Friday, March 14, 2008

Casino Capitalism

Carlyle Capital Corporation: commentary

'No one can complain that they weren’t warned. The implosion of Carlyle Capital Corporation is a spectacular failure, probably the most damaging to sentiment in credit markets since Northern Rock. But this time all those closely involved were consenting adults. Those who read the prospectus for the company had no doubt about its potentially precarious nature. You lose count of the number of references to “leverage without limit”. Never mind the eye-popping 32 times gearing CCC opted for. There was nothing in the company rules to prevent it leveraging up 320 times.'

Posted by quiet guy @ 01:18 AM (625 views)
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One thought on “Casino Capitalism

  • “The banks that financed the $22 billion (£10.9 billion) of debt that eventually capsized the company were also fully aware of the risks. Many of them were directly involved in bringing this house of cards to market in the first place”.

    When you lend money, you surely check who you are lending to. I learned this on an East London market stall at 13. So what made the banks go for a $22billion loan, bearing in mind the conditions? Greed, perhaps?

    Nice to see it’s “59 other funds, doing all right”. I’m willing to bet a tenner that the lenders are looking closely on the small print – right now! Any takers?

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