The Justice Department’s Antitrust chief Jonathan Kanter is misguided in his comments about the Private Equity industry. Mr. Kanter ought to look to the Federal Reserve for perverting markets through its actions over the past decade-plus, especially during the April 2020-March 2022 period.
If Mr. Kanter wishes to place blame somewhere place it at the feet of the Federal Reserve and its extremely accommodative monetary policies over most of the past 13 years. Holding the Fed Funds Rate near zero and more importantly expanding its balance sheet via Quantitative Easing were the primary catalysts for the debt-fueled U.S. economy over the past 13 years – particularly during the April 2020-March 2022 period when the Fed printed record sums of money.
During the easy monetary policy of the past 13 years public companies loaded their balance sheets with debt – primarily to execute share buybacks designed to bolster options packages. Private Equity firms naturally took advantage of the easy monetary conditions and raised record amounts of capital with which to pursue acquisitions. We covered the PE industry and the pursuit of yield in a low interest rate environment in our TEK2day Spotlight: The Evolving Insurance Industry report which may be accessed HERE.