The Buksbaum family, one of whose members is Tom Friedman’s wife, has been ejected from the management of General Growth Properties Inc., after financial irregularities were discovered.
Basically, what happened here is that GGP fueled its growth by leveraging itself up to its eyeballs:
Rather than apply for bank loans, General Growth began taking out short-term mortgages on its malls. As the mortgages came due, the company would replace them with even larger mortgages to provide cash for additional acquisitions.
This is what happens when you let the finance folks drive your business, rather than the other way around….It’s also why people wonder how different Bernie Madoff was from business as usual in the US financial system.