Capitalisn't
Is Private Credit In The Public Interest? with Jim Grant
Apr 25, 2024
Financial expert Jim Grant joins the hosts to discuss the rise of private credit post-2008 crisis, its $1.7 trillion industry size, and lack of traceability. They analyze risks in unregulated lending, potential spillover effects, and the public interest implications. The conversation emphasizes the need for transparency, regulation, and honesty in private credit markets to protect investors and the financial system.
48:59
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Quick takeaways
- Private credit's rapid growth post-2008 crisis poses systemic risks due to lack of transparency and regulation.
- Regulatory arbitrage and conflicts of interest in private credit markets call for enhanced transparency and oversight.
Deep dives
Risks and Benefits of Private Credit
Private credit, a significant component in the financial market, has witnessed a notable surge in the US post the 2008 financial crisis, growing to an estimated $1.7 trillion. The rise in private credit can be attributed to factors like regulatory changes post-crisis and the expansion of private equity firms engaging in leveraging buyouts (LBOs). Although private credit offers better returns in a low-interest rate world, concerns arise due to the lack of public data available to assess risks adequately.
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