All three deals stuck the banks with bridge loans that could not be sold.
The end of the story was that Merrill and Salomon lost millions on bridge loans.
The lenders are granting short-term bridge loans to help service its debt, and stop shedding jobs.
Against my advice, Drexel started doing bridge loans, started buying pieces of the deal with their own capital.
Mr. CHIP CASE (Housing Economist, Wellesley College): That's the big danger, double payments and bridge loans and things like that.
Look at the hundreds of millions they lost when those bridge loans to LBOs went bad in 1989 and 1990.
Silicon Valley venture capitalists are the latest to succumb to this draw, anteing up not with chips but with so-called bridge loans.
Most heart-arresting are bridge loans, which carry a company to an imminent financing eventa venture round, an initial public offering or an acquisition.
They did bridge loans where the investments house doing the deal puts in some of the junior capital to get the deal done.
Meanwhile, Corinthians and Odebrecht are financing construction via bridge loans, which cost much more, especially considering the relatively high interest rates in Brazil.
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It estimates that 60% of informal loans have gone to small property developers, with the rest going to other businesses that need bridge loans.
At one point, there was talk of trying to use the DOE program to provide bridge loans that would get the carmakers through the crisis.
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During the height of the financial and economic crisis, Ford was the only U.S. auto company that did not use the government bridge loans provided by TARP.
Gilinski got bridge loans from Barclays and ING, backed by equity in the bank, and sold convertible bonds in the U.S. to get the money to seal the deal in record time.
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Given the greater liquidity in the high yield market, some arrangers are a lot more comfortable underwriting senior secured bridge loans to high yield and then flexing and structuring the capital structure based on market demand.
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Also, consumers are no longer saving less and borrowing more on credit card, home equity and other loans to bridge the gap between income and desired spending growth.
And since the bridge banks can make new loans, do not have to make profits, and will have the express remit of keeping dodgy companies in business, they will eat into the loan business of the remaining private-sector institutions.
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