David Rubenstein of Carlyle Group doesn’t have anything to gain by saying bad things about banks, and he is well connected, so odds are good he is on to something (hat tip reader Abdul).
He also repeated a theme that we’ve heard earlier: don’t count on sovereign fund rescues. While they were active buyers in the first round of bank fundraising, they’ve been burned, and will hold back until they have clearer indications that the worst is past.
The article notes he was far more bullish on April 28. Wonder what he learned in the meantime?
U.S. and European banks and financial institutions have “enormous losses” from bad loans they haven’t yet recognized and may have a harder time wooing sovereign-fund rescuers, Carlyle Group Chairman David Rubenstein said.
“Based on information I see,” it will take at least a year before all losses are realized, and some financial institutions may fail, Rubenstein said at a breakfast meeting of the Institute for Education Public Policy Roundtable in Washington. He didn’t name any companies.
“The sovereign wealth funds are not likely to jump into the fray again to bail out these institutions,” Rubenstein said. “Many financial institutions aren’t going to be able to survive as independent institutions.”…
On April 28 at a conference in Baltimore, Rubenstein said financial institutions and financial assets are “the single greatest investment opportunities” in the U.S. and “a lot of private-equity firms like ours are going to try to make investments in these firms.”….
Rubenstein said today that the industry and broader economy aren’t likely to turn around until early next year.
“The truth is, we’re in some kind of economic slowdown,” Rubenstein said. “I don’t think it’s going to be over for quite a while.”