Category Archives: Private equity

How the Volcker Rule Misses the Shadow Banking System

On the one hand, debating the merits of the Volcker Rule may seem a tad academic, given the rousing opposition it is encountering from Congress (and you have to love the world of politics: the biggest obstacle is, basically, “We sorta have a deal, you can’t retrade it!” Funny how banks and AIG get to […]

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Volcker Rule: Dead on Arrival? And is Obama a Lame Duck?

We’ve argued that the “Volcker Rule,” which would limit “proprietary trading” by banks, is in theory a very good idea, but the proposal put forward by Volcker/Team Obama goes wide of the mark by defining any customer trade as not being part of proprietary trading. That’s a spurious distinction; large-scale position-taking well beyond what was […]

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Volcker Does Not Get It

Paul Volcker has an op-ed in the New York Times that made my stomach sink. I had considerable hopes for Volcker’s involvement in financial reform; he’s one of the few regulators with the stature (literally and figuratively) who can say things to bankers, the media, and government officials that are unpalatable yet need to be […]

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Quelle Surprise! Proposed Restrictions on Proprietary Trading are a Joke

True to form, the White House set forth a sketchy program to limit the proprietary trading activities of banks, and it is a vote for the status quo which is being tarted up as something else. I’m amazed that someone of Volcker’s stature is allowing himself to serve as the branding for ideas that are […]

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The Kanjorski “We’re Tough on TBTF” Headfake

Dear God, if you read the media, you’d really think the Congressional huffing and puffing at the banking industry was going to solve the “too big to fail” problem, or even make much of a difference. Folks, I hate to tell you, these remedies fall so far short of what it would take as to […]

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Securitization Drought Exposes Policy Bind, Threatens Recovery

The New York Times has a good update on the progress, or more accurately, lack thereof, in the efforts to return to normalcy in the credit markets. The story highlights the fact that the securitization markets, to the extent they are operating, are heavily dependent on government intervention and it does not appear likely that […]

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Quelle Surprise! New York Times Fails to Call Private Equity Looting by Its Proper Name

The New York Times tonight features a generally very good piece, “Buyout Firms Profited as a Company’s Debt Soared,” by Julie Creswell that falls short in one important respect: it fails to call a prevalent and destructive practice of private equity firms by its proper name. PE firms in the risk-blind environment preceding the credit […]

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Chrysler End Game Nigh? Talks on With Renault and Magna

We’ve read off and on speculation that Chrysler might not make it, even assuming a less punitive attitude towards carmakers under the Obama regime. It’s hard to justify government subsidies when a wealthy owner, Cerberus, is refusing to open its checkbook. And Chrysler’s number three status makes it the least problematic to shrink or liqidate. […]

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Scarcity of Debtor-in-Possession Financing Forcing Earlier Bankruptcy Filings

In more normal times, when a company faces the risk of bankruptcy but believes it has a viable business, it files for Chapter 11 and works out a deal with its various creditors. To keep functioning (and paying its lawyers) while the court proceedings are in motion, large companies have resorted to debtor-in-possession financing. The […]

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VC Investors Defaulting on Capital Calls; PE Investors Just Say No

Yet another credit crunch casualty: venture capital firms, and potentially, their portfolio companies. The Wall Street Journal reports that VCs are seeing an increasing number of rebuffs, some borne of necessity, when they hit up their limited partners for dough (reader note: investors in private equity and venture capital funds do not remit the full […]

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Harvard, Other Big Endowments Selling Private Equity Stakes at Big Losses

A year ago, major endowments, like Yale, Harvard, and Princeton were seen as the ne plus ultra of sophisticated private investors, regularly posting 20%+ annual returns. Now they are dumping big chunks of their private equity holdings at distressed prices. What gives? The reason this is odd is that the last thing you want to […]

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Surprisingly Superficial New York Times Article on Troubled Private Equity Deals

A story by Andrew Ross Sorkin and Michael de la Merced, “Debt Linked to Huge Buyouts Is Tightening the Economic Vise,” covers the fact that private equity deals, which as a matter of course feature high leverage, are starting to hit the wall as the economy sours. This is hardly surprising; it’s happened in past […]

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