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Asset Managers Are Now Making Loans Big Banks Can't Make

Asset management firms are making loans in order to fill the gap created by regulations enacted during the recession that followed the 2008 banking crisis.

Asset management firms are making loans that were traditionally made by JPMorgan Chase and Bank of America in order to fill the gap created by regulations enacted during the recession that followed the 2008 banking crisis. Two prominent asset management executives cited the trend both referring to tougher capital rules for banks. Neuberger Berman CEO George Walker said, 'We've been purchasing assets from banks who've been forced sellers as a result of Volcker or the increased capital requirements in helping to transfer those assets from levered bank balance sheet assets to pension funds and the like who are arguably better holders.' The Volcker Rule aims to limit large directional bets by banks, whether through private equity or trading. David Rubenstein, co-founder of The Carlyle Group, one of the world's largest private equity firms said, 'It's about 400 pages in terms of regulation [and] it's here to stay, and so that has created opportunities for private equity firms to do things that banks used to be able [to] do, like lending money to small companies.' Rubenstein's comments focused on writing new loans to smaller companies, as opposed to buying loans made by banks that have run into trouble. He said big banks still like making big loans.

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