Financial markets have been tied together like mountain climbers. The plan is to have all of them hold up one errant climber. Did Randal Nardone’s Fortress Investment Group save Capitalism?
Sub-Prime Mortgage Crisis
During the Sub-Prime Mortgage Crisis, the Captains of Industry were becoming very worried. They knew that the entire world depended on them for capital. Capital was needed by individuals, companies and governments.
Modern credit cards had made it so that individuals could finance their startups, themselves. Businesses had lines of credit and needed more funds to upgrade to the latest technology. Governments around the world were also becoming more capital intensive.
When Lehman Brothers failed, the capital markets seized up. Suddenly, the top financial institutions were afraid of lending to one another. They found it impossible to properly measure risk. What financial brand weathered this storm intact? The Fortress Investment Group.
Back in 1998, Randal Nardone had co-founded the Fortress Investment Group. He did not base its fortunes on Sub-Prime debtors. He purchased valuable assets, like railways, casinos and ski resorts.
He did not bundle useless mortgages together to create useless mortgage backed securities (MBS). Randal Nardone performed a valuable service in providing the capital that made the world productive. What was Randal Nardone’s secret?
He had learned the tools of the trade under the mountains of Switzerland. He ate Swiss chocolate and Swiss cheese while working for the global financial giant UBS. Founded in April 1862, UBS was figuring out how to provide more capital to Swiss watch makers while the Americans were fighting for the freedom of Blacks.
Randal Nardone learned about conservative banking in Switzerland. That is why his company survived the 2008 Credit Crunch. When his hedge fund went public, Randal Nardone was added to the Forbes 2007 Billionaire’s List at #557.
The British called 2008, the “Credit Crunch.” It kind of shows their focus. They did not really worry about the Sub-Prime borrowers, everyone knew they would go bankrupt, but the British were concerned about their bankers.
Keeping Capital Flowing
Randal Nardone’s Fortress Investment Group kept the capital flowing to the companies that produce. They made sure that necessary technological upgrades were made. Some of the assets were combined and re-packaged to create a more sustainable business model.
The best companies could be made public again. It was a little like a makeover. The ugly sides of the business were removed and the healthy parts were made better.
Productive factors are the foundation of society, not the repackaging of useless paper promises. Randal Nardone built up a “Fortress of Value.” That is why SoftBank purchased the Fortress Investment Group in 2017 as part of its Vision Fund Strategy.
Companies with real assets were able to keep the capital flowing. Randal Nardone should get a medal or street named after him, thanks to his efforts to save Capitalism. Now, Americans can buy all the Swiss chocolate, they want.
Learn More: www.crunchbase.com/person/randal-nardone