Justin Baer
Appearances
WSJ What’s News
Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
There are a couple of things that have happened since then. One big thing is that the banks, which have historically been the main lenders for both consumers and companies, because of all the new rules that came about after the crisis, they've had to gradually recede from those markets. So they don't hold all those loans on their balance sheets as they once had.
WSJ What’s News
Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
A second factor has been just the growth of all of these private investment firms that manage all forms of debt. And they've grown quite popular with all sorts of pensions and insurance companies. And the funds that they've raised have been pretty extraordinary. And that leads to the third part of this, which is that the demand for these kinds of debt structures is growing off the charts.
WSJ What’s News
Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
You've seen, particularly after COVID, when the Fed stepped in and they cut rates to near zero again, You had a lot of investors that were desperate to add various investments that had a higher yield to them. And so that really lit the fire for many of these products, which can be rated highly and are deemed safe, but generate a much higher yield than, say, owning government bonds.
WSJ What’s News
Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
The big part of it is the way, just in terms of the mechanism... that they choose. So it's an opportunity to take a basket of loans and slice those up in different ways that would appeal to different investors.
WSJ What’s News
Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
So if you are, let's say an insurance company that you really only want to hold really safe stuff, you can get the slice that's the most senior and is more highly rated and deemed less risky. But if you're a hedge fund that's just trying to generate as high a return as you can, you want the riskier stuff. And so a lot of folks need to describe these as machines, as technology.
WSJ What’s News
Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
And the technology, what it enables is for you to distribute those various risks to different investors that vary in needs.