Word: terming
(lookup in dictionary)
(lookup stats)
Dates: during 1990-1999
Sort By: most recent first
(reverse)
Last week's bailout raised twin fears in Washington and on Wall Street as tall as Manhattan's Twin Towers. The first: that Long Term Capital's financial troubles are shared by many of the country's 4,000 hedge funds--lightly regulated and often secretive, high-risk vehicles for sophisticated investors. The banks and brokerages that have loaned them money could be carrying big and undisclosed potential liabilities. If those lenders get caught in a cash squeeze, they could respond by cutting back on lending, even to low-risk borrowers...
...second fear is that the Long Term Capital bailout could encourage banks to make still more risky loans, confident that the government won't let them get into trouble. In this regard, the rescue was rich in irony: it came as the Senate passed a bill that would make it harder for ordinary citizens to seek bankruptcy-court protection from banks and other creditors...
Such outrage was mingled with shock that a star-studded fund like Long Term Capital, whose seasoned investors had nearly doubled their money from 1994 to 1997, could have got so deeply in trouble. The fund was headed by legendary trader John Meriwether, who helped make Salomon Brothers the top bond house of the 1980s, as recounted in the best seller Liar's Poker by Michael Lewis. The partners, who worked out of waterfront offices in tony Greenwich, Conn., included Nobel-prizewinning economists Myron Scholes and Robert Merton and former Fed Vice Chairman David Mullins. As their price...
Star-struck lenders had virtually showered money on Meriwether and his band of supposed geniuses. While the term hedge refers to techniques for reducing risk, funds such as Meriwether's often do just the opposite by using vast sums of borrowed money to make highly speculative bets in global markets. At the peak of its borrowing, the secretive fund reportedly carried a debt load 100 times as great as its net assets, or ownership capital. This would be like putting down $1,000 of your own money to buy a $100,000 house--in a flood plain...
...Wall Street insiders say what really spooked the Fed was indications that Long Term Capital had off-balance sheet derivative contracts with a value of more than $1 trillion. Derivatives are financial instruments that bet on the future direction of interest rates, stock indexes or currencies. Defaults representing less than 1% of that whopping sum could have sunk the fund and punished banks and investment firms around the world...