The woes of Guggenheim, which was founded by the philanthropic New York family best known for the Guggenheim museums, is the latest example of turmoil in the $1 trillion commercial-mortgage market set off by worries over increasing defaults. Late last month, a $1.5 billion real-estate debt fund with investors including the family of onetime presidential candidate H. Ross Perot was forced to liquidate to pay off creditors.
The seizure and sale of collateral by creditors is adding to the downward pressure on prices of debt backed by office buildings, hotels, shopping centers and other commercial property.
In both cases, J.P. Morgan was one of the lenders. It sued the Perot fund last week. In the case of Guggenheim, the fund agreed to turn over the collateral to the bank after it failed to raise additional capital. J.P. Morgan has gained the reputation for playing hardball since it demanded $5 billion in collateral from an ailing Lehman Brothers Holding Inc. just days before Lehman sought bankruptcy protection.
Wednesday, December 3, 2008
JP Morgan is playing hardball
From the WSJ report, looks like JP Morgan is playing hardball with its clients (the likes of Ross Perot and the Guggenheims) going into default.