One of the biggest names in the New York/Washington financial axis was one of two big industry players to hit the wall this week as their lenders became very nervous about the collateral they were holding - mostly mortgages or mortgage related securities.

The Carlyle Fund is managed by The Carlyle Group, which claims some of the biggest names in politics serving in the present or past tense as employees, directors, investors, or advisers. The Fund announced this week that it had failed to meet margins calls on its $21.7 billion portfolio. A margin call occurs when a lender fears that underlying collateral is no longer sufficient to ensure the safety of a loan and calls for the borrower to either provide additional collateral or pay down the loan.

A margin call is a like a snowball rolling down hill. Once a call is triggered it takes a disproportionate contribution to shore up the loan because for every dollar of collateral that is liquidated to pay down the loan there is one dollar less to securitize the rest. For example, suppose a lender holds $5 worth of stock as collateral for an $11 loan requiring 50% collateral - $.050 less than he holds. He calls in the margin and sells $1 in stock, reducing the loan to $10 but cutting the collateral to $4, only enough to support an $8 loan. It is indeed a slippery slope.

Carlyle Capital said it had received additional margin calls and default notices Thursday from banks that help finance its portfolio of residential mortgage-backed securities and that it was unable to meet the calls from four banks

Friday the second shoe fell as lenders began to liquidate the securities underlying the Groups loans. Trading of shares in the listed mortgage-bond fund was suspended. The stock closed Thursday down almost 60 percent to $5 on the Amsterdam market where it is primarily listed.

Carlyle Capital said Friday it is in continued discussions with its lenders about its financing situation, but warned shareholders that the additional margin calls and increased collateral requirements to keep funding in place could quickly deplete its liquidity and impair its capital.

According to The Wall Street Journal, Carlyle Capital is well beyond the 50% requirement for margin support, leveraging its $670 million equity 32 times to finance a $21.7 billion portfolio of residential mortgage-backed securities issued by U.S. housing agencies Freddie Mac and Fannie Mae.

Carlyle Capital was initially launched as a private fund in 2006 but it is its parent company that is much more interesting.

According to its website, "The Carlyle Group, headquartered in Washington D.C., was established in 1987 as a "private global investment firm that originates, structures and acts as lead equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings."

Among the major players that have, over the years, been closely associated with the Group are former Secretary of State James Baker, III; former Defense Secretary Caspar Weinberger; billionaire George Soros; members of the bin Laden family and, most notably, Carlyle Group Director George H. W. Bush.

The second company, Thornburg Mortgage, Inc also announced this week that it was facing default as it failed to meet "a substantial number" of new calls it was facing. Officers said that the Santa Fe, New Mexico company was trying to sell securities, offer debt, or raise capital but many analysts were speculating that the company might have no choice but to file bankruptcy.

Thornburg specializes in so-called "jumbo mortgages" those above the $417,000 conventional lending limit of Freddie Mac and Fannie Mae. The company has suffered as investors have shied away from such loans in recent months.