Saturday, June 28, 2008

Quarles Goes Public With His Case for Allowing Private Equity to Buy Bank Stocks, Without Current Restrictions

Apparently the full court press is on. In addition to Bloomberg reports on the Carlyle Group talking to the Fed on "reforming" the restriction on limitations to the size of positions private equity funds can take in bank stocks, there's also an Op-Ed calling for the same.

Carlyle Group managing directors Oliver Sarkozy (half brother of French President Nicolas Sarkozy) and Randal Quarles are now aggressively promoting, very publicly, their reasons why private equity should be allowed to own major stakes in bank stocks.

While we have no problem with free markets being allowed to operate, as we asked in our earlier post, what's all this "dialogue" between the Fed and Carlyle Group and other private equity firms about? Only one sentence is required to remove the restrictions.

Further, Quarles continues to bring up the fact that public markets will not be able to provide the necessary funds the banking sector will need. Does this really mean that Quarles is angling to prevent public markets from investing at any new level that private equity funds will be allowed to invest at?

This has been an on going project for Quarles. His current argument is not any different from his argument during the luncheon I attended back in April.

See my report here.

See his recent WSJ Op-Ed piece here.

Note that the WSJ article identifies him as the former "under secretary of the Treasury for Domestic Finance in the Bush administration." More precisely, and importantly, he was the Treasury's coordinator to the President's Working Group on Financial Markets (aka, The Plunge Protection Team) But, of course, identifying him as such would add a new layer of mystery to the always mysterious operations of Carlyle.

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