If you can stand the annoying the “Power Point” CNBC commentators in this video (below), there’s a debate buried somewhere about whether private equity dollars should be allowed to purchase controlling stakes in banks. As it stands, they aren’t, because the Fed doesn’t want a buyout firm lending from its own portfolio company.
“If some banks are too big to fail this is going to make them way too big to fail,” says Julie Roginsky of Comprehensive Communications Group. That argument doesn’t exactly take into account the nature of an LBO—the portfolio company failure would be completely separate from that of the private equity backers.
She goes on to say that the private equity investors are “only out to make money for themselves.” This sets her debater (didn’t catch his name…) over the edge, and while the back-and-forth is a bit of a headache, he does at least make the little-understood point that pension funds and institutions are the main investors in private equity funds.