Republican and Democratic administrations both worked eagerly for forty years to make possible the growth of private credit and private equity firms’ role within it. In 1982, for instance, the Securities and Exchange Commission (SEC) under President Reagan issued Regulation D, through which companies could generally borrow from “accredited investors”—shorthand for wealthy or sophisticated lenders—without registering with the SEC.16 This created a new class of firms from which companies could borrow money. Then, in 1990, the SEC allowed for the syndication of private capital to certain institutional buyers. Investors could now make loans on the private market and then bundle the promises of payment on those loans and sell them to other investors. This Rule 144A, in essence, created a new, secondary market for private credit.

These regulations were issued under SEC chairmen appointed by Presidents Reagan and Bush, respectively. But Democratic administrations got in on the game too. In 1996, Congress passed, and President Clinton signed, legislation that lifted the requirement that private funds—funds that made loans on the private credit market—be limited to one hundred or fewer investors.17 This created the opportunity for investors to build vast stores of capital with which to make private loans.18 The legislation passed overwhelmingly in the House (just eight members voted against it) and by unanimous consent in the Senate.19 Then, in 2012, Congress passed, and President Obama signed, the JOBS (Jumpstart Our Business Startups) Act, which further expanded the private credit market by permitting borrowers to make general solicitations for money.20 This meant that private credit sales could be advertised publicly and essentially obviated the purpose of going public. The legislation passed with bipartisan majorities in both chambers of Congress.21