Fred Prouser/ReutersMarc Lasry, co-founder of Avenue Capital, left, at a panel moderated by Steven Drobny of Drobny Global Advisors, right.LOS ANGELES — If a single word captured the mood of the Wall Street contingent at this year’s Milken Institute Global Conference, “uncertain” would fit the bill.
“There’s a lot of uncertainty in the U.S.,” said Steven Drobny of Drobny Global Advisors, who was the moderator of a panel on alternative investments on Wednesday. Those words, more or less verbatim, were also relayed by members of panels on mergers and acquisitions, private equity and the global credit market.
“People are waiting and wondering what’s happening,” David Bonderman, the TPG Capital co-founder, said during the private equity panel. “It’s an uncertain and dangerous world, and people are being cautious with their cash.”
“Uncertain,” of course, is one of those cloudy, shapeless words that serves as a stand-in for a general feeling of malaise in the financial world – the feeling that, for reasons as widely felt as they are difficult to pinpoint, Wall Street is not the capitalist feeding frenzy it used to be.
“The big difference between today and 2008 is that it used to be easier to make money,” Marc Lasry, the founder of Avenue Capital Group, said during the alternative investments panel. “Today, you have so many more risks, and things are much more difficult.”
As a networking event, of course, the Milken conference still shows all the signs of life: bankers and traders backslapping old friends, swapping business cards and taking meetings with clients at the Beverly Hilton’s poolside bar.
But as an economic powerhouse, a conference where big deals once got hashed out in every corner and the atmosphere was one of bull market fist-pumping, the conference now feels more like the hopeful reunion tour of a once-great rock band.
Granted, there is much more to this gathering than finance – Michael Milken, the founder of the event, told DealBook on Tuesday that he considered education the biggest single field represented at the conference. But at its heart, the conference is a five-day paean to the primacy of the free market. And the free market, most attendees seem to feel instinctively, isn’t what it used to be.
Much of the uncertainty expressed at this year’s conference has revolved around the Obama administration and the bevy of new regulations that were introduced after the financial crisis to curb risk on Wall Street.
One senior private equity executive, speaking to DealBook in the Hilton’s hallway on Tuesday, bemoaned the fact that a single new rule introduced as part of Dodd-Frank Act had forced him to spend $50 million a year on new auditors and compliance officers, whose sole job it was to calculate the compensation of all the employees at a given company.
“The rules have changed,” he said.
But there are worries beyond Wall Street’s profits. At a panel on job creation on Tuesday, talk revolved around the fact that for cities and states, traditional municipal bond financing was failing to provide the money needed for important public projects like repairing roads and building bridges. At a panel on the credit markets, panelists said that the new regulatory regime was making it harder for banks to lend, and leading to the rise of a shadow banking sector. At various points during the conference, panelists and attendees worried about the rise of China, the future of Social Security and the threat posed by Iran.
Indeed, the mood was so dark that on Wednesday morning, when it came time to hear from Nouriel Roubini, the economist known as “Dr. Doom,” his proclamations about the deterioration of global economies barely registered on the fear scale.
Incidentally, in contrast to other Milken-goers, Mr. Roubini said the United States was doing “relatively well.”