I wrote yesterday about what is, in common parlance, greed. It's good to see that on the same day the FSA announced that banks will be subject to scrutiny on their exposure to private equity deals. Private equity is also about greed, and bankers suffer from this complaint very badly indeed. So badly they're happy to take risks that any lay-person can see is mad, hence their over lending in the 1970s and 1990s to developing countries and in the 1980s and now to the domestic mortagge markets.

So it's troubling to note that on the same day Blackstone, a major private equity group launched its stock market prospectus. Nils Pratly rightly sees beyond the absurd rewards paid to the equity partners in a first rate article. He points out that the profits these funds take come from someone, and when they're quoted it will be pensioners. As he says:

The trustees of these pension funds have been asleep at the wheel. They ought to have demanded lower fees years ago but it has simply not happened. Even off the record, private equity partners report no pressure. Indeed, one or two look at hedge funds and note that fees there, if anything, are rising: some top-performing hedge funds have found clients happy to pay 4% annual fees and to allow the managers to keep 30% of the profits over specified thresholds.

This is not good enough. But the problem is simple. Pension trustees come from the ranks of managers who stand in awe of greed, and most pension managers work in the City, where the same rule applies. The lay-person knows what is happening is mad. The problem is how to hold those who abuse to account.