Private equity firms and hedge funds want their share of the recently passed $2 trillion rescue package. The Federal Reserve Bank agreed to buy junk bonds, many are leveraged loans from private equity affiliates. It turns out the big money boys are actually small businesses.
Private equity underwriters (PEU) ended 2019 with $1.5 trillion in dry powder, which is cash committed by investors. Affiliates are supposed to send cash to their PEU sponsor via management and deal fees, special dividends/distributions (many of which are debt funded), assets sales and complete corporate flips. They are not supposed to demand cash from their sponsor to stay afloat.
PEU boys learned long ago not to throw good money after bad. Even though they have over $1 trillion in cash for investments they want Uncle Sam's wallet to keep their investments from tanking.
The greed and leverage boys want to keep their preferred place in U.S. society President Trump and Congress seem happy to oblige. Politicians Red and Blue love PEU.
Update 6-8-20: Wolf Street has an update on how the Fed bailed out the wealthy.
