Monday, January 12, 2009

Carlyle Group Continues to Make Noises about Investing Big in Financial Services

Carlyle Group co-founder and managing director David Rubenstein told an audience at the recent Washington Economic Forum that:

PE [Private Equity]can invest in financial services businesses, an industry that hasn't previously seen a great deal of PE involvement. With $1 trillion of dry powder, the PE industry is in a stronger position than anyone else to help in economic recovery by providing capital and management expertise to financial services businesses. PE can re-tool itself by coming in and offering longer-term capital to these institutions and helping them turn around.
These remarks echo those of Carlyle man Randal Quarles, who pretty much said the same thing in early 2008, prior to the seriousness of the problems facing the financial sector becoming obvious.

Still, outside of a small position in Boston Private Financial Holdings, Carlyle has pretty much remained on the sidelines of the financial sector, despite having some $40 billion of sdeline cash to burn. The patience they have displayed is something to observe. Not even Warren Buffett has been able to keep his wallet closed, e. g., his positions in Goldman Sachs and GE.

The question now is, does Carlyle know something the rest of us don't, by continuing to hold out from buying? Or, given the enormous amounts of money Bernanke is pumping into the system, will Carlyle be too late to the buying party if they don't do some buying very soon?

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