How bad are the credit markets right now? Worse than 1998, according to the CEO of Carlyle Group’s newly public fund that invests in mortgage-backed securities, which has just received a second lifeline from its parent.
    
While commentators have tried to soothe worries about the credit crunch, Carlyle Capital Corp’s CEO John Stomber came right out with the bad news according to his assessment.
 
“We believe the recent liquidity disruption is significantly worse than the events of 1998,” he said.
 
Stomber of course is referring to the collapse of Long Term Capital Management in 1998, a hedge fund whose downfall roiled financial markets across the globe and led to a massive Wall Street bailout.
    
His assessment is a somber view on the state of the credit markets and of financial institutions. 
    
The situation Stomber is handling at Carlyle Capital Corp. is similar to what KKR faced with its mortgage-related public company, KKR Financial.    

The fact that private equity firms and banks were able to come to an agreement on what to do about Home Depot Supply offers an optimistic view of how the various parties–including some of the biggest names in private equity and investment banking–are able to handle the credit tummult. But if you’re coming from Stomber’s point of view, it’s probably going to get worse before it gets better.

(Photo. Reuters file)