Comments on: Home Equity Loans: Source of Systemic Risk? http://www.nakedcapitalism.com/2007/12/home-equity-loans-source-of-systemic.html Mon, 23 Nov 2009 07:55:15 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: smiff http://www.nakedcapitalism.com/2007/12/home-equity-loans-source-of-systemic.html#comment-2194 smiff Fri, 07 Dec 2007 11:07:00 +0000 http://www.nakedcapitalism.com/2007/12/home-equity-loans-source-of-systemic-risk/#comment-2194 Felix Salmon just posted this anecdote:<br/><br/>http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/<br/><br/>if this is right - and the implied folly does rather strain credulity - the problem may be comfortably bigger than subprime and home loans put together. Felix Salmon just posted this anecdote:

http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/

if this is right – and the implied folly does rather strain credulity – the problem may be comfortably bigger than subprime and home loans put together.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/12/home-equity-loans-source-of-systemic.html#comment-2192 Anonymous Fri, 07 Dec 2007 05:08:00 +0000 http://www.nakedcapitalism.com/2007/12/home-equity-loans-source-of-systemic-risk/#comment-2192 Re: Numbers two and three on the list – downgrades to monoline insurers damaging municipal credit and counterparty risk in derivatives markets – have been covered in this blog....<br/><br/>Here is an example of County of Santa Cruz holding $13 million in what seems to be an SIV:<br/><br/><br/><br/>The bulk of the remaining SIV assets could be protected by deeper pockets by next week, as pressure grows on Citi to back its Beta Finance, Sedna Finance, and Five Finance programs. Today, Rabobank said it will support its $​7.​6 billion Tango Finance, taking it onto its balance sheet, reports Reuters. "The Tango portfolio is high quality with only minimal exposure to CDOs of ABS," said the bank. HSBC has already said it will support its Cullinan Finance and Asscher Finance programs, and WestLB has pledged to back its Harrier Finance Funding. Standard Chartered, Bank of Montreal are also all expected to support their Whistlejacket Funding and Links Finance programs, respectively. Both SIV assets overall and money market holdings in SIVs have decreased dramatically over the past two months, with SIVs now totalling less than $​300 billion, as programs liquidate or move holdings onto bank balance sheets. See also, today'​s WSJ story, "'​Super Fund' for SIVs". <br/><br/>Re: County of Santa Cruz TREASURER-TAX COLLECTOR 701 Ocean Street, Room 150 P.O. Box 1817 Santa Cruz. California 95061 Fred Keeley Treasurer-Tax Collector reasur ' (831) 454-2450 FAX: (831) 454-2257 April 17,2006 Board of Supervisors County of Santa Cruz 701 Ocean Street Santa Cruz. CA 95060 <br/><br/>Fred Keeley Treasurer – Tax Collector <br/><br/>TREASURY OVERSIGHT COMMISSION Chairperson: Bob Shepherd Public MemberAlternate: L. Scott Osborne <br/><br/>Santa Cruz County Treasurer's Portfolio as of March 31, 2007<br/><br/>http://www.co.santa-cruz.ca.us/ttc/qrep033107.pdf<br/><br/>Whistlejacket12,942,854.175.38%13,000,000.0012,945,010.002.23%40%03/22/0705/01/07A1+ / P1<br/><br/>Re: DESCRIPTION OF INVESTMENT INSTRUMENTS The investment activities of County Treasurers are restricted by state law to a select group of government securities and prime money market instruments. To reduce the risk inherent in any one instrument, state law further limits the percentage of the county's portfolio that can be invested in any one type of security. The types of securities available to the County Treasurer can be divided into three main categories: 1) U.S. Treasury bills, notes and bonds. They are guaranteed by the U.S. Government and are considered to have no credit risk. They also typically have the lowest yield of the securities available for investing. 2) Securities issued by U.S. Government Agencies and Instrumentalities. These securities consist mostly of notes and debentures of agencies and government sponsored corporations. They are not guaranteed by the U.S. government and therefore have some credit risk. Their yield is typically higher than U.S. Treasury securities. 3) Prime money market securities. These consist of securities such as bankers' acceptances, certificates of deposit, commercial paper and municipal bonds. The yield is typically higher than the other types of securities in which the county invests but the risk is also higher. Through diversification and purchasing only highly rated paper, the credit risk is kept to an acceptable minimum. Each of the securities in these three categories is subject to market risk if sold prior to maturity Re: Numbers two and three on the list – downgrades to monoline insurers damaging municipal credit and counterparty risk in derivatives markets – have been covered in this blog….

Here is an example of County of Santa Cruz holding $13 million in what seems to be an SIV:

The bulk of the remaining SIV assets could be protected by deeper pockets by next week, as pressure grows on Citi to back its Beta Finance, Sedna Finance, and Five Finance programs. Today, Rabobank said it will support its $​7.​6 billion Tango Finance, taking it onto its balance sheet, reports Reuters. “The Tango portfolio is high quality with only minimal exposure to CDOs of ABS,” said the bank. HSBC has already said it will support its Cullinan Finance and Asscher Finance programs, and WestLB has pledged to back its Harrier Finance Funding. Standard Chartered, Bank of Montreal are also all expected to support their Whistlejacket Funding and Links Finance programs, respectively. Both SIV assets overall and money market holdings in SIVs have decreased dramatically over the past two months, with SIVs now totalling less than $​300 billion, as programs liquidate or move holdings onto bank balance sheets. See also, today’​s WSJ story, “‘​Super Fund’ for SIVs”.

Re: County of Santa Cruz TREASURER-TAX COLLECTOR 701 Ocean Street, Room 150 P.O. Box 1817 Santa Cruz. California 95061 Fred Keeley Treasurer-Tax Collector reasur ‘ (831) 454-2450 FAX: (831) 454-2257 April 17,2006 Board of Supervisors County of Santa Cruz 701 Ocean Street Santa Cruz. CA 95060

Fred Keeley Treasurer – Tax Collector

TREASURY OVERSIGHT COMMISSION Chairperson: Bob Shepherd Public MemberAlternate: L. Scott Osborne

Santa Cruz County Treasurer’s Portfolio as of March 31, 2007

http://www.co.santa-cruz.ca.us/ttc/qrep033107.pdf

Whistlejacket12,942,854.175.38%13,000,000.0012,945,010.002.23%40%03/22/0705/01/07A1+ / P1

Re: DESCRIPTION OF INVESTMENT INSTRUMENTS The investment activities of County Treasurers are restricted by state law to a select group of government securities and prime money market instruments. To reduce the risk inherent in any one instrument, state law further limits the percentage of the county’s portfolio that can be invested in any one type of security. The types of securities available to the County Treasurer can be divided into three main categories: 1) U.S. Treasury bills, notes and bonds. They are guaranteed by the U.S. Government and are considered to have no credit risk. They also typically have the lowest yield of the securities available for investing. 2) Securities issued by U.S. Government Agencies and Instrumentalities. These securities consist mostly of notes and debentures of agencies and government sponsored corporations. They are not guaranteed by the U.S. government and therefore have some credit risk. Their yield is typically higher than U.S. Treasury securities. 3) Prime money market securities. These consist of securities such as bankers’ acceptances, certificates of deposit, commercial paper and municipal bonds. The yield is typically higher than the other types of securities in which the county invests but the risk is also higher. Through diversification and purchasing only highly rated paper, the credit risk is kept to an acceptable minimum. Each of the securities in these three categories is subject to market risk if sold prior to maturity

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