Private Equity, the Giant Before the Bust, Hangs On

Correction appended April 2, 2009

Back when we had a functioning financial system, the guys who ran private-equity (PE) firms stood very near its pinnacle. "The new kings of capitalism," the Economist called them. The kings of birthday parties too: the $3 million 60th-birthday bash for Blackstone Group chief Stephen Schwarzman in February 2007 will go down in history as a glaring sign that the boom was about to go bust.

But Schwarzman, unlike several Wall Street kingpins at his party, remains gainfully employed. His pay at Blackstone dropped to $350,000 in 2008 from $180 million the year before, but...