He expanded on this point by stressing that the risk in lending depends on the source of funding, not the act of lending itself. As he put it, “credit or the act of lending, in and of itself, is not where the risk lies. The backing for that is where we should focus on.” Deposit-taking institutions require strict oversight because poor lending can threaten deposits, he noted, while lending funded by capital markets operates under a different risk profile. “That distinction needs to be made sharper,” he said, so risk can be calibrated appropriately across the system.
Marc added that today’s market signals point in the same direction. Prices are not cheap, long rates are unlikely to fall given persistent inflation pressures, and geopolitical uncertainty is elevated. With those conditions in place, the rational response for investors is to take risk down: move up in credit quality and reduce volatility and beta on the equity side. He noted that, from today’s starting point, history suggests equities could deliver flat returns over the next five years, and this is a moment to be positioned defensively.
Together, the discussion underscored how markets, regulation, and capital allocation are evolving to meet the demands of a more complex global economy, and how long-term, flexible capital will help shape the next phase of innovation and economic transformation.