Private Equity, the Giant Before the Bust, Hangs On

The buyout guys were on top of the heap before the bust. Can they avoid being plowed under?

Illustration by Harry Campbell for TIME

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...

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