By Owen Paine on Thursday March 13, 2008 01:37 PM
This is the face of the credit crisis in action: David M. Rubenstein co-founder of The Carlyle Group, private equity personified and prolly still making it at both ends.
http://www.bigthink.com/user/david-rubenstein
Well, read here how he's dumping his stale leverage play on mortgaged-backed securities. The downward cascade proceeds apace. Basics of all these fandangos:
"The fund was set up in August 2006 with roughly $670 million in cash from Carlyle's owners and other investors, and about $300 million in additional capital raised from a public stock sale. The capital allowed the fund to go to banks and borrow far more, leveraging its cash investment some 20 times into the portfolio."I.e., they bought $20 billion in securities, with only one bil of their own money in the pot. Now comes the drop and the margin call:
"As the market value of the Fannie Mae and Freddie Mac securities has dropped, Carlyle Capital's lenders asked it to increase its cash equity from what was 1 percent to as much as 5 percent"Their answer:
"In a statement, Carlyle Capital said that it had been unable to meet margin calls in excess of $400 million over the past week and that it expected its lenders to take control of its remaining assets."Now for the dump, aka "let's all join the cascade":
"The lenders, headed by Deutsche Bank and J.P. Morgan Chase, began selling the securities last night..."
Comments (3)
Selling them to whom? . . . Never mind, I already know the answer to that.
Posted by Fledermaus | March 13, 2008 7:11 PM
Posted on March 13, 2008 19:11
on a lesser note
consider the link
a carnal metaphor
for the high god of capitalism
sort of like a foundering bovine
iz a market jesus
http://hosted.ap.org/dynamic/stories/C/CONGRESS_SLAUGHTERHOUSE_ABUSE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT
Posted by op | March 13, 2008 7:23 PM
Posted on March 13, 2008 19:23
amen
to the mendell tendency
Posted by op | March 13, 2008 7:25 PM
Posted on March 13, 2008 19:25