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Private market heavyweights helped get Donald Trump elected. Now they’re hitting the limits of their buying power.
Firms like Blackstone and KKR spent the first year of the president’s second term racking up regulatory wins from his administration. The Internal Revenue Service backed off audits of partnerships, while the White House ordered agencies to open up retirement plans to private equity and credit. Some industry heavyweights, like Cerberus Capital’s Steve Feinberg, landed top Trump advisory jobs.
Private firms kept bankrolling Trump after he returned to office, too: Megadonors like Blackstone’s Stephen Schwarzman and IJS Investments’ Konstantin Sokolov have agreed to foot the bill for Trump’s ballroom and pad his super PAC. But as Blue Owl’s stumble rattles the industry, its standing in Washington is also getting shakier.
Treasury Secretary Scott Bessent recently said he wanted to keep certain private assets out of retirement plans, saying last month that officials want to ensure “individual investors will not become the [industry’s] dumping ground.” Those reservations are one reason why the Labor Department has yet to propose its long-planned rule on incorporating alternative assets into retirement plans, half a dozen people familiar with its drafting told Semafor.
In addition, the White House is lobbying for legislation that would box institutional investors out of the housing market. Shares of asset manager Blackstone, a top institutional investor in the sector, tumbled after Trump announced the push — which traditionally free-market GOP lawmakers have raised repeated questions about. One House Republican labeled it “ridiculous.”
Companies are struggling to parse the administration’s mixed messaging, especially as Securities and Exchange Commission Chair Paul Atkins doubles down on expanding investor access to private markets and the Pentagon headhunts for bankers. The industry’s free-market fans have long blanched at the administration’s friendliness toward economic populism, and now they don’t know what to make of the relationship.
One lobbyist told Semafor that the industry “is supportive of some of the administration’s policies” but “experiencing whiplash” on other fronts: “There is a bit of cognitive dissonance that seems to be at play.”
Another lobbyist said that “there are some elements of the administration’s financial and investment policies that seem to be unintentionally in conflict.”
Wall Street ally Sen. Thom Tillis, R-N.C., summed up the shift to Semafor by observing that BlackRock’s Larry Fink introduced Trump at the event where the president unveiled his call to block institutional investors from housing. Fink’s firm, which has made recent forays into private markets, invests heavily in real estate.
“It was remarkable,” Tillis said, since BlackRock is “in that space. … Strange day.”
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Trump has recently focused scant attention on his past push to include alternative assets in retirement plans, even as he touts other ways to pad Americans’ pocketbooks (including a separate plan to expand workers’ access to retirement plans).
Meanwhile, asset managers are still waiting on a retirement rule they initially expected to land by mid-February.
The Labor Department “turned its homework in Jan. 13” when it submitted the proposed rule to the Office of Management and Budget for review, Groom Law Group’s Kevin Walsh said. “Thirty days is pretty normal — but once we get to 60, it does start looking like this is taking a lot longer than it should.”
As the delay continues, Bessent offered some context in Texas by warning that the Treasury Department’s priority for the rule is “to make sure that the regulated system is not affected by private credit.” He likened it to “the subprime [mortgage] crisis that then turned into a banking crisis.”
Bessent flashed his yellow light about letting the industry into retirement plans at a time of fresh challenges for firms that deal in both private credit and equity. High interest rates have made it difficult for private equity firms to offload a record number of companies, while some private credit firms’ struggle to pay out retail investors is fueling concerns about their transparency.
“While Trump’s EO [on retirement plans] placated Big Wall Street private equity donors, many in the administration and the industry are worried there’s a private credit bubble,” one financial services executive said. “They don’t want America’s retail investors left holding an empty bag.”
Nor do some congressional Republicans want to reflexively filter out certain private assets from the retirement plan market.
“I know that there’s been some discussion about passive investment issues versus active investment issues; I don’t know that we want to pick winners and losers on that,” Sen. Mike Rounds, R-S.D., told Semafor. “I’m wondering if that’s even intentional or not. So … that’s a bigger issue that’s got to be discussed.”
A spokesperson for the Labor Department said that its proposal on alternative assets in retirement plans is advancing “on a routine timeline, including effective collaboration with other key governmental agencies.” The White House and Treasury Department did not comment.
The second lobbyist said Trump’s advisers “see that investors need returns that guarantee income in retirement,” contending that “many of those returns come from private equity and alternative assets.
“The administration has recognized that in some areas, but I think still has an axe to grind with private equity in others.”
Room for Disagreement
This isn’t the first moment of tension between the Trump administration and private assets; GOP lawmakers last year rejected its calls to close the so-called carried interest loophole.
And while Republicans are likely to push through the White House’s ban on institutional investors — to steer Trump aides away from other populist ideas, if nothing else — they’re also signaling possible changes that could cushion the blow.
The details are still in play after House Republicans, housing groups, administration officials and even some Democrats pushed back on some facets of the Senate’s approach, including a requirement that investors sell any rental properties they build to individuals within seven years.
Eleanor’s view
Trump has never liked a loser. And with Blue Owl making headlines, private assets aren’t necessarily winning.
Add in mounting political pressure on affordability, and it could explain why his administration feels extra empowered to pump the brakes with private assets right now, even as it backs off other industry-despised policies like capping credit card interest rates.
Many lawmakers thought Trump would pivot away from keeping institutional investors out of housing; after all, he’d kept his promise to donors by signing the first executive order on retirement plans.
But as the industry is experiencing firsthand, much of Washington rides on how lower-ranking officials hash out finer points behind closed doors.
Notable
- The struggles of Blue Owl may prove to be a blessing in disguise, Semafor’s Liz Hoffman wrote.