Trading in Carlyle Unit Suspended

Over the past year, lenders also increased the fees they charge Carlyle Capital, hurting its ability to pay. Some fees have risen from 1 percent of the loan to 3 percent, which can amount to hundreds of millions of dollars more on $20 billion in debt.

"This may be the first of many negatives for blue-chip firms," said William L. Walton, chairman of Allied Capital, a business-development company in the District. "I don't see this as a Carlyle-specific issue particularly. The larger issue is that most small, publicly traded financial firms are seeing their liabilities under pressure. I would expect Carlyle will manage their way through this."

James J. Angel, associate professor of finance at Robert E. McDonough School of Business at Georgetown University, said the extent to which Carlyle's brand is damaged will depend on Carlyle Capital's outcome.

"Just getting a margin call is not that big a deal," Angel said. Carlyle Capital "may have losses on paper at the present, but it could be a very good investment in the long run. If they can meet the margin calls and if history shows it was a good trade after the fact, this situation may actually burnish [Carlyle Group's] reputation."

A financial rescue may have to come from Carlyle Group, which has put $150 million into Carlyle Capital in the past year. The world credit crisis first hit Carlyle Capital last summer.

Carlyle Group spokesman Chris Ullman said yesterday that while the outlook for Carlyle Capital is unclear, the private-equity firm has limited exposure.

Money from Carlyle Group investors, mostly pension funds, sovereign wealth funds and wealthy individuals, is not at risk in Carlyle Capital, Ullman said. Only owners' money, not buyout fund money, goes into Carlyle Capital, he said. Carlyle Group has $75 billion under management from investors around the world.

Donald B. Marron, founder of Lightyear Capital in New York and former chairman of PaineWebber Group, said Wall Street legends are made during crises like Carlyle's.

"Reputations in this business are made in the long term and . . . enhanced by how you deal with troubled times because everyone has trouble at one time or another," Marron said. "I expect [Carlyle] to deal with this extremely responsibly."