Posted on 10/18/2009 3:59:58 PM PDT by FromLori
Harvard University’s failed bet that interest rates would rise cost the school at least $500 million in payments to escape derivatives that backfired, reports Bloomberg. Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the school’s annual report said. Harvard said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.
The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates.
“When we went into the fall, we had some serious liquidity management issues we were dealing with and the collateral postings on the swaps was one,” Shore said in an interview yesterday. “In evaluating our liquidity position, we wanted to get some stability and some safety.”
Many of the derivative transactions were entered into in 2004, according to Harvard spokeswoman Christine Heenan. Larry Summers, now, director of Obama’s National Economic Council, was the university’s president at the time.
Harvard had too much money to begin with. This evens things out.
Harvard people essentially run the country
Now we understand why we have the financial problems we have.
the story makes the point that high intelligence does not necessarily lead to good sense - just plain dumb
Such investing skill demands he be promoted to a position where he can inflict even more damage.
No wonder the doo-doo has hit the air mover.
Harvard Kennedy School
API-148: Advanced Risk Management and Infrastructure Finance
.
If only they could have gotten the bailout the other financial geniuses got.
Unless of course it turns out that Yale lost a lot more.
He should likely ask Barney and Chris for investment advice.
That is Obama plan for America. Spread the wealth.
Have.......you......ever......heard.......Larry......Summers........talk......? It.......is.........past.......unbearable.
So much for the value of a Harvard MBA.
I have known several local Harvard MBA’s who came to me for tax advice. I was stunned they were so ignorant. My puny little Master’s in Tax was obviously far more valuable than their prestigious Harvard MBA.
These creeps only like spreading other peoples' wealth - not their own. Am I mistaken in calling this "poetic justice?"
Failed at Harvard so promote him to the national stage.
The incompetency of this admin's appointments is staggering.
Then, again, maybe that is the plan.
vaudine
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