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.


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