Really nice piece on the SEC proposal, which I did a little thread about yesterday.

As I have explained before, this really shows the weakness of the ideology that financial products and services are the solution to everything that is broken in American life. The American people don’t want more financial products. They want an economy that actually works. Fin.

A bigger role for PE in American life!

And the flip side of this, not covered by the Journal, is that people also are unhappy with the role of private equity in the American economy–buying up everything from doctor practices to youth sports leagues. If PE gets access to more capital, you know what we will get?

If individual investors get pulled into PE, they may systematically get worse investment products with higher fees and lesser returns. Not good!

To its credit, @WSJ reports on the mediocre returns and high fees of PE. But a big point to grasp here is that those are the returns for the institutional investors.

The Trump administration has exerted a lot of energy to make this happen. But why? People have been all but screaming that they are struggling with affordability. As @WSJ notes, they have NOT been begging to invest in PE! People report being happy with their current investment options.

PE returns have been mediocre in recent years while other places have been profitable, and PE firms’ historic big institutional investors may be losing interest. Desperate for more capital, PE firms want access to individual investors—and their retirement savings.

(2) allowing private funds to accept performance-based compensation from more clients (effectively allowing “2 and 20” fee-based PE offerings to more investors). This is a solution in search of a problem. Or rather, it’s trying to solve a problem for PE firms, not people.

The SEC is proposing a bunch of changes, but the two most relevant ones are: (1) changing who is an “accredited investor,” which affects who private funds can take money from;

News dropped yesterday that the SEC is moving to make it easier for private equity investment funds to include retail investors, part of the admin’s broader quest to get more individuals into private equity (and to financialize our whole society!). 🧵

Perhaps we are allowing betting on too many things?

Kalshi is saying it won’t lend to people betting on sports. But if prediction markets don’t have to comply with state law, under the CFTC’s self-certification model, they can file something with the agency tomorrow and start lending to sports bettors in 45 days.

The key point is that this is why it matters whether prediction markets have to comply with state law.

As my piece explains, that’s a big difference from how gambling rules work at the state level, where regulators generally must approve gambling models BEFORE they go into effect (which in practice makes a big difference for what people can bet on). 7/

While the CFTC rules for trading on “margin” are too complicated for a Tweet, one quick thing to note is that as with other CFTC rules, it’s a “self-certification” model: the prediction markets platform files something and can start offering the product UNLESS the government agency acts. 6/

In Nevada, for example, casinos can only lend to people who the casino has affirmative reason to believe have “an established credit history that is not entirely derogatory.” 5/