Michael,
Saw this in the WSJ (partial exert follows) and wondered what it's future effect will be on financial insititutions. I expect it can't be good but wondered about your opinion.
A Hedge Fund Falters, So the Fed
Persuades Big Banks to Ante Up
By ANITA RAGHAVAN and MITCHELL PACELLE
Staff Reporters of THE WALL STREET JOURNAL
At an extraordinary gathering Wednesday night, Wall Street's biggest power brokers agreed to prop up one of their most aggressive offspring, Long-Term Capital Management L.P., a highflying hedge fund that was on the verge of collapse.
Heeding a plea by Merrill Lynch & Co. Chairman David Komansky to put aside any misgivings, Travelers Group Chairman Sanford I. Weill, Goldman, Sachs & Co. Senior Partner Jon Corzine and J.P. Morgan & Co. Chairman Douglas "Sandy" Warner were among those who agreed to have their organizations pony up more than $3.5 billion to shore up Long-Term Capital, a creation of some of Wall Street's ostensibly most brilliant minds.
The rescue was the culmination of increasingly intense negotiations among Long-Term Capital's lenders, dealers and the Federal Reserve that began last weekend as rumors spread that the fund was close to foundering. Long-Term Capital, which uses borrowed money to make multibillion-dollar bets all over the globe, had tried for weeks on its own to draw in more capital to shore up its rapidly failing positions, even approaching famed global investor George Soros, who said no.
.....More at WSJ site. |
