Friday, October 10, 2008

When William Conway & David Rubenstein Speak, The White House Listens

Not long ago Carlyle Group co-founder William Conway suggested banks need recapitalization, more than liquidity. That means new owners come out far rosier than old. Guess who wants to be a new owner? The Carlyle Group, the politically connected private equity underwriter (PEU).

Today, fellow Carlyle founder David Rubenstein weighed in with Lee Hudson Teslik of the Council on Foreign Relations. David's interview is on the CFR website. He closes with:

Nobody is immune from the laws of gravity, and private equity will have its problems as well, but by and large the private equity firms are probably going to emerge from this far stronger than many of the other kinds of economic engines of our society.

Taxpayers are clearing the deck for Carlyle & Co. to ride in, take positions, and profit mightily. The government industrial monstrosity continues its plundering. Consider David's prescription to address the economic infection:

I also believe that the more times we can get the congressional leadership and the president meeting together and agreeing on things would be helpful. And the more we can get business leaders meeting with governmental leaders and agreeing what should be done and coming out and giving the country a sense that the leadership of the country-business and government-have a common view on what should be done, would be helpful.

Recall that fifty big money men in a room could reverse the credit crisis overnight. That doesn't address the gloomy economic outlook, but it's the immediate antifreeze for the economic engine. But Carlyle wants to help out. It offered medicine to regulators struggling to deal with the crisis. Affiliate FRSGlobal announced it is offering all official regulatory bodies a version of its risk and regulatory software without charge to better facilitate prudent oversight of the financial markets and help provide a single, global regulatory model for the 21st Century.

How all this impacts future winners, I'll leave to Mr. Conway and Rubenstein to prognosticate. But they clearly want PEU's to be far stronger, more stunning to wealthy investors. Deutsche Bank thinks Carlyle is worth courting. They want more than one date.