USA LP

Dear Uncle Sam,
 
I read with interest news reports detailing the US government plan that would set aside $250 billion to take equity stakes in financial institutions. May I just say – not bad for a first-time fund! Who was your placement agent? If it was the IRS, I still haven’t received any marketing materials from them.
 
And hey – way to go, shooting right to the top of the national league tables. Germany, with a measly $109 billion bank fund, and the UK, with a paltry £37 billion bank bailout, must be green with envy.
 
Being that I was not invited to be a limited partner to the latest JC Flowers fund (he’s got a Chinese sugar daddy), I’m enthused at your insistence that my tax dollars be pooled for investment in a handful of financial sector turnaround plays. Good timing! I understand there are some motivated sellers out there and that you have proprietary deal flow (the sellers can’t say no!). I also understand that you may co-invest alongside private capital managers (don’t let those guys nail you on fees, by the way).
 
Have you thought about what you will do with the profits, if any? Since you’re now a private equity firm, might I suggest an arrangement called “carried interest”? Any profits that come from your eventual exit from these holdings come back to me, the taxpayer, in a cheque, on a pro-rata basis, minus your 20 percent performance fee (and it’s fund-as-a-whole performance measurement, in case you think the busted deals “don’t count”). You may do whatever you want with your carry, but my impression is that your operating budget could use some attention. And if you do receive carry, would you consider this “ordinary income” or would it seem more like a “long-term capital gain”? (Trick question, heh heh heh.)
 
Looking forward to the quarterly reports,
 
David
 
PS is there a closing dinner?