What are Broker’s Exposure to Carlyle Capital ?

Broker’s trading exposures to Carlyle Capital’s soon to be defaulted fund — rumored to be leveraged at an astonishing 32 X! — has been the big question circulating street desks today.

Here’s one set of numbers currently circulating on the potential exposure (analyst unknown):

-Citibank (C)  $4.7B
-Lehman (LEH)  $3B
-BoA  (BAC) $2B
-UBS  $1.8B
-Bear Stearns (BSC) $1.7B
-ING $1.5B
-JPMorgan (JPM)  $1.4B
-Calyon $1.3B
-Merrill Lynch (MER)  $760m
-BN Paribas  $600m
-Credit Suisse   $500m

I cannot vouch for the accuracy of these numbers, but this is what is getting pinged around Wall Street trading desks . . .


UPDATE: March 14, 2008 1:15pm

FT is reporting this list was culled from CCC’s annual report, and is therefore out of date.

The only question is whether it got better or worse . .  .


Thanks, JD.

UPDATE: March 13, 2008 11:15am

Standard & Poor’s comments on subprime write-downs, via Briefing.com:

Standard & Poor’s Ratings Services believes that the bulk of the write-downs of subprime securities may be behind the banks and brokers that have already announced their results for full-year 2007. "There may be some additional marks to market as market indicators have shown deterioration in the first quarter. However, when we dissect the percentage of write-downs taken against various types of exposures, in our opinion the magnitude of some write-downs is greater than any reasonable estimate of ultimate losses… The write-downs of collateralized debt obligations (CDOs) of subprime asset-backed securities (ABS) by large banks and investment banks (referred to as banks) in North America and Europe to-date total approximately $110 bln. To this amount we add approximately $40 bln in write-downs of insurers (financial guarantors and other insurers) and banks in the Gulf States and Asia to arrive at a rough estimate of $150 bln in global disclosed write-downs to-date… Based on available information, we believe that the largest players can be seen as having undertaken a rigorous valuation methodology to come up with conservative valuations. Citigroup (C) and Merrill Lynch (MER), for example, value their high-grade supersenior tranches at 52% and 68% discounts to original exposure, respectively. The broader range of banks values them at only a 30% discount. Similarly, Citi and Merrill value the supersenior tranches of the mezzanine CDOs at 63% and 73% discounts, respectively, whereas the broader range of banks values them at a 48% discount… We believe Citi and Merrill in particular have taken conservative views in this regard, and have built in liquidity premiums.

Now if only these guys had any credibility left . . .

Category: Credit, Derivatives, Trading

CFOs: Recession Has Already Started

Category: Economy, Finance, Psychology

Futures Down Triple Digits on Hedge Fund Collapse

Category: Credit, Derivatives, Markets, Trading

Paul A. Volcker Address on Future Challenges

And now, a word from a distinguished central banker:

Monetary Policy Transmission:  Past and Future Challenges
Distinguished Address by Paul A. Volcker
To Conference on Financial Innovation and Monetary Transmission
Sponsored by the Federal Reserve Bank of New York, April 2002

The subject of this conference — innovation and monetary policy transmission — is something that has naturally concerned me over the years. Historically, the issue has appeared in somewhat different guises. I never thought I had really adequate answers, but somehow the system has worked. Moreover, I am afraid that as far as current technological and financial innovations go, I should be listening rather than speaking. I am not a big user of new technologies. My main experience with technology as president of this Bank and then as chairman of the Federal Reserve Board was asking why staff needed new computers every four years. I always had the feeling that capacity was expanding exponentially over time, but I did not know that monetary policy was becoming any better.

Nonetheless, I believe you are onto an intriguing subject. Indeed, some of the topics covered in your papers remind me of questions I have thought about before. For example, when I was here and when I was in Washington in the late 1970s and early 1980s, we embarked on some new approaches to monetary policy that depended upon control of money by the means of quantitative control of the reserve base.

Hat tip: Money: What it is and how it works

Read More

Category: Federal Reserve

Why the Fed Bailed Out the iBanks

Category: Credit, Derivatives, Federal Reserve, Finance, Psychology

Freddie Mac CEO: Home Price Drops Only 1/3 Done

Category: Credit, Economy, Real Estate

Fun with Google Trends: Stagflation

Category: Economy, Inflation, Web/Tech

So Long, and Thanks For All the Fish!

Category: Books, Legal, Politics

Latest Bank Headache: Home Equity Loans

Category: Credit, Economy, Finance, Psychology, Wages & Income

Wilbur Ross on the Banking System

Category: Credit, Derivatives, Federal Reserve