Carlyle fund at end of the road

Stephen Beard Mar 13, 2008


Doug Krizner: As if we didn’t have enough problems for the markets. Now the troubled mortgage bond fund of the prestigious Carlyle Group is near collapse. As Stephen Beard reports, it may be sign the Fed’s plan to stabilize the credit markets isn’t working.

Stephen Beard: Carlyle Capital has been struggling for weeks, but now it’s reached the end of the road. The banks lent it more than $21 billion and they want their money back. They’re about to grab all of the fund’s remaining assets.

These are, you guessed it, mortgage-backed securities. Carlyle’s troubles reflect a wider and worrying situation. Its assets are backed by triple-A rated residential mortgages. We’re not talking subprime here.

The fear is that billions of dollars of good quality securities could flood the market, and further depressing their value and further reducing the amount that banks will lend. The Fed made a dramatic $200 billion move on Tuesday to stop banks foreclosing on these kinds of assets. In Carlyle’s case, it clearly hasn’t worked.

In London, this is Stephen Beard for Marketplace.

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