP stock continued cratering and now the company may well cease to exist. Oh, the board pretended to spank John Bucksbaum, but he’s still chair.

The Bucksbaums have their billions. Their company will probably file bankruptcy soon. So many of their employees will lose jobs, and the ripple effect could effect those employed by tenants in their malls. Truly, this is capitalism at its sickest. Devoid of ethics, concerned only with short-term profit for oneself, and screw everyone else.