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Part private equity, part mortgages

Marketplace Staff Dec 31, 2007

Part private equity, part mortgages

Marketplace Staff Dec 31, 2007


Scott Jagow: One thing that happened on Wall Street in 2007 is that Allan Sloan changed jobs. He went from Newsweek to Fortune Magazine. Allan, besides that, what was the key Wall Street moment in 2007?

Allan Sloan: It was when the Blackstone leveraged buy-out people sold stock to the public in June?

Jagow: Why?

Sloan: Because that’s when I knew it was all over. I’ve been saying for a year that money is cheap, there are excesses, this is all craziness and it will end. And when the Blackstone people raised those billions of dollars — much of which ended up in their own pockets — they were betting that the market had peaked. So I figured I finally had company, maybe I was right. And of course, unfortunately, I was.

Jagow: And when you say it’s all over, are you talking about private equity?

Sloan: I’m talking about private equity, I’m talking about all this loose money and cheap money that facilitated deals and a lot of the crazy mortgage stuff. All of that is a function of cheap money. And look what happened.

Jagow: It’s amazing when you look back, the first six months, we talked about private equity on this program almost every single day. There was a deal almost every single day. And then all of a sudden, it just completely stopped. In the last six months, we’ve talked about mortgages every single day.

Sloan: And some day, that will stop. I just don’t know when it is!

Jagow: What are going to be the buzzwords on Wall Street in 2008, you think?

Sloan: I think it’ll be the Fed, and it may be bond insurers — who are, I have to say, the most boring thing in the world next to the bonds and next to insurance. And this way, you have them both in the same package.

Jagow: But why bond insurers?

Sloan: Because bond insurers have put triple-A ratings on a lot of these securities by guaranteeing them. I think if some of the big insurers lose their triple-A credit, we can have this incredible mess. But there is one bright side to that, however.

Jagow: And that is?

Sloan: There’s stuff for you and me to do.

Jagow: Well, I’m sure we’ll have plenty to talk about, no matter what happens, Allan. Happy new year to you and I’ll talk to you in 2008.

Sloan: Thanks, and happy to you and your’s, and to our listeners as well.

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