Blackstone’s Schwarzman: U.S. Action Could “Break the Back” of Crisis

DUBAI, Oct 14 (Reuters) – Blackstone Group (BX.N) chief executive Stephen Schwarzman said on Tuesday that action by the U.S. government to inject cash into its banks, alongside other dramatic moves around the world, could break the back of the credit crisis.

“We will be looking today to an absolute sea change in the global financial system in terms of liquidity,” Schwarzman told a packed room at the Super Return private equity conference in Dubai. This could be the time that “breaks the back of the credit crisis”, he said.

The United States will announce plans on Tuesday to inject $250 billion into its banks, following similar, concerted measures in Europe to revive money markets and stave off global recession.

Schwarzman said there was now “absolutely no reason” why anyone would have any concerns or fear about putting money into the U.S. financial system.

New York-based Blackstone, one of the world’s biggest private equity firms, has been hammered as the year-long credit crunch shut down financing markets.

As markets plummeted last week, the future looked even bleaker for private equity firms that rely on financing to strike leveraged buyout deals.

Blackstone’s share price has slumped to a third of its initial public offering price in June 2007.

“We were at a complete freefall a week ago,” Schwarzman said. “I think it was an unsettling experience for virtually everyone. It started spilling over into the real world.”

But Wall Street roared back from its worst week ever with one of its best single days on Monday, as governments pledged to pour cash into struggling banks to restore confidence in a rocky global financial system.

Schwarzman told reporters on the sidelines of the conference that it would take several months before the banking system returns to better health.

Despite the freeze, he said there was still some access to financing.

“Certain of us still can obtain financing in the current environment,” he said.

By Megan Davies
(Editing by Paul Bolding)