Reply to thread

Message: [QUOTE="FfldCntyFan, post: 5104625, member: 71"] Excellent post but I disagree with you labelling PE firms as pure capitalism. They are in fact the highest form of exploitative capitalism, as far from pure as they can be. Beyond that, you hit the nail on the head. Kolumbo's analogy of an athletic department receiving a PE investment and an individual getting a mortgage is erroneous. If a state school (like UConn) needed funds in the form of debt funding, it would make far more sense to have the state issue a bond offering. If a private school were to look into debt funding, they would securitize the borrowing with real estate collateral. Neither would need a PE firm to take the role of banker and in all candor, nobody wants a PE form to be their banker. PE firms don't invest their money for simple interest returns. They wouldn't remain in business of that was what they earned on their capital. They would issue the [B]loan[/B] as an investment with many layers of preferred returns which would result in a usurious transaction (without the legal protection for the school). Picture the scenes in Goodfella where Paulie became a partner in the restaurant, ended up bleeding the owner dry, then torched the place for the insurance money. That isn't far from the manner in which PE firms operate. [/QUOTE]