Friday, November 30, 2007
One of the surprising big losers in the mortgage crisis is E*Trade, the discount brokerage whose savings and loan affiliate used its deposits to invest in mortgages. Yesterday hedge fund Citidal Investment Group announced it would invest $2.55 billion in E*Trade, which, along with its current holdings, will bring its stock holdings to close to 20%. Mitch Caplan, the E*Trade CEO who instituted the mortgage strategy, is out. The Wall St. Journal today has a detailed account of the negotiations that led to Citidel's investment. WSJ, Why Citadel Pounced On Wounded E*Trade.