Andrew Milgram

There are some unbelievably good CLO managers out there.

They're smart and sophisticated and thinking very hard about how they are managing those pools of assets.

there are a lot that are not so you're getting this laziness that's happening i would also say one of the things i don't like that's happening out there is the productization of investment decisions there's a lot of outsourcing of critical thinking because i can go to this person that'll make this decision for me and i'll go to this person who'll make that decision for me

And so, again, we're bankrupting the decision-making process.

The investor, if that's even what you want to call them, becomes more of a general contractor and they're not actually doing anything.

And I don't think adding a whole lot of value other than choosing other people

to do the thinking who by the way are misaligned because those folks are motivated by a stream of fees rather than an investment outcome i don't love what is happening in the clo system i think that there's a big opportunity to be much more active and engaged in that now it probably means that you can't be 100 billion dollars of clo capital thinking like that that being said there

People are going to do $100 billion of CLO that will do just fine under the system that exists.

So I don't want to disparage everything that is happening, but I do think that there is an opportunity to be much more actively engaged in that portion of the market.

Private credit in particular is a really interesting space.

In 2011, the federal government issued an update on what is called the Guidelines on Leveraged Lending.

And that is the perspective on the rules out of the center.

Because we do bank regulation in a really interesting way in this country.

So policy is set at the center.

Primary policymakers are the Fed, the FDIC, and the OCC.

And they issue guidance.

Now, we have individual guidance.

and independent Federal Reserve banks around the country that apply the guidance.

So it's up to the individual Fed regions, Fed presidents and boards and employees as to how that regulation is applied, policy set at the center.

And the guidelines of leveraged lending that were issued in 2011 created the dynamic that pushed more leveraged credit out of the banking system.