Steve Schwarzman, chief executive officer of the world’s biggest alternative-asset manager, said Blackstone Group LP (BX) is benefiting from increased regulation hampering traditional lenders such as the largest banks.
“A lot of these traditional sources of capital are under some level of constraint,” Schwarzman said in an interview today on Fox Business Network. “The demand still exists, so we’re getting the advantage as a firm that can raise outside money and then put it back into the economy.”
Executives at the largest managers of investment alternatives to stocks and bonds, wary of attracting regulatory attention themselves, have been careful to say they are taking advantage of banking rules that emerged following the 2008 financial crisis, such as the Dodd-Frank Financial Regulatory Reform Bill and the Volcker Rule. Schwarzman, who co-founded New York-based Blackstone in 1985 and grew it to oversee $266 billion in assets, said his firm’s credit and other lending activities are expanding.
“Our business is really a bit evolutionary, it’s not revolutionary,” said Schwarzman. “The size of what we’re doing has grown.”
Blackstone, while benefiting from the lending void created by financial regulations in the U.S. and Europe, is also concerned that legislation may be shrinking the global banking system, Schwarzman said. Blackstone is a customer of the largest banks, including JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc., by pairing loans from those institutions with capital from its funds to complete leveraged buyouts.
“Shrinking banks and shrinking extension of credit creates enormous headwinds for economic growth and job creation,” Schwarzman said. “You need adequate regulation and no one knows what that is. We know we didn’t have it going into the crisis, but we don’t know if we’re doing too much to the patient now.”
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