Mar 16 2008
Who Follows Bear Down the Tubes?
Carlyle got in trouble because they couldn’t get overnight funding. Bear Stearns went down because they couldn’t get overnight funding. Lehman seems to be the one everyone thinks is next.
Consider this. Any bank or other institution requiring daily funding is basically insolvent. It’s a prisoners’ dilemna. So long as all those who fund said institution continue to do so things are fine. As soon as one pulls its lines of credit, though, the wheels can come off very, very quickly.
So there’s the question. Which institutions and/or funds require that constant overnight funding?
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