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Steve Rattner: Credit Bubble Will Eventually Burst

The unprecedented credit environment has fueled a boom in private equity, but it can’t last, Steve Rattner told Sue Herrera on “Power Lunch.”

“We are living in a state of a worldwide liquidity glut, or surplus if you will, and that is finding its way through to these kinds of loans,” said Rattner, managing principal of Quadrangle Group, which invests in media and communications companies.

“We are in a credit bubble,” he said. “Credit is an overvalued commodity at the moment. The lenders are not really getting compensated relative to the risks that they’re taking, and at some point that will change.”

And while private equity is getting “an unfortunate amount of attention” right now, Rattner expects things to get back to some kind of a norm.

“Private equity is an asset class that will be around for a long time, but it’ll come and go inevitably,” he said.

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

  • "Power Lunch" & “Nightly Business Report” Co-Anchor

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