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March 6, 2008

Carlyle Group's Margin Call, God, and My Toyota Corolla

With news this morning that mega-investor Carlyle Group got a margin call -- it had to put up more capital -- on its bond fund, that doesn't leave much room on the even larger side for funds that will get such calls. Maybe Pimco is next, or at least God.

Carlyle Capital Corp. missed four of seven margin calls yesterday totaling more than $37 million, the Guernsey, U.K.- based fund said today in a statement. The fund expects to get at least one more notice of default related to the margin calls.

Granted, Carlyle missing margin calls isn't like you are I missing the same thing. It isn't, in other words, because Carlyle can't make payments; it's because it chooses not to. As one fund exec there said in nicely opaque words, the calls were not "representative of the underlying recoverable value" of the agency bonds in question.

Yeah, I remember saying the same thing about my 1987 Toyota Corolla.

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