Risk Rap

Rapping About a World at Risk

TPG and WaMu WHOO HOO

Its starting and bears watching.

The reconfiguration in the banking market.

In this corner TPG, a bulge bracket private equity firm. Still flush with cash from the halcyon days of rich valuations and unlimited liquidity is looking to acquire some cheap dollar denominated assets at bargain basement prices.

And in this corner WaMu, a revenue challenged regulatory capital depleted, NYSE listed, consumer banking company that took a bad hit in its mortgage business and desperately needs to shore up its sinking capital ratios with a massive capital infusion.

The tension between unregulated private equity and regulated banking entities will become a major challenge that regulators, law makers and market participants will have to confront in the new economic landscape.

Much of the Basel II discussion centered on prohibiting the arbitrage of regulatory and economic capital within a banks own capital structure.

Like hedge fund managers, private equity bankers are the best and the brightest. They may perceive a cellar price to acquire large pools of regulatory capital. Might this be a form of economic/regulatory capital arbitrage?

Risk: Banking, Market, Systemic, Regulatory

You Tube Video: Tom Waits, Step Right Up

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April 10, 2008 - Posted by | credit crisis, hedge funds, private equity | , , , , ,

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