Steven Rattner, former Lazard co-hort of Felix Rohatyn, general all-around straight-shooting good-guy, and in his spare time working for the home team (or at least the lesser of the evils, politically) now Chief Buyout Honcho at his own shop, Quadrangle, spoke to Bloomberg News in an interview today, and said:
"there may be a change, that this gushing well of liquidity that we've all enjoyed for the past several years now is coming to an end.
He continued that it's hard to tell precisely if its now for certain, and that for the moment, it seems to be contained. Then, in a moment of clarity and forthright honesty for which I most admire him, he went on (and it's verbatim):
Our view for some time has been that we are in a credit bubble and that there is money being lent and that we're happily borrowers of it on the private equity side at rates and on terms that really frankly don't make a great deal of sense from the standpoint of the lenders...but we're the borrowers, and we're happy to take advantage of that, and so as long as we can continue to finance our deals with that money, we will continue to do it."
What can one say, but, "a fool and his money [lent fixed, for too long, too cheap, and on shitty terms] are soon parted"...
Most of the booms and busts of the last many years have been associated to some large extent with bad banking practice. i.e., at the height of their careers, when the Reichman's went to the banks for money they were apparently able to demand that the banks come to their offices to read the conditions of the project concerned. The terms were that the individual pages would be taped to the desk to be memorized, no notes taken, by bank employees (lots of them) with none of it physically ever leaving First Canadian Place.
ReplyDeleteBut these are things that come out in the post mortem. Wringing of hands.