(Bloomberg) -- Marc Lasry, the billionaire co-founder of Avenue Capital Group, said there’s little benefit for small businesses and other depositors to keep their money with regional banks instead of Wall Street giants — unless the Federal Reserve steps in.
Lasry, who runs New York-based Avenue Capital, said that even if the risk of a regional bank failing is small, it still makes sense for depositors to move their money to large Wall Street banks in the absence of new deposit guarantees from the Fed.
That especially applies for small businesses that can have $200 million deposited with a regional bank, which wouldn’t be insured by the Federal Deposit Insurance Corp.
“If you look at it, what is the benefit of keeping your money in sort of a smaller bank?” he said in an interview with Bloomberg Television Friday. “Even if that bank is doing extremely well — it’s not one of the banks that, in essence, the Fed worries about systemic risk.”
Avenue Capital managed an estimated $12.4 billion as of Feb. 28, according to its website. Lasry, 63, is also well-known for owning a stake in the NBA’s Milwaukee Bucks.
Last month, Bloomberg reported he had agreed to sell the 25% stake in a deal that values the team at about $3.5 billion.
Read more: Marc Lasry ‘Shocked’ That Two-Time NBA MVP Put Money in 50 Banks
Here are other highlights from the interview:
- Lasry said he sees a “golden age” for private credit lenders like Avenue Capital because lending standards will tighten as banks face turmoil. “The Fed is going to supervise more,” he said. “It will be harder to lend and for folks like me, it will be easier to come in and dictate terms.”
- Lasry said he plans to continue investing in sports, because it’s one of the only things that people watch live. He said winning another championship would increase the value of the Bucks.
--With assistance from Guy Johnson.
©2023 Bloomberg L.P.
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