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rafe.thrasher5229
Hi Peter,
Given that the major risk to the financial system are the shadow banks or "private credit", can you please take a look at Blue Owl "OWL", Apollo Global "APO", and Blackstone "BX". The April correction was highly correlated to the shadow banking system and the primary dealer banks having to accept shit collateral "Junk". Private credit is like an umbelical cord tied into the public banking system. This is where the crisis has begun. The hunt for yield...no transparency...Pensions, Insurance Companies, Endowments,
Large investors — including Brown University’s endowments, New Jersey’s pension fund, Michael Dell’s investment firm and Iconiq Capital — were given stakes in the firm, essentially making them owners of the new enterprise.
“They wanted to become one of the largest financial players on the planet,” said Oliver Weisberg, CEO of Blue Pool Capital, which led that initial financing round. “That was always their plan.”
Over the next few years, the new firm set off a high-stakes arms race among some of the biggest names in global finance.
Interest rates had been low since the 2007-08 financial crisis, so pension funds and other institutional investors were desperate to find ways to earn higher returns on their investments. The debt markets, Ostrover told prospective clients, were much stabler, year over year, than stocks or commodities.
Unlike a bank, the firm would be amassing money not from individual depositors, whose savings are fiercely protected by the federal government and can be withdrawn at will, but from institutions like insurance companies and pension funds. Thus, the new firm would be legally permitted to finance tricky, highly speculative companies without reporting the details of such activities publicly.
Failures could have a cascading effect throughout the financial markets. Because private credit firms borrow from banks — JPMorgan lends to Blue Owl, for instance — “there is actually an umbilical cord back to the banking system,” said Viral V. Acharya, a New York University finance professor and former deputy governor of the Reserve Bank of India. Blue Owl’s war chest is roughly doubled by leverage, meaning that for every $1 its clients have staked the firm directly, $2 are lent out.
Later that month, Fed Chair Jerome Powell commented that, in private credit, “many of the lending structures are not subject to a run in the way that banks have traditionally been.” He added that because their funding largely came from backers with a long-term commitment, “it’s not obvious to me that at this point it’s a net loss to financial stability.”
But regulators are increasingly on edge. In November last year, Sen. Sherrod Brown of Ohio, the chair of the banking committee, wrote to regulators that “private credit funds operate in the shadows” and “in the absence of sufficient oversight and accountability.” The International Monetary Fund stated in April that the sector “has meaningful vulnerabilities, is opaque to stakeholders and is growing rapidly under limited prudential oversight.”
Blue Owl has both caught and created a once-in-a-generation wave, one that has brought a change to Wall Street. Over the past few years, roughly $1.8 trillion has been raised by private credit investment firms, including rivals like Ares and Apollo Global. That money has been lent to highly indebted companies in sectors like software, insurance and health care.
“We’re financing many of the same companies that used to go to the public markets,” Packer said. To doubters, he added, “Ignore us at your peril.”
“Shadow banking” now accounts for $250 trillion, or 49% of the world’s financial assets, according to the Financial Stability Board. Hedge funds manage 15 times as many assets combined as they did in 2008. The recent spike in bond yields—caused by hedge funds unwinding heavily leveraged trades—has some people worrying this largely unregulated business could pose a 2008-style threat to the financial system.
Economist Paul McCulley coined the term “shadow banking” in 2007, just over a year before Lehman Brothers collapsed. Soon it became clear that easy credit had helped fuel the subprime mortgage meltdown that brought the global financial system to its knees. Nearly two decades later, a bond market selloff triggered by President Donald Trump’s chaotic tariff rollout has sparked fears of a similar liquidity crisis.
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Hi Peter,
Given that the major risk to the financial system are the shadow banks or "private credit", can you please take a look at Blue Owl "OWL", Apollo Global "APO", and Blackstone "BX". The April correction was highly correlated to the shadow banking system and the primary dealer banks having to accept shit collateral "Junk". Private credit is like an umbelical cord tied into the public banking system. This is where the crisis has begun. The hunt for yield...no transparency...Pensions, Insurance Companies, Endowments,
https://rethinking65.com/easy-money-from-risky-loans-what-could-go-wrong/
Large investors — including Brown University’s endowments, New Jersey’s pension fund, Michael Dell’s investment firm and Iconiq Capital — were given stakes in the firm, essentially making them owners of the new enterprise.
“They wanted to become one of the largest financial players on the planet,” said Oliver Weisberg, CEO of Blue Pool Capital, which led that initial financing round. “That was always their plan.”
Over the next few years, the new firm set off a high-stakes arms race among some of the biggest names in global finance.
Interest rates had been low since the 2007-08 financial crisis, so pension funds and other institutional investors were desperate to find ways to earn higher returns on their investments. The debt markets, Ostrover told prospective clients, were much stabler, year over year, than stocks or commodities.
Unlike a bank, the firm would be amassing money not from individual depositors, whose savings are fiercely protected by the federal government and can be withdrawn at will, but from institutions like insurance companies and pension funds. Thus, the new firm would be legally permitted to finance tricky, highly speculative companies without reporting the details of such activities publicly.
Failures could have a cascading effect throughout the financial markets. Because private credit firms borrow from banks — JPMorgan lends to Blue Owl, for instance — “there is actually an umbilical cord back to the banking system,” said Viral V. Acharya, a New York University finance professor and former deputy governor of the Reserve Bank of India. Blue Owl’s war chest is roughly doubled by leverage, meaning that for every $1 its clients have staked the firm directly, $2 are lent out.
Later that month, Fed Chair Jerome Powell commented that, in private credit, “many of the lending structures are not subject to a run in the way that banks have traditionally been.” He added that because their funding largely came from backers with a long-term commitment, “it’s not obvious to me that at this point it’s a net loss to financial stability.”
But regulators are increasingly on edge. In November last year, Sen. Sherrod Brown of Ohio, the chair of the banking committee, wrote to regulators that “private credit funds operate in the shadows” and “in the absence of sufficient oversight and accountability.” The International Monetary Fund stated in April that the sector “has meaningful vulnerabilities, is opaque to stakeholders and is growing rapidly under limited prudential oversight.”
Blue Owl has both caught and created a once-in-a-generation wave, one that has brought a change to Wall Street. Over the past few years, roughly $1.8 trillion has been raised by private credit investment firms, including rivals like Ares and Apollo Global. That money has been lent to highly indebted companies in sectors like software, insurance and health care.
“We’re financing many of the same companies that used to go to the public markets,” Packer said. To doubters, he added, “Ignore us at your peril.”
https://fortune.com/2025/04/20/bond-market-chaos-hedge-funds-world-shadow-banks-regulation/
“Shadow banking” now accounts for $250 trillion, or 49% of the world’s financial assets, according to the Financial Stability Board. Hedge funds manage 15 times as many assets combined as they did in 2008. The recent spike in bond yields—caused by hedge funds unwinding heavily leveraged trades—has some people worrying this largely unregulated business could pose a 2008-style threat to the financial system. Economist Paul McCulley coined the term “shadow banking” in 2007, just over a year before Lehman Brothers collapsed. Soon it became clear that easy credit had helped fuel the subprime mortgage meltdown that brought the global financial system to its knees. Nearly two decades later, a bond market selloff triggered by President Donald Trump’s chaotic tariff rollout has sparked fears of a similar liquidity crisis.
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