Sunday, March 16, 2008

Carlyle Blames Feds for Failure (Once Again)

The infamous Carlyle Group loves to blame the federal government for its problems. Carlyle Capital Corporation fell faster due to action by The Federal Reserve Bank. Ironically the Fed was trying to save funds like Carlyle Capital. The Financial Times reported:

This week's emergency credit market intervention by the US Federal Reserve was supposed to ease the liquidity crisis for struggling financial groups such as Carlyle Capital Corporation.

But David Rubenstein, co-founder of the Carlyle Group, said it only accelerated the demise of his group's mortgage-backed securities fund, which is being liquidated by its banks for defaulting on more than $16bn of debts only eight months after listing on Euronext Amsterdam. (Creditors wanted Carlyle's holdings so they could use them as collateral in the upcoming Fed intervention.)

It's not the first time the feds tried to save a Carlyle investment vehicle's bacon only to be blamed later. After Hurricane Katrina, patients in Carlyle's LifeCare hospital in New Orleans badly needed saving. Long term acute care patients suffered up to five days in a dead hospital. Twenty four long term acute care patients perished in Katrina's steamy, toxic aftermath. Mr. Rubenstein's firm blamed the feds for those wrongful patient deaths. LifeCare's attorneys assert that patients became wards of the federal government as soon as FEMA evacuation teams set up in New Orleans.

LifeCare argues in court documents that once the Federal Emergency Management Agency (FEMA) and the U.S. Coast Guard assumed control of evacuations and other emergency procedures in New Orleans during the flood, it was no longer responsible for the patients at Memorial.

The failure of a publicly traded investment and the deaths of 24 LTAC patients, both are the responsibility of the federal government. Carlyle might want to get Booze, Allen, Hamilton to write up such an analysis. The feds of course, would need to pay mightily for such professional consultation...