1 What did you make of Standard & Poor’s downgrade of the United State’s credit?

I’ve always suggested that this downgrade is much ado about nothing. You have to question S&P given their failure in mortgaged-backed securities. I thought we’d have a few days to a week of emotional volatility and then things would settle down. But there are much more severe problems in Europe.

2 What has been the upshot of the downgrade?

I haven’t really seen it impact the buyout market. The bottom line is, the single safest asset class, and it has been since before World War II, is senior corporate debt. Now, assuming private equity-owned companies are not over-leveraged, then it’s a great asset because these companies can withstand the vicissitudes of the global economy. Obviously, there are other factors that would weigh against that, such as if you over-leverage.

3 How do you feel about China?

China is a big question mark. Is there a bubble? China represents the end-market for approximately 45 percent of significant commodities, from steel to oil to pork. If their economy slows down, it will reverberate throughout the global economy. Also, most people do not realize China has a shadow banking system that is very dangerous. It used to be that “As GM goes so goes the U.S. economy” Well, now it’s “As China goes, so goes the global economy.”

4 What are your thoughts on Dodd-Frank financial reform?

It’s a complete disaster. People in Congress just don’t get it. All they had to do was two things: Re-install Glass-Steagall, and then deal with leverage. And then they could go have lunch. A 2,700 page document could have been 10 pages. Glass-Steagall was only about 33 pages.

5 Is your opinion on Glass-Steagall shared by your friends in banking?

Of course not. Their comp packages would be cut dramatically and they couldn’t build their empires. Now, one major, reasonable concession to Glass-Steagall is the Volcker Rule. I’m just saying they didn’t even have to do that. They should’ve just said, “We’re going back to Glass-Steagall,” and then gone to lunch.

Edited for clarity.