tag:blogger.com,1999:blog-2494261085549436083.post7893376954229466919..comments2010-03-13T16:05:04.127-05:00Comments on Forward Movement: More (?!) Bank Closings and New Rules for Private Equity BuyersStephanie Soondarhttp://www.blogger.com/profile/10641501848328041087noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2494261085549436083.post-11184763051724997262009-07-07T19:17:36.952-04:002009-07-07T19:17:36.952-04:00The private equtiy buyers are complaining because ...The private equtiy buyers are complaining because they want to stake out as much freedom and flexibility as possible to do as they please. no one likes being told how to handle their money, especially by the government! Also, private investors don't have that much to lose because they are only out to the extent of their investment and because of the limited liability doctrine they are not liable for personal bad debts incurred as a result of reckless business practices. regulation is necessary to counter this incentive to over-gamble with other people's money.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2494261085549436083.post-41459124323828023802009-07-07T13:47:48.246-04:002009-07-07T13:47:48.246-04:00Hey Bolga!
Thanks for the comment. I agree, the ...Hey Bolga!<br /><br />Thanks for the comment. I agree, the leverage ratio seems a practical provision in light of the last several months' events. Having said that, I'm really interested in what has the private equity guys so up in arms >> is it just the reduced profit in light of a lower leverage ratio? Do they think this is not the appropriate manner to handle the leverage issue in the new governance structure the Obama Administration is building? How much potential profit is loss? Is there an alternative means of capturing that loss profit without the low ratio (new vehicles?)? Cynics will say the private equity guys just don't care about stability, but that doesn't shake either: they lose money, too, when risks come to fruition.<br /><br />So there's a lot more here to investigate >> *yeah*: more posts!<br /><br />Have a good one, Beaut - we'll speak soon,<br /><br />Sls.Stephanie Soondarhttps://www.blogger.com/profile/10641501848328041087noreply@blogger.comtag:blogger.com,1999:blog-2494261085549436083.post-64961177826763425442009-07-07T12:10:14.172-04:002009-07-07T12:10:14.172-04:00I think the regulations are wise in their intent. ...I think the regulations are wise in their intent. US financial institutions are some of the most undercapitalized in the world, and this was a major contributor to the recent economic collapse. It's great, on the one hand, to attract buyers of failed institutions to try to save what we can and give them new life, but it would be foolish to let the pattern of excessive speculation repeat itself (costing taxpayers money either in the form of FDIC insurance funds or bailouts). When I say "excessive" speculation - I refer to speculation of the kind where the potential lossise fatal to the risk-taking institution. Sure, no risk, no reward, but if we learned anything from the recent economic crisis it is that in today's global economy, when bets that are too risky (institutionally fatal) fail, the snowball effect has worldwide economic and political significance. In fact, the CIA has recently decided to start recruiting ex-Wall street guys to monitor global financial conditions, recongnizing that an unstable economy is directly tied to major political upheavals (read: global security threat). (Heard the CIA bit on NPR:) So, the proposed policy is a good idea in my view.Olga Waynehttps://www.blogger.com/profile/05933975205246472650noreply@blogger.com