Wall St. Is Minting Easy Money From Risky Loans. What Could Go Wrong?

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Wall St. Is Minting Easy Money From Risky Loans. What Could Go Wrong?

By Rob Copeland and Maureen Farrell
Dec. 27, 2024

In the fall of 2015, in the back booth of the retro Putnam Restaurant in Greenwich, Conn., Craig Packer, a partner at Goldman Sachs, sat across from Doug Ostrover and listened to an audacious pitch.

Mr. Ostrover, then 52, had recently left the investment colossus Blackstone and was mulling a dramatic midcareer effort to build a firm from scratch, one that would take on some of the biggest names in global finance. Quit your job, the billionaire financier told the 48-year-old Mr. Packer, and join me.

As Mr. Packer later recalled, Mr. Ostrover wanted to create a firm that would lend money to highly indebted, risky businesses willing to pay hefty interest rates for fast cash. If it succeeded, the new enterprise, and its founding partners, could dominate a new financial playing field with the potential for huge profits.

Mr. Ostrover’s pitch (one he would also make to Marc Lipschultz, a two-decade veteran of KKR who would eventually become another founder of the nascent firm) was to leap into the business of “private credit,” a simple-sounding term that belies its complexity — and its risk.

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Rob Copeland is a finance reporter, writing about Wall Street and the banking industry. More about Rob Copeland

Maureen Farrell writes about Wall Street, focusing on private equity, hedge funds and billionaires and how they influence the world of investing. More about Maureen Farrell