The Soapbox

RickPerry

Joined: 10/24/2017 Posts: 1693
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That is part of my argument below


However I also think the systemic application of high leverage (their business model) creates more volatility and risk in the economy and impacts go beyond securities holders.

I don’t have a solution in mind (other than increasing their cost of capital by eliminating the tax loophole). But there’s precedent for limiting leverage in other financial entities (e.g., banks). Maybe to more properly assign the cost of managing systemic risk, PE funds should pay into some kind of insurance fund based on the Level of leverage they use. I’m sure there are lots of arguments on both sides - just thinking out loud here.
[Post edited by RickPerry at 07/03/2020 1:06PM]

(In response to this post by BocaHoo91)

Posted: 07/03/2020 at 1:05PM


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