Thought this might be of some interest - recieved it in my box. We all know of the Carlyle ( http://www.carlyle.com/) Group.
Numerian March 6, 2008 - 10:50amCarlyle Capital Corp. failed to meet four margin calls yesterday for $37 million, and has received notice of default from its lenders. The fund is the publicly traded arm of the Carlyle Group, the Washington D.C. equity and leveraged buyout firm that lies at the nexus of corporate and governmental power in the U.S. The Carlyle Group is the modern day source of enormous wealth for the Bush family. George H.W. Bush is a shareholder and former board member, as are key members of his administration such as Frank Carlucci, former head of the CIA, and James A. Baker, former Secretary of State. Carlucci ran the Carlyle Group for many years and Baker served as legal counsel. The Carlyle Group is noted for its substantial contacts with governments around the world, especially in the military and intelligence areas. Former president Ferdinand Ramos of The Philippines, as well as John Major, former U.K. Prime Minister, have served on the board of directors.
Carlyle Capital Corp. was formed in July of 2007 with $300 million in publicly-raised capital. It proceeded to borrow $22 billion and invest in Aaa rated agency securities, which are bonds issued by Fannie Mae and Freddie Mac. These securities have generally been considered tantamount to no-risk U.S. Treasuries, because the agencies are chartered by the U.S. Congress. It is a sign of the increasing depth of the global credit crisis that a fund like Carlyle Capital Corp. is unable to find buyers for such securities [VERY SCARY] to raise cash for margin calls. Similarly, a year ago it would have been unlikely that the fund's lenders – mostly Wall Street banks – would have been issuing any margin calls against a fund holding such highly rated securities. But Wall Street brokers are now applying steep haircuts against even AAA rate securities in an attempt to preserve their own liquidity.
The very high amount of leverage used by the Carlyle Capital Corp, typical of hedge funds, is now working against it as well. Several months ago it received a $150 million line of credit from its parent, the Carlyle Group, but it is unclear why the parent firm is no longer providing such support to its fund. The Carlyle Group is privately owned, and the fund is the only publicly traded entity within the group.
It is now clear that the credit crisis is striking at the very epicenter of business and governmental power in America, and potentially threatening the fortune [ I don't know about that] of the Bush family. For a long time it was assumed that a board seat was being left open for President George W. Bush upon his retirement in 2009, but in recent years that speculation has been dampened since the Carlyle Group requires from its board members a minimum of useful international contacts and some basic business competence.
