More Really Smart Guys Lose Their (Clients') Shirts

Carlyle Capital Corporation was the idea of the hedge fund giant Carlyle Group. Carlyle Group, headed by former IBM Chief Lou Gerstner, brought together some of the top business minds in the world to manage money all over the globe for sophisticated investors.

In 2006 they had a great idea to set up a separate company to buy AAA rated mortgage backed bonds. It sounded safe enough. Unfortunately they thought it would be a brilliant idea to borrow 32 times the capital they invested and raised. Last week Carlyle Capital defaulted on $16 billion worth of loans and their shareholders were left empty handed.

Hey, but they are really smart guys!

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