Inside Wall Street’s Shifts: Private Equity, Big Banks, and the Tokenization Hype

Today I sat down with my old friend Glenn Schorr of Evercore, who covers some of the largest financial institutions on the planet, including banks, private equity firms, and asset managers. Glenn’s view of the financial landscape is unusually wide for a sell-side analyst, and our conversation dug deep into what’s happening behind the scenes on Wall Street right now.

Here’s what we discussed and what I took away.

1. The Strange Year for Private Equity and Credit

It’s been a brutal year for the “alts.”

Blackstone is down 15%, Apollo 25%, KKR 21%, Blue Owl 33%.

That’s strange, because we’re in a bull market, and these are supposed to be secular growth stories. They’re raising record sums every quarter, yet their stocks are falling.

Glenn’s take was straightforward. These companies had two phenomenal years in 2022 and 2023, and they’re now giving a bit back while investors question whether a credit cycle is starting.

The irony is that high-yield spreads remain tight, which means the credit market isn’t signaling trouble. Either the public markets are wrong or investors are overreacting to fears that haven’t materialized.

Banks and credit agencies like Moody’s are still saying the same thing: there’s no real turn in the credit cycle. Loss rates may rise modestly from 1% to 2%, but that’s hardly catastrophic.

So, the panic seems more psychological than fundamental.

2. Why KKR and Apollo Stand Out

When I asked Glenn which names he liked best in the group, his first pick was KKR.

Their secret is that they’re returning capital consistently. Even as monetizations have slowed across private equity due to weak IPO and M&A markets, KKR continues to exit investments and recycle cash. They’ve managed roughly 2x the capital return of peers.

Meanwhile, Apollo has become the king of private credit.

Their insurance model gives them long-duration liabilities, meaning money that doesn’t have to be repaid for decades. That allows them to fund long-term projects like data centers, renewable infrastructure, and digital assets.

That’s the “superpower” of asset management, Glenn says: long-duration money that’s not dependent on overnight funding like banks.

Yes, Apollo’s near-term spread income disappointed because rates fell and competition increased, but strategically, they’re leading the industry’s transformation.

3. Goldman’s Reinvention and Misstep

Next, we turned to Goldman Sachs and CEO David Solomon.

Two years ago Solomon’s reputation was in the gutter. The firm’s foray into consumer banking with Marcus and the Apple credit card was bleeding money. Goldman had tried to become more “Main Street.”

It didn’t work.

They were lending to near-prime consumers, something Goldman had never done before, and it backfired.

But Solomon made the right call to shut it down. He admitted it didn’t work and pivoted, which takes discipline.

Now, Goldman is focused again on what it does best: investment banking, trading, and growing asset and wealth management.

They’re selling down private equity from their balance sheet and moving toward managing third-party funds instead, essentially following the Morgan Stanley playbook.

If they’d done this 10 years ago instead of the consumer detour, they might already be there. But they’re back on track.

4. Bank of America’s Costly Bet

Bank of America has been lagging far behind JP Morgan, with a return on equity (ROE) about 500 basis points lower.

The reason is simple and painful.

During the zero-rate years, they plowed $600 billion into long-duration Treasuries and agency bonds yielding under 2%.

Then rates soared to 5%.

Now they’re sitting on huge unrealized losses while JP Morgan, who stayed in short-term paper, can reinvest at high yields.

It was a bad call, no question. But as Glenn put it, “everyone’s entitled to one mistake.”

The good news is that this is a slow grind, not a death sentence. Those securities will roll off, and Bank of America’s net interest income will gradually rise again.

5. Citigroup’s Transformation Under Jane Fraser

Here’s the surprise. Citi is up over 40% this year, the best-performing big-bank stock.

CEO Jane Fraser deserves credit.

When she took over, Citi was bloated, inefficient, and underperforming. She’s been cutting aggressively, exiting unprofitable consumer markets around the world, simplifying the structure, and fixing systems and regulatory issues.

For years I said Citi needed an outsider. Turns out, the insider broke more eggs than anyone expected.

Still, Citi has one truly great business: its global treasury and payments division, the backbone for corporate clients like Nestlé or Unilever moving money around the world.

But the rest — investment banking, cards, U.S. retail — is mediocre. Their branch network is tiny. Their investment bank is second tier.

So Fraser has cleaned house. The next step is harder: actually rebuilding.

She’s improving technology, cutting costs, and bringing in talent from JPMorgan and others. But growing in wealth or retail without acquisitions is going to be a long, uphill climb.

6. Tokenization: The Buzzword of the Year

Now, let’s talk about tokenization, because most people using the word can’t explain it.

Here’s the reality.

Tokenization, in finance, means digitally representing ownership of an asset — stocks, bonds, buildings, anything — in a secure, transferable format.

That’s not as revolutionary as people think.

Right now, when I buy a stock on Schwab, it takes about 35 seconds. Settlement takes a day. Tokenization could make that instantaneous, T+0 instead of T+1.

That’s useful for the back office, not life-changing for the average investor.

Where it is exciting is in private markets, for example tokenizing real estate cash flows or private company shares, giving investors access to assets that were previously illiquid.

But for public markets, it’s more about efficiency than innovation. It could lower settlement risk, cut costs, and modernize systems, but it’s not going to change your life.

Banks will need to adapt, though. Faster settlement and stablecoins could eat into their float and payment revenues. And that’s why they’re investing heavily in it.

7. Traditional Asset Managers: The Long Slow Decline

Finally, we talked about traditional asset managers.

For years, these companies were incredible businesses. In the 1990s they traded at 25 times earnings and were growing 20 to 25% a year. Mutual funds were exploding.

But technology came for them too.

ETFs and index funds offered the same exposure for 5 to 15 basis points, while active funds charged 40 or 50 and couldn’t consistently outperform.

The result? About $300 billion in annual outflows from active equity mutual funds in the U.S., while ETFs take in just as much or more.

Their valuations collapsed from 25 times earnings to around 9 or 10 today.

Some firms are evolving. BlackRock had the foresight to buy Barclays Global Investors and its iShares ETF business in 2009, which turned them into a juggernaut.

Others, like Invesco and Franklin Templeton, are still digging out. They’re trying to diversify into ETFs, private credit, and global markets, but their legacy active funds keep shrinking.

Glenn put it perfectly: many of these firms were “fat and happy” for too long and didn’t see what was coming.

Meanwhile, alternative managers like Blackstone, Apollo, and KKR built empires in private markets.

If traditional asset managers had made that bet 15 years ago, they’d be in a very different place today.

8. Closing Thoughts

Every part of finance is evolving right now.

Private credit is maturing. Big banks are reinventing themselves. Tokenization and digital infrastructure are reshaping the plumbing of the system.

But one thing hasn’t changed: execution and adaptability still separate the winners from everyone else.

Thanks to Glenn Schorr for joining me. As always, the conversation was sharp, honest, and deeply informative.

Until next time, this is Steve Eisman, and this has been The Real Eyes Playbook. .
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This post is for informational purposes only and does not constitute investment advice. Please consult a licensed financial adviser before making investment decisions.