Carlyle Capital Nears Collapse as Rescue Talks Fail

Carlyle Capital Nears Collapse as Rescue Talks Fail

www.bloomberg.com

Carlyle Group said creditors plan to seize the assets of its mortgage-bond fund after it failed to meet more than $400 million of margin calls on mortgage- backed collateral that plunged in value.

Carlyle Capital Corp., which began to buckle a week ago from the strain of shrinking home-loan assets, said in a statement it defaulted on about $16.6 billion of debt as of yesterday.

The fund fell 87 percent in Amsterdam trading.

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Well there goes the Carlyle Group's mortgage fund, set up to play the US housing bubble by the insider's insiders, and now a huge debt sink.

Yes, that was a $16.6 billion default; orders of magnitude beyond the $10-20 million defaults of a few days ago.

The money quote:

The industry is reeling from its worst crisis because bankers -- staggered by almost $190 billion of asset writedowns and credit losses -- are raising borrowing rates and demanding extra collateral for loans.

"This is not only a problem for Carlyle,'' Jochen Felsenheimer, the Munich-based head of credit strategy at UniCredit SpA, wrote in a note to clients today. "We expect a further flood of downgrades especially of higher-rated securities, putting enormous pressure on the system.''

The Masters of the Universe have gotten badly burned as the housing bubble they inflated and rode for a decade now collapses. Obviously CG should have stuck to cushy insider arms deals; actual economic acumen is obviously far over the heads of the ultimate crony capitalists.


www.bloomberg.com
(visit the link for the full news article)

Ouch, reality bites!



nice job.