– Acknowledges that the firm is raising a late-stage cleantech venture fund. This is really the next big fundraising trend, with firms like C Change Capital and CMEA Ventures also out in market.
– Schwarzman is wearing a dark blue suit, with a white short and red necktie. Just wanted to provide a visual.
– Says current financial crisis began with Clinton Administration’s moves vis-a-vis Fannie Mae, Freddie Mac and CRA. Then spreads the blame around to mortgage bankers, rating agencies (“incomprehensible set of analytics blunders”) and the CDO underwriters (“did no due diligence”).
– Still talking about origins of credit crunch, and has now moved on to the evils of SOX and fair value accounting. Pretty sure I’ve heard this a million times before. It’s like he’s reading an old CNBC transcript. When do we get to hear about private equity? And will Schwarzman issue the same type of mea culpa that we recently heard from Henry Kravis? Inquiring minds want to know.
– Guess not, he’s now discussing Bear Stearns. Wonder if he’ll run out of time before we get to present day, like a high school U.S. history class that never gets past WWI.
– Fast forwarded to WaMu, AIG and Lehman (where Schwarzman got his start, at around the same time as Dick Fuld). A dollar for an insight…
– Checking my Blackberry, as talk about Lehman continues in the background (sorry this is so tedious — at least you can skip ahead). Maybe he believes everyone here is Canadian, and that Canadians are unaware of what happens below the border.
– I haven’t typed anything in five minutes. Matthew Bishop of The Economist is busy taking notes. I’d love to know why. Maybe he’s just a diligent doodler.
– Schwarzman gives a shout-out to Canadian financial institutions, which have kept lending. All of the local economic dev guys are smiling. As an aside, one thing this conference needs is more discussion of the Canadian market. There are real worries here about the lack of outside investment, particularly venture capital. When’s the last time you heard about a U.S. firm putting boots of the ground in Toronto or Montreal?
– “We were unbelievably close to just losing the system… a virtual end of the world scenario in terms of global finance.”
– Now talking redemptions from mutual funds and hedge funds. Just generalizations, nothing specific about Blackstone’s hedge funds.
– “We’re going into unprecedented territory, and we’ll be doing it with financial institutions that are in much better shape than they could be. And liquidity is coming back.” But warns that Q4 numbers will “shock people.”
– “Panics don’t last for long periods of time.”
– “This type of environment is tailor-made for making money in the private equity business.” The old heads we win, tails we win argument. Adds that these deals can be done “with very little risk” and that “you can’t lose.” Last time I heard him say something similar was Philly in early 2006. At that time, the risk was erased by widespread debt syndication. Still no mention of pending defaults, slashed IRRs, fundraising difficulties, etc.
– “It’s a wonderful wonderful time to invest… Warren Buffett is right… I’m close to a raging bull on private equity.”
– Canada has a “winning hand,” but it will have a tougher time as commodity prices come down.
– No Q&A.
– That’s all folks. Not much discussion of private equity… Maybe next time.