The Apples-to-Martians Comparison of PE Capital to That Demanded of Banks
What is capital? We talk a lot about how much banks should hold and what more bank capital means to whom. But few have said much about what regulatory capital actually is. That’s a signal, strategic omission as private-equity firms spin a tale of capital resilience without actually having anything comparable to what banks must raise even as nonbanks take over more and more financial markets key to stability, economic equality, and macroeconomic growth. Let nonbanks compete wherever they can, but suggestions that private equity hold more capital than banks is a whopper that cannot go unchallenged as lending migrates to these powerful firms.