In a move that experts describe as a direct warning to private equity firms, New York mayor-elect Zohran Mamdani has appointed former Federal Trade Commission chair Lina Khan to his transition team. The selection signals a potential crackdown on corporate practices that have driven up rents and monopolised healthcare industries across the state.
The Roll-Up Strategy Under Fire
Private equity firms across the United States have increasingly employed a strategy known as "roll ups" – acquiring numerous small local businesses and consolidating them into larger entities. This approach grants significant market power, enabling simultaneous price increases and quality reductions.
Martin Kenney, distinguished professor at University of California, Davis and author of Private Equity and the Demise of the Local, noted that Khan was among the first regulators to aggressively challenge this practice during her tenure as FTC chair under President Biden.
"While Khan might have comparatively less power on a transition team for a city government, her appointment is 'a signal' – of warning to New York private equity firms," Kenney explained.
Healthcare and Housing Impacts
The consequences of private equity consolidation are particularly severe in healthcare, where involvement has been linked to worse health outcomes, including increased mortality rates. Meanwhile, in New York's housing market, private equity firms have employed aggressive tactics to displace residents from rent-controlled buildings.
"They made it a hellhole for the tenants. They played all sorts of shitty little tricks on them, and they eventually moved," Kenney stated, referencing practices allegedly used by firms like Sugar Hill Capital Partners, accused of allowing properties to deteriorate through problems like rat infestations to force out rent-controlled tenants.
During her FTC tenure, Khan brought multiple suits against private equity and big tech monopolies, including a complaint against US Anesthesia Partners and its private equity owners for attempting to monopolise Texas's anaesthesia industry. Though she didn't win all cases, her investigations created significant impact.
Symbolic Power with Practical Implications
Loren Adler, associate director at Brookings Institution's Center on Health Policy, agrees that Khan's appointment carries largely symbolic weight given that "municipal power is only so strong". However, Mamdani could leverage several mechanisms to challenge private equity-backed companies.
"It's pretty easy to force transparency at the municipal level," Adler noted, pointing to facility approvals and land use permits as potential leverage points for compelling disclosure of ownership changes that often occur beneath regulatory thresholds.
Adler also suggested strengthening New York City's already robust public hospital system and resisting contracts with private equity firms for services like ambulance provision and medical devices as additional strategies to create competition.
The appointment places Khan directly in Wall Street's backyard, representing what Kenney describes as a new approach from younger Democrats like Mamdani – one that could have national implications for how policymakers address corporate consolidation and its effects on everyday Americans.
