Gerry Sullivan

FAS 157: Blackstone and Its Banker Buddies Have It Wrong

In January 1975 Merrill Lynch started the ML Ready Assets Trust, the first money market fund. That began the systemic change that eventually led to bank deposit rate deregulation.

Ironically, Merrill Lynch now makes it difficult for investors to access money market funds, preferring that customer balances go into their bank deposit program which pays much less.

The current rates on the Ready Assets Trust is 2.21%, an account
holder at Merrill with less than $250,000 gets a 0.20% rate in the Bank Deposit Program.

Calling a Turn in Blackstone Group

Blackstone has little debt on its balance sheet because it is an asset manager. Blackstone's deals do need large amounts of debt to work.

Think about the Hilton Hotels buyout that was done last year.
BX paid $26 billion for Hilton and borrowed more than $20 billion.

Last month, Lex, a writer in the Financial Times, suggested that the
Blackstone equity in Hilton was now worthless.