Why Private Equity Sees Katie Porter as a Strategic Threat as California Governor

/ ChrisTobe

Pension Governance, Fee Economics, Media Influence, and Political Incentives

I. Overview

Private Equity (PE) is one of the most politically dominant financial sectors in the United States. It controls approximately $12 trillion in global assets, and the revenue it extracts from public pension systems—including California’s CalPERS and CalSTRS—generates tens of billions of dollars in annual fees for PE general partners (GPs) and their affiliates.

Katie Porter has emerged as one of the few national-level elected officials willing to challenge PE’s influence, particularly in:

  • Health care
  • Housing and rents
  • Corporate governance abuses
  • Private Equity fee extraction from public pensions

Because of this, Porter represents a credible threat—not just rhetorically, but structurally—to one of PE’s largest and most reliable revenue sources: California’s public pension system, which is one of the largest pools of institutional capital on earth.

Porter’s positions therefore create a direct financial incentive for the PE industry to block, weaken, or discredit her candidacy for Governor.

II. Why Katie Porter Threatens Private Equity’s Economic Interests

1. California Public Pensions Are a $50+ Billion PE Fee Machine

CalPERS and CalSTRS together hold more than $75 billion in Private Equity positions.
Assuming typical fee structures (2% management + 20% carry + monitoring fees, transaction fees, fund-of-fund layers), these systems generate at least:

≈ $3 billion per year in recurring fees and carried interest paid to PE managers.

This makes California one of the two or three most valuable public-pension clients for the global PE industry. No other U.S. state has as much concentrated PE capital—and thus no other governorship poses greater regulatory risk to PE’s fee extraction models.

Katie Porter, if elected, would appoint or influence:

  • CalPERS & CalSTRS board members
  • CalPERS CEO
  • CalPERS CIO
  • Legislative oversight structures
  • Transparency initiatives
  • Fiduciary standards for alternatives

Her governorship alone could shift tens of billions of dollars in capital allocation and transparency expectations.

This is a structural threat to PE that dwarfs the conventional left–right political calculus.

2. Porter’s Policy Agenda Collides Directly With PE Business Models

Health Care

Porter is one of the few members of Congress who has directly attacked:

  • PE-owned emergency room staffing companies
  • PE roll-ups of physician practices
  • Surprise-billing profit strategies
  • Debt-driven hospital consolidation

Health care is one of the most lucrative sectors in PE, generating outsized IRRs. Porter’s focus puts those strategies under direct reputational and regulatory scrutiny.

Housing

Porter has criticized:

  • PE consolidation of rental housing
  • Institutional single-family landlords
  • Eviction-driven returns
  • Fee layering on tenants

PE firms such as Blackstone and Invitation Homes are among the largest landlord entities in the U.S.

Pensions and Financial Transparency

Porter has been one of the few national politicians willing to challenge:

  • Hidden carry structures
  • Non-disclosure agreements
  • Fee opacity
  • “Zombie funds”
  • Private credit valuation risk
  • Benchmark manipulation

If she brings these issues into California state policy, PE faces:

  • Higher transparency obligations,
  • Stricter fiduciary standards, and
  • Potential capital reallocation away from opaque funds.

III. How Private Equity Has Already Signaled its Political Preferences

1. Evidence from the 2024–2025 California Senate Race

While direct campaign-finance records require careful interpretation, multiple political observers noted that:

  • PE-linked donors and financial-sector PACs were disproportionately aligned with Adam Schiff rather than Porter.
  • This pattern aligns with how PE has historically backed lowest-risk, establishment-aligned candidates who are unlikely to disrupt pension-fee revenue streams.

Porter, by contrast, has:

  • No donor dependence on the finance industry
  • Built her brand on adversarial oversight
  • Already taken positions hostile to PE sectors (health care, housing)

This makes her a high-risk candidate for PE’s interests.

IV. How Private Equity Typically Responds to Political Threats

Private Equity rarely attacks a candidate on policy because its business model cannot withstand public scrutiny. Instead, PE-funded messaging networks use:

A. Personality-Based Attacks

  • Focus on tone, communication style, or staff management
  • Exaggerate minor interpersonal conflicts
  • Reinforce gendered stereotypes (e.g., “abrasive,” “difficult,” “emotional”)
  • Use micro-scandals to divert attention from PE’s own impact

This pattern is identical to how establishment actors targeted Elizabeth Warren, where Native American heritage and personality tropes were used to obscure her substantive financial-reform agenda.

B. Identity-Based Distractions

Exactly as you noted: instead of debating Porter’s policy threat to PE’s business interests, PE-aligned media will highlight:

  • Her alliance with Elizabeth Warren
  • Cultural or identity issues
  • Gender-coded expectations of “likeability” and “temperament”

C. Narrative Inversion

The goal is to shift the voter conversation away from:

  • PE’s harmful effects on health care
  • PE’s role in driving housing unaffordability
  • PE’s fee extraction from pensions

…and toward anything else.

V. The Ohio Case: A Playbook for How Private Equity and Hedge Fund Influences California Media

In my Ohio analysis, you documented how:

  • The press manufactured “fake scandals” around personalities
  • Meanwhile burying or ignoring massive pension corruption
  • Local media outlets aligned with PE-linked donors
  • High-fee public pension contracts were protected by political actors

(See: “Ohio Media’s Complicity: How a Fake Scandal Hid the Real Teacher Retirement System Corruption”)

This model is instructive:

If PE can turn an entire state’s press ecosystem against a reformer to protect fee revenue, California—where tens of billions in fees are at stake—will face the same pattern.

Like Ohio  = Private Equity Apollo controls the Gannett papers by debt which include Ventura County Star, The Desert Sun, Record Searchlight, Salinas Californian, Visalia Times-Delta,

A major newspaper  Sacramento Bee / McClatchy is owned by the  Chatham Asset Management hedge fund and is basically the paper of record for CALPERS and CALSTRS.   They also contol the Fresno Bee, Modesto Bee and others

The Alden Global Capital hedge fund owns the Media News group, which includes the San Diego Union-Tribune, Orange County Register, L.A. Daily News, Riverside Press-Enterprise, Bang, Mercury News, East Bay times. Also recently expanded into Northern California with The Press Democrat.

Los Angeles Times owner Nant Capital sold the San Diego Union-Tribune to Alden and has rarely been critical of Private Equity.

Almost all California TV stations are owned by firms with strong Private Equity Hedge Fund Ties.

The largest Nextstar has private equity hedge fund roots and owns KTLA 5 (Los Angeles) KSWB FOX 5 (San Diego) KTXL FOX 40 (Sacramento), KSEE 24 (Fresno) KRON 4 (San Francisco; via Nexstar’s majority control of “The CW”). Additional affiliates in Bakersfield, Chico/Redding, Palm Springs.

Sinclair Broadcast Group is hedge fund owned and includes KMPH FOX 26 (Fresno) KPTH/KTVU partnerships in some markets and multiple smaller market affiliates in Northern and Central CA

TEGNA was nearly purchased by Apollo in 2022 but was blocked by the FCC and they own KGTV ABC 10 (San Diego) and KXTV ABC 10 (Sacramento)

Scripps is publicly held, but is heavily HF led and credit lines from Blackstone. Scripps owns KGTV, KSBW (Monterey/Salinas), KERO (Bakersfield)

VI. Why PE and CalPERS Staff Interests Align Against Porter

This is the part most observers miss.

CalPERS staff—especially senior investment personnel—benefit from:

  • Very high compensation
  • Benchmark structures designed to flatter performance
  • Close, reciprocal relationships with PE firms
  • Soft-landing jobs in private markets
  • Sponsored travel, conferences, speaking circuits

A Porter governorship would place:

  • CalPERS compensation
  • CalPERS fee disclosure
  • CalPERS use of private equity
  • CalPERS governance practices

under unprecedented scrutiny.

Thus, PE and CalPERS senior staff incentives align.

This is not speculative—my Ohio salary analysis demonstrated how:

  • Excessive staff compensation becomes politically protected
  • Staff collude with industry to defend fee streams
  • Reform candidates become targets of orchestrated negative coverage

California’s dynamic is similar—but the capital at stake is vastly larger.

VII. PE’s Dark-Money Ecosystem in California

Private Equity already exerts considerable influence in California through:

  • Charter school lobbying (as shown in The Intercept, July 2021)
  • Dark-money networks routed through 501(c)(4)s
  • PACs aligned with real estate, hospital chains, and tech investors
  • Groups that present as “education reform” or “innovation” advocates

Porter opposes charter-school expansion.
PE-backed charter networks see her as a threat to:

  • Real estate acquisitions
  • Asset-backed leverage structures
  • Cash-flow extraction from public-school budgets

This adds another multimillion-dollar incentive for PE to oppose her.

VIII. Why Porter Is Uniquely Dangerous to the PE–Pension Complex

Porter understands—down to the legal and accounting levels—how:

  • Carried interest works
  • Valuation smoothing works
  • Pension-fund PE benchmarks are engineered
  • Capital-call structures manipulate risk
  • Opaque reporting burdens pensions with unmonitored liabilities
  • Private credit threatens system solvency

A California Governor with that level of literacy would be the first in modern history.

The “alarming scenario” for PE looks like this:

  • Porter appoints a CalPERS Board majority interested in transparency
  • CalPERS shifts $10–20 billion out of opaque PE/credit
  • CalSTRS follows
  • LA County and SF City & County mimic the model
  • California becomes the first state to audit PE fees line-by-line
  • Other states copy the model

A single California governor could trigger a national retrenchment of PE in public pensions.

This is why PE cannot allow her to win.

IX. Conclusion: Why You Are Seeing Personality Attacks Instead of Policy Debate

Private Equity cannot defend:

  • surprise medical billing
  • PE-run emergency rooms
  • housing consolidation
  • fee extraction from teacher pensions
  • opaque valuation methodologies
  • charter-school dark money
  • performance-lag gimmicks
  • political corruption in pension governance

So it avoids those topics entirely.

Instead, it pushes:

  • personality narratives
  • identity politics
  • small “scandals”
  • staff management stories
  • “tone” criticism
  • character-based tropes
  • guilt-by-association techniques

Because the truth—that California’s next Governor could put $50+ billion of PE fee streams at risk—would collapse PE’s political strategy overnight.

Katie Porter is not being targeted because she is “difficult.”
She is being targeted because she is dangerous—specifically, to the private-equity profit engine tied to CalPERS, CalSTRS, and the California public-pension complex.

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