Monday, March 23, 2009

Carlyle Group Likes Geithner PPP Plan

Treasury Chief Tim Geithner gave details on public private partnerships. The ventures will used government subsidized loans and taxpayer equity to buy toxic financial instruments from banks. The PEU boys like the plan (PEU stands for private equity underwriter). Bloomberg reported:

“This ambitious program is structured in a way to attract private capital and help banks sell distressed or toxic assets,” said David Marchick, head of government and regulatory affairs at Washington-based Carlyle Group, a closely held private-equity firm.

Carlyle raised $1 billion to invest in this sector. They have a goal of $3 billion. While the Carlyle Group expects 30% annualized returns from most investments, it's willing to dial that down for guaranteed returns. Bill Gross from PIMCO cited an expected return in the teens. David Rubenstein, Carlyle Group co-founder told Robert Wenzel of Economic Policy Journal that Carlyle needs a 20% rate of return to participate in Treasury's PPP program.

Bonus fact: David Marchick is one of many Carlyle Group employees from the Clinton White House years. Others include Mack McLarty, Arthur Levitt, Chris Ullman, William Kennard, and Charles Rossotti. Who has more ex-Clinton staffers, Carlyle or the Obama White House?