26 (Bloomberg) - Peter Weinberg, co-founder of Perella Weinberg Partners LP, discusses financial markets regulation and executive pay. Weinberg, speaking with Erik Schatzker at the World Economic Forum in Davos, Switzerland, also talks about the outlook for mergers and acquisitions and the U.S. economy. They speak on Bloomberg Television's "In the Loop."
Weinberg on regulations on the U.S. financial system:
"I think if you step back, you knew that given what happened to the financial system over the past three or four years, you knew that there was going to be a significant backlash of regulation. Some of which can be quite good and positive--and some of which can be harmful. But you just knew that there was going to be a resurgence of regulation. I think that last year there was definitely a tone of that the big institutions were listening--I would say almost apologetic. My sense is this year is that it's a little different and they're little more on the front foot in terms of exploring whether or not regulation will be costly. I think there's a general feeling that the current regulatory framework and developments particularly in the U.S. are working at a reasonable pace right now."
On the current confident tone:
"It's kind of a tale of three cities. My perspective would be that the U.S. is feeling a lot more confident now--maybe more confident than it should--but there's a fair amount of confidence in the U.S. right now. I think in Europe I feel less that way and you hear that here. And obviously in the emerging markets I think the issue is not as much confidence, but it's more about inflation and constraining growth."
On what Weinberg's clients are most concerned about:
"I think our clients are really most concerned about their businesses and growing their businesses and trying to do so in the best way possible whether it's investing in their own country, investing in their own people or whether it's buying businesses around the world."
"To put it into context, last year was about a $2.5 trillion M&A year, which is a relatively low number. 2007, the last peak in recent memory, was about $5 trillion. This year, I think our view is that it will be in the $3.5 trillion-ish area, which really reflects the confidence globally."
On executive compensation:
"In a purely capitalist system, you pay your people what the market will bear--your shareholders, your customers, your creditors, etc. That's the general blueprint for compensation on Wall Street. I think there are two parts to that now--one is the structure of compensation, one is the absolute amount. With respect to the structure, I actually think there's been some interesting and positive developments in structural compensation. This contingent convertible concept I think is a very logical thing and I think it was bound to happen, but I think that's really what now people are more thinking of."
"I think that the compensation will be an issue here [at Davos] for sure. I think shareholders--the large institutional shareholders--are focused on a return on equity and the compensation ratio and those need to be in balance. Entities will get pressure from large institutions on those issues. Otherwise, you've got the Main Street concern which I think is a very valid concern and will always be a concern and that has to do more with the quantum of compensation."
Source: Bloomberg Television