Learned the name behind the crisis of 2008, financier


Learned the name of the financier, which actually sparked eight years ago, the collapse of investment Bank Bear Stearns, which marked the beginning of the global financial crisis. He was the founder of Hayman Capital Management Kyle bass, his name is first found in the published documents of the Commission of inquiry of the financial crisis (FCIC), which reviewed U.S. The Wall Street Journal.

When on 12 March 2008, a reporter of CNBC’s David Faber interviewed Bear Stearns President Alan Schwartz, one of the questions was the request to comment on the “actively spreading rumors about the risk of default” on the part of Bear Stearns, and that the partners are afraid to work with the Bank. Financial institution for several months had big problems, even the year before, the hedge funds lost a total of $1.7 billion on the bonds secured by a pledge. Schwartz shrugged off these allegations, but the reporter said that his sources in one of the hedge funds told about the concerns of Goldman Sachs, one of the leading partners of Bear Stearns.

Although after a few hours of CNBC received confirmation that Goldman Sachs is still working with the Bank Schwartz, interview provoked panic in the market. Next night, Bear Stearns turned to the Fed with a request for urgent funding its obligations, as funds after a wave of rumours have lost confidence in the Bank. On March 14th the fed agreed on an emergency loan of $30 billion in the form of asset purchase, and after a few days, Bear Stearns was purchased by JPMorgan Chase Bank, at the price of $2 per security (at market value stocks at $30).

Among the FCIC documents, disclosed by the National archives of the United States, journalists have found a Memorandum containing a summary of the survey of members of the Board of financier Thomas Marano. Now he heads the real estate and tourist concern Intrawest in the Denver (Colorado), and from 1983 to April 2008, Marano led the Department of international mortgage business at Bear Stearns. According to Marano, Kyle Bess told Faber about the problems of Bear Stearns with liquidity.

Employees of Goldman Sachs allegedly hinted Bass that is not ready to assume his obligations to the Bear Stearns credit-default swaps (CDS). “I and another trader Bear Stearns contacted Bescom, and he confirmed that he had contacted Goldman Sachs regarding such exchange of obligations, and then devoted the situation in Faber from CNBC, — told investigators Marano. — Bess himself was shocked that Faber eventually told this story to live”.

As noted by the WSJ, many analysts subsequently criticized CNBC and personally Faber because he could act in the interests of the players down, getting as a result benefit from the collapse of Bear Stearns. At the same time, attached to the FCIC documents emails prove that Goldman Sachs really refused to work with securities Bear Stearns on March 11, 2008, the day prior to interview Schwartz.

An anonymous source told the WSJ that Goldman Sachs was connected not only with the General mood on the market, but also with explosive growth in the number of requests from funds for such transaction for the transfer of obligations.

On the evening of 11 March, the hedge Fund Bassa planned to close the risky position at $5 billion, but early in the morning, the traders at Goldman Sachs refused to do so, not wanting to work with Bear Stearns securities, to the documents the FCIC. Following this, around 9am, the Bank has agreed to accept Bear Stearns as a counterparty at the same time on CNBC Schwarz gave an interview with Faber. “A news story shocked wall street that Goldman Sachs refused simple transactions in securities of his colleagues on the five largest investment banks. The main message: do not count on Bear Stearns,” concludes FCIC.

Following the collapse of Bear Stearns fell the confidence of investors to other investment banks operating on the mortgage lending market (which from the previous year were in acute crisis). In September 2008 led to the bankruptcy of the Bank Lehman Brothers. Later media reports claimed that the cause of the collapse of two banks, which began with the global financial crisis uncovered short selling, speculative in nature. In this case study the University of Oklahoma in 2009 found no significant effect of uncovered sales to a collapse of quotations of the companies.

Game Kyle Bass

The head of hedge Fund Hayman Capital Management’s Kyle bass is known in the USA investor and analyst. At the end of 1990-ies he worked at Bear Stearns, being a senior managing Director in the regional office of the Bank in Texas. After that he moved to a management company Legg Mason, and in 2005 he founded his own Fund Hayman.

In 2006 he became one of the first investors who predicted the formation of a bubble in the market of mortgage lending of the USA and tried to profit from it by buying paper of CDS (the equivalent of insurance against default on debt), thereby playing against the market. With the beginning of the crisis in the market of mortgage lending and the collapse of investment banks Bess earned, according to Texas D Magazine, about $500 million.

Subsequently, Bess, analyzing the debt structure of the largest economies in the world, predicted the Eurozone’s debt crisis, which is fraught with default on government bonds. The idea of Bassa about the imminent default of the Japanese and U.S. economies has caused criticism from economists. As a specialist in high-risk investments, businessman, on the contrary, urged to invest in bonds of Argentina. In July 2014, the authorities failed to negotiate with creditors on the payments on the previous default in 2001 and in fact was again in default.