Apollo's Black Opposes 'Micromanaging' Leverage

Mar 3 2014 | 11:59am ET

Apollo Global Management founder Leon Black doesn’t want the government telling him how much he can borrow to buy a company.

Black said he opposed a proposal by the Federal Reserve and Office of the Comptroller of the Currency that would keep banks from issuing senior debt in leveraged buyouts worth more than six times a company's cash flow.

"To have a blanket number like that is micromanaging too much from a regulatory point of view," Black told a private equity conference at Columbia Business School last week. "Different industries have different rates of growth."

The Fed and OCC in September began to warn banks that high-risk loan performance would play a big role in the "stress tests" that determine whether a bank has a sufficient capital ratio. The regulators said that their annual review of leveraged loans found 42% had a deficiency that could lead to a loss.


In Depth

OmniQuest Capital: Why Funds of Hedge Funds Work

Aug 11 2016 | 4:47pm ET

There have been few sectors of the alternative investment universe under as much...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...