Comments on: SIV Rescue Plan: Will it Get Done? http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done.html Mon, 23 Nov 2009 08:18:14 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Yves Smith http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done.html#comment-1058 Yves Smith Mon, 15 Oct 2007 06:01:00 +0000 http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done/#comment-1058 Anon of 1:56 AM,<br/><br/>That's what I thought they were suggesting. The banks are trying to prop up the market, but how much they actually bought (ie, whether they really acquired enough to have an impact) is unclear. Anon of 1:56 AM,

That’s what I thought they were suggesting. The banks are trying to prop up the market, but how much they actually bought (ie, whether they really acquired enough to have an impact) is unclear.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done.html#comment-1057 Anonymous Mon, 15 Oct 2007 05:56:00 +0000 http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done/#comment-1057 I thought the most interesting line in the NYT article was this: "Banks have already been buying significant amounts of commercial paper in recent weeks, even though they did not have to."<br/><br/>Does this mean that the weak recovery we have seen in the CP market was not due to investors coming back, but to banks trying to make it look like they didn't have a huge problem on their hands? I thought the most interesting line in the NYT article was this: “Banks have already been buying significant amounts of commercial paper in recent weeks, even though they did not have to.”

Does this mean that the weak recovery we have seen in the CP market was not due to investors coming back, but to banks trying to make it look like they didn’t have a huge problem on their hands?

]]> By: Anonymous http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done.html#comment-1053 Anonymous Mon, 15 Oct 2007 02:06:00 +0000 http://www.nakedcapitalism.com/2007/10/siv-rescue-plan-will-it-get-done/#comment-1053 Marking the CDOs is next to impossible and that is why I doubt this deal can go through. Due to the multilayer structure, as you well know, any RMBS CDO could contain pieces of thousands if not tens of thousands of loans. Thousands of underlying loans to examine for one CDO. Who has the time and analyst manpower?? <br/><br/>And in this day and age, with many of these loans being liar loans, no one knows anything about the borrowers or their ability to repay. In other words even if you could get the servicers to give up the confidential loan files, there would likely be nothing in them of value, at least for the stated income types of loans. I never could figure out how anyone could pretend to model this stuff when there was no information about the borrowers or the collateral but there must be credit analysts out there who know more than I do (I have been a corporate bond credit analyst and portfolio manager). <br/><br/>Okay, maybe you could get data on at least the properties of say, 30-50 properties for each of the originators (assuming there weren't too many of those who produced product) and try to do some statistical inference based on that -- if you also have market data on the property locations -- but this feels a little flaky. I suppose that is where the big distressed MBS investors are starting up, what else can they do? I wonder just how far along they are -- remember these guys will also be hampered in their model building because there is not yet alot of longterm liar loan experience.<br/> <br/>To Citi I say, good luck. And thank you for doing such poor internal contingent liability risk pricing that allowed you to get into so much SIV product with liquidity backstop agreements. Even if us taxpayers don't have to bail you out, this was really dumb stuff to do when it was already clear that a dollar crisis was on the way -- this will give our trade partners every excuse to give up on the soundness of the United States Marking the CDOs is next to impossible and that is why I doubt this deal can go through. Due to the multilayer structure, as you well know, any RMBS CDO could contain pieces of thousands if not tens of thousands of loans. Thousands of underlying loans to examine for one CDO. Who has the time and analyst manpower??

And in this day and age, with many of these loans being liar loans, no one knows anything about the borrowers or their ability to repay. In other words even if you could get the servicers to give up the confidential loan files, there would likely be nothing in them of value, at least for the stated income types of loans. I never could figure out how anyone could pretend to model this stuff when there was no information about the borrowers or the collateral but there must be credit analysts out there who know more than I do (I have been a corporate bond credit analyst and portfolio manager).

Okay, maybe you could get data on at least the properties of say, 30-50 properties for each of the originators (assuming there weren’t too many of those who produced product) and try to do some statistical inference based on that — if you also have market data on the property locations — but this feels a little flaky. I suppose that is where the big distressed MBS investors are starting up, what else can they do? I wonder just how far along they are — remember these guys will also be hampered in their model building because there is not yet alot of longterm liar loan experience.

To Citi I say, good luck. And thank you for doing such poor internal contingent liability risk pricing that allowed you to get into so much SIV product with liquidity backstop agreements. Even if us taxpayers don’t have to bail you out, this was really dumb stuff to do when it was already clear that a dollar crisis was on the way — this will give our trade partners every excuse to give up on the soundness of the United States

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