UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

February 16, 2009

LOOK WHO PLANS TO MAKE BIG BUCKS OUT OF THE BAILOUT. . . WITH TAXPAYERS SUBSIDIZING IT

Washington Post - District-based Carlyle Group, a giant private-equity firm, has raised around $1 billion and hopes to add $2 billion more for investments in financial institutions that come up for sale under President Obama's economic rescue plan, according to people familiar with the company's plans.

The buyout firm will use the money to help with the recapitalization of banks whose balance sheets have been rocked by toxic mortgage assets and are in need of cash, said the sources, who spoke on condition of anonymity because they are not authorized to speak publicly. The financial crisis has crippled institutions big and small.

Seeking to jump-start the economy, Treasury Secretary Timothy F. Geithner last week said he will seek private-sector help for the banks, offering loans at favorable rates and putting up government backing to reduce the risks to investors like Carlyle.

With $40 billion in cash on the sidelines waiting for the right play, Carlyle could find many profitable deals in the financial sector.

Two of the firm's co-founders, William E. Conway Jr. and David M. Rubenstein, have been saying for months that there is a role for private equity in the bank bailout and that there's money to be made.

"Private equity has a lot of experience buying assets at distressed prices, and we expect to see a lot of attractively priced assets," Rubenstein said in a September interview. "It's likely that private equity will be a big investor in this area. It's good that private-equity firms are in good shape and have the resources to buy some of these assets and help the system."

Wikipedia -
The Carlyle Group is a global private equity investment firm, based in Washington, D.C., with more than $91.5 billion of equity capital under management. . . The firm has employed political figures and notable investors. Some of these figures include former US President George H. W. Bush and former US Secretary of State James A. Baker III.

3 Comments:

Anonymous If you were a big enough crook you could be rich. said...

My favorite tidbit on Carlyle is their big initial break. Apparently, Indian tribes get a special break on capital investment tax. Carlyle bought that dispensation from some Indian tribe and then lured investors who didn't want to compete on the up and up by paying their taxes.

February 17, 2009 3:00 PM  
Anonymous Anonymous said...

Check out Power Down by Richard Heinberg for specifics on Carlyle's beginnings. Can't find my copy right now.

February 17, 2009 3:38 PM  
Anonymous Anonymous said...

Check out Power Down by Richard Heinberg for specifics on Carlyle's beginnings. Can't find my copy right now.

February 17, 2009 3:38 PM  

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