Opinion
The 1999 Repeal of Glass-Steagall Contributed to the 2008 Financial Crisis
“I think There was definitely some attribution to it. I don't think that was clearly not the only reason, but my view it's some combination, but ultimately it had to do with the system and the set of incentives.”
Insight
Asset-Liability Mismatches, Not Bad Credit, Drive Financial Crises
“All crises is generally a cause from not credit issues or others. There's, they might start in other issues, but it's mismatched assets and liability.”
Insight
Industrialized Capital Fundraising Forces Asset Managers Into Factory-Model Deployment
“The two parts to it are, first part is the industrialization of the fundraising process, right?
It's a liability gathering.
So literally raising as much capital as you possibly can, literally as fast as you can.
So that's sort of the industrialization of the l…”
Insight
Credit Investors Must Reject Collateral Stripping for a Mere 10% Return
“If you have capped upside and you're earning a 10% return and all the collateral that your 10% is based on can literally be basically taken out of your collateral package overnight. Or for that 10% return, you can be levered up because let's say there's an AI …”
Insight
Waxman: 'Semi-Liquid' Assets Do Not Exist; Investments Are Liquid or Illiquid
“There's no semi-liquid, ok? There's no such thing as semi-liquid. Like, anyone that's an investor that's been through a bunch of cycles, there's liquid, and then there's illiquid”
Opinion
Private BDC Liquidity Bottlenecks Do Not Pose a Systemic Financial Risk
“I don't think this is a systemic issue yet for two reasons. One, we're only five years into this, so it's early. And the second, second thing, at least for now, there's a pretty strong economic backdrop. There's definitely risk to it. So I don't think this is …”
Insight
A good investment theme has a 12 to 36 month shelf life
“Any theme that is good as a shelf life of somewhere between 12 months and 36 months, because ultimately there's a lot of smart people out there, and all of a sudden it's a really good theme. It comes in and it's a good theme, then it's a less good theme, then …”
Assertion Not checkable as stated
Goldman Sachs' Special Situations Group avoided losing capital during the 2008 crisis
“We're, I think the only principal investing group, maybe there's one other that didn't lose money in 2008 on a lot of capital. Now, we didn't make any returns, but we protected capital”
Insight
Glass-Steagall Delivered 50 Years of Stability But Constrained US Growth
“When you look at post-World War II with this separation of commercial banks and investment banks, you basically have really after post-World War II, Kind of, 50 years, a pretty stable system other than the SNL crisis in the 19 eighties, which was a big event. …”
Opinion
Glass-Steagall Left US Banks Uncompetitive Against Globalizing European Rivals
“As you go to a more globalized world and you're competing with say European banks, you become less and less competitive. So in a non-globalized world, it was probably okay. But as we got to a more globalized world, it wasn't really optimized to maximize econom…”
Opinion
The Post-GFC Regulatory System Could Be the Best in US History
“So system three, in my opinion, is, and we took like 125 years to get here. ... Has the potential to be the best system American finance has ever had.”
Insight
Wealth Channel Capital Is Easy to Raise but Flees in Downturns
“The wealth space in general, just for, just from a historical perspective, it is typically the easiest to raise, the simplest to raise. It's typically the cheapest. That doesn't mean that they're not smart, just the cheapest. But the other characterization of …”
Assertion Supported
Perpetual Private BDC Redemption Requests Have Exceeded Standard 5% Limits
“And basically a lot of in the perpetual private BTC space, the amount of money people have asked for has exceeded what is the five percent limit.”
Insight
Exposing Retail Capital Directly to Principal Risk Historically Triggers Crises
“Any time society or finance system puts, you know, wealth or retail individuals next to principal risk taking, if you look throughout history, there's, that's where problems start to happen.”
Insight
Institutional Capital Discipline Regulates Investment Risk Better Than Government Legislation
“There can be good legislation, but there's a risk that it's not the right guardrail and it's not good for competitiveness. And it creates like the next crisis, the best. Answer is a market mechanism like you have within institutional investors, where if you do…”
Disclosure
Why Sixth Street Refuses to Hold Perpetual Private BDCs
“Exactly zero. It's not that we couldn't have, we just didn't think it was the right thing, and we didn't think it was consistent with our clarity of purpose, and that's why we didn't do it.”
Insight
Narrow Investment Strategies Fail During Macro Shifts Unless Fund Capital Is Capped
“The idea that you're gonna have a narrow investment strategy when the world's changing so much. You're gonna have oscillating supply-demand dynamics of good time, bad time. Like, it's just crazy to raise it, or too narrow strategy, unless you, like, Put a gove…”
Disclosure
Sixth Street holds decade-long strategic partnerships with Real Madrid and FC Barcelona
“We have a strategic partnership with Real Madrid and also a strategic partnership with FC Barcelona. We're probably the only people in the world that actually partners with, you know, Real Madrid and FC Barcelona because they trust us, but we're, you know, tho…”
Disclosure
Sixth Street's Airbnb pandemic investment relied entirely on assuming a vaccine cure
“One of them in the case of Airbnb, it was like, we're assuming a way that that there will be a cure. We can't all be locked in our houses forever. We were willing to take that risk, but we had to think about that because that was part, part of the investment”
Assertion Supported
Sixth Street has never lost a single partner since the firm's inception
“We've never lost a partner at Sixth Street.”
Insight
Asset-Liability Mismatches Will Ruin Even the Best Illiquid Investors
“Leverage always plays a role, but the, and they're all connected, but just the mismatching of assets and liabilities, you could be the best investor in the world, making the best illiquid investments. But if someone comes and asks for your money in a quarter, …”
Assertion Not checkable as stated
Factory-Model Investing Began Spreading Across Asset Managers in 2018
“It filtered down to midsize firms, smaller firms for a whole bunch of reasons, but this whole factory model behavior started to reveal itself in 2018.”
Assertion Not checkable as stated
Historical Private Capital Maintained Perfectly Matched Assets and Liabilities
“Going back to just the financial system, the private capital pro was pretty perfectly mass assets and liabilities.”
Assertion Not checkable as stated
Tapering SMA Growth Forced Private Asset Managers Into Retail Wealth Channels
“The growth in institutional SMA started to really taper off. So the next place where the industry started to go was the wealth space.”
