Hidden business with loans

The regulations for the US financial sector have resulted in the unregulated gray financial sector booming: companies with poor credit ratings are getting money - at a horrendous rate. For the boss of the New York financial enterprise Arena Investors, the title of shadow banker is nevertheless no swear word.

With the granting of unregulated loans to companies that no longer receive money from banks, US businessman Dan Zwirn earns double-digit returns.

"Hello Dan!" The PR consultant is already waiting for Dan Zwirn to enter the conference room with a view of the skyline of Manhattan in the legendary Chrysler Building. The 45-year-old, a figure juggler with thin hair and wary eyes, leads Arena Investors, a $ 1 billion financial firm with about 40 employees in New York. His business model? With the granting of unregulated loans to companies, which no longer receive money from banks, to earn double-digit returns.

Dan Zwirn said: "In Florida, US citizens can borrow up to 80 percent of the value of their real estate and a loan with a maturity of 30 years and a fixed interest rate of 4 percent But we are able to lend them 55% of their property, we give them a 2-year loan with an interest rate of 12%, which is better than nothing. "

No banking license, no capital requirements, little control - the hidden credit business is flourishing, since regulated banks are always risky and banish risky loans from their books. Dan Zwirn does not find that shadow banks such as Arena Investors should be monitored more closely. "We are already strictly regulated - even if not by the banking supervisor. Besides government regulators, who control interest rates and other things, the securities authority and many other control bodies are also active."

From Harvard Business School graduate to multimillionaire

The Wall Street financier knows what he is talking about. In his 30s, he headed a $ 12 billion hedge fund, which he founded in 2001. He lent expensive loans to around 1,000 companies, including a hospital in Italy that his suppliers could no longer pay.

The Harvard Business School graduate quickly became a multimillionaire. But after the rapid rise came the deep fall: His hedge fund was caught in the visor of the supervisory authority SEC because of an accounting procedure when purchasing an aircraft and had to close.

Zwirn needed five years to prove his innocence - and started again: With 15 million dollars from his own pocket, the father of two children founded 2013 Arena Investors. And is now celebrating his comeback. Two years ago, he agreed with the Canadian subsidiary Westaim Corporation a far-reaching partnership.

And just now, Fairfax Financial Holdings, another Canadian financial institution, has given him 500 million dollars to invest - for good reason, says Dan Zwirn: "Compensation for our loans is on average 18 percent, so we do something right and Will be adequately compensated for our use. "

Finding suitable borrowers is one of the biggest challenges for Dan Zwirn. Fracking companies, for example, which the banks do not want to give any loans since the crash of the oil price. Or other shadow banks such as Pearl Capital. The company shoots pizzeria and florist shopkeepers fast cash - and requires access to future business income.

30 million euros annually for the rescue of AC Milan

While nearly one in two US banks are in the shadow of a shadow bank, a broad counter-movement is emerging: 20 US states, including California and New Jersey, are considering the opening of so-called public banks. They are to be financed with taxpayers and loans at low rates in their environment, says the lawyer Earl Staelin, a strong advocate of this concept. "Would you rather have a bank committed to serving the community, or someone who wants to maximize their profits, often at the expense of the community?"

Dan Zwirn continues to drive forward - and extends his business to Europe. After all, Arena Investors is one of the financial investors who gave a loan of 300 million euros to Chinese investors in April to rescue the highly indebted football club AC Milan from former Prime Minister Silvio Berlusconi - and according to press reports, interest payments of a total of 30 million Euro per year.

Dan Zwirn does not want to comment on the details of the deal, but says: "If you handle a very complicated, big deal quickly, then there has to be a reasonable compensation, I think we got it."

Football fanaticism? Dan Zwirn has not developed this. He keeps a cool head and is only interested in what is left over. "We do not feel passion when we give in. Football is something we do not know about equipment or a bank or real estate, but we look only at the appropriate compensation for the risk we receive."