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Carlyle Capital, the mortgage debt investment fund of the Carlyle Group (where Bush Sr. and James Baker were top advisers and presumably still large shareholders) is getting hammered by margin calls. Banks that have loaned them money are calling in their debts and the fund is struggling to stave off liquidation of all of its assets.

From the NYT

The Carlyle Group’s troubled mortgage-debt investment fund, Carlyle Capital, said on Monday that it had asked lenders to halt further liquidation of collateral worth as much as $16 billion while the two sides discuss ways to repay debt.

The fund, which invests mainly in triple-A rated mortgage securities issued by Fannie Mae and Freddie Mac, has received $400 million in margin calls, and some of its lenders started to liquidate collateral for $5 billion of debt. Banks are asking for their money back amid concerns the economic climate may deteriorate further.

The Carlyle fund said on Monday that it "requested a standstill agreement whereby its lenders would refrain from foreclosing and liquidating their collateral, and we are awaiting responses."

The Carlyle fund just went public last summer and the Carlyle Group got a huge cash infusion from Abu Dhabi last fall.

Perhaps they'll have to sell their copy of the Magna Carta.

Somehow, I think Carlyle will come out a lot better than a few million homeowners who got caught up in the subprime mess.  What backroom deals will be cut to save Carlyle? We will probably never know but this is certainly a story to watch.  I'm trying to keep the schadenfreude to a minimum, given the seriousness of the mortgage crisis but it's kind of nice to see the piper being paid by such a nice bunch of sharks.

Originally posted to Blue Intrigue on Mon Mar 10, 2008 at 10:17 AM PDT.

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