HREI Capital Markets Commentary – September
Tumult! No single word better defines today’s capital markets. The severity of the challenges facing the capital markets has spiked higher with each phase. First came the lock up of the CMBS markets last summer/fall, then the seizure of the auction rate market this February, next the failure of Bear Stearns, the nation’s fifth largest investment bank in March, followed by what seemed to be a period of relative calm until this September. In September, the US Government effectively nationalized Fannie Mae and Freddie Mac, Lehman Brothers filed for bankruptcy and is being liquidated piecemeal, Merrill Lynch rushed into a shotgun wedding to avoid Lehman’s fate, the US provided $85 billion of financing to AIG to avoid a potential bankruptcy of the world’s largest insurer and the two remaining large investment banks have elected to be regulated as banks. It is difficult to overstate how extensive and severe the shocks to our capital markets have been or the fragility of its current condition.
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