Friday, 24 April 2020 16:40

The Private Equity Bailout is Coming

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(New York)

In a topic that wreaks of moral hazard, private equity firms are increasingly the beneficiaries of government bailout funds. The situation is similar to the Crisis-era bailout of Chrysler, which was owned by Cerberus Capital Management. The Financial Times summed up the situation best, saying “Should they use government money to support companies whose deep-pocketed private equity owners have often thinned out their balance sheets and left the slimmest financial cushion?”, continuing with a quote from a professor at Oxford, “We cannot have a world in which one can borrow to earn more and pay little taxes if things go up and when things go down then the taxpayer comes to the rescue”.


FINSUM: Private equity will probably get more bailout money as this lockdown rolls on, but the Democrats will surely attach a lot of strings to it.

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