Carlyle Default?
March 6th, 2008 by Jon Taplin
George H.W. Bush’s partners at the Carlyle Group have been unable to make a margin call for the past three days., saying the prices of the securities are “not representative of the underlying recoverable value of these securities,” Can you imagine J.P. Morgan (the equivalent of Carlyle’s reputational importance) in the 1920′s being willing to walk away from an obligation like this? This is “jingle mail” on a grand scale.
Jingle mail? (late Christmas financial posting?)
Translation please for those of us not up to date with modern financial vernacular?
Many Thanks,
- Zhirem
re Zhirem
I am not a financial expert but from what I read in the media/econoblogshere
jingle mail refers to homeowners (or to be more precise homeborrowers) who can not or are not willing to make their monthly payments. They send in their keys and move out of the house. On reason for this behaviour apparently is negative equitiy, e.g. through falling house prices the amount of dept they have is higher than the house they live in is worth. I don’t know what the legal consequences of this behaviour are and I don^t know how many jingle mailers are actually around, but judging from Bernankes pledge to the lenders to adjust mortgages it might be a real threat. If you visit the calculated risk blog you will find an ongoing discussion on this subject.
Best BMH
CCC shares were down 1.7 percent at $11.80 by 0900 GMT, but only 1,000 shares had changed hands.
Washington DC based The Carlyle Group has more than $75 billion under management and has attracted a string of high-profile advisers including U.S. President George Bush in the early 1990s and former British Prime Minister John Major.
This week it said it had hired Olivier Sarkozy, half-brother of French President Nicolas Sarkozy, from investment bank UBS as it looks to “capitalize on the dislocation in the financial services sector.”
“Jingle mail” refers to the latest practice of putting your house keys in an envelope and mailing them to your home lender. In other words, simply giving up all your equity and crying uncle by walking away from your financial obligations no matter what the consequences.
In Europe this story is having a major effect.
http://www.iht.com/articles/2008/03/06/business/rates.php
A default by a London unit of the private equity firm Carlyle Group on residential mortgage-backed securities underscored the fragility of global markets, six months after the subprime crisis prompted the European Central Bank to inject hundreds of billions of euros into the market.