The Deal
Sunday, November 8, 
2:02 pm

Carlyle Group's Randal Quarles on the pain of deleveraging

  Share     E-Mail    Discussion    Print Story
Speaking at the Securities Industry and Financial Markets Association's Summit on the Troubled Asset Relief Program Monday, Randal Quarles, a managing director at the Carlyle Group, provided some insights into just how leveraged America's financial system is.

Continue reading below

Also on Dealscape

"How TARP develops from now will be driven by the logic of what's come before," said Quarles.

"There's been a massive increase in leverage in our financial system. It's at about 350% of GDP," Quarles said. "The financial sector and households drove that. The last time that the whole amount of leverage was at this level was at the start of the Great Depression, and we're at twice the level leverage of the early 1930s.

"We're at a level of leverage that's not sustainable, and those that provide that leverage have come to realize that," he continued. "The government's strong balance sheet can ameliorate the effects of the massive deleveraging that needs to take place. That is a necessary step no matter your political affiliation."

Still, Quarles thinks that TARP is far from being the final solution to the crisis.

"Institutions are realizing that in this environment they need to anchor confidence," he commented. "But I don't think TARP capital will be an effective signal of viability though. The only thing that can do that is due diligence by a private capital investor that's willing to put his money where his mouth is." - George White

See more posts from the SIFMA TARP Summit





Post a comment





The Deal Pipeline

Deal Video


Inside The Deal: Linklaters' Schmidt says how regulators handled Pfizer Inc.'s acquisition of Wyeth is an outlier of how others merger reviews will be conducted.


More video...

Crisis On Wall Street
Technology
Deals of The Decade

Community

Industry Insight

Dealing with frozen bank lending

If your bank is not willing to lend, what can you do as your company continues to seek growth?


Judgment Call

The coming age of the renminbi

The Chinese currency will play an increasingly important role in international commerce and finance.


Industry Insight

Banking on PE investments

Howls of protest greeted the FDIC policy statement, but the financial services industry should get over it.


footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg


©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.