The inner and even not-so-inner workings of the Beltway frequently escape me. Nevertheless, a complaint made by Charles Schumer, chairman of the Joint Economic Committee, in an interview with the Financial Times, seems truly bizarre. Schumer moans that Paulson isn’t doing enough to help with the subprime crisis because his hands have been tied by […]
Read more...Three thousand banks recently participated in trying to assess the impact of a pandemic on their operations and determine what they could do to cope. The results make for sobering reading, yet is it doubtful that organizations that were not involved in this program will take heed. While the financial services industry is making contingency […]
Read more...This article by George Monbiot, “Libertarians are the True Social Parasites,” is priceless. It illustrates the sort of behavior discussed in longer form in Dean Baker’s book, The Conservative Nanny State, namely, of diehard critics of government intervention who nevertheless want a handout when their enterprise goes bad. Note I refrained from including the extensive […]
Read more...Bloomberg reported that an SIV, called Hudson-Thames Capital Ltd., operated by a subsidiary of MBIA, the world’s largest bond insurer, was having trouble securing funding. Note that Hudson-Thames has not yet breached any financial tests. MBIA has only a modest financial exposure, $15.8 million of capital notes; the bigger issue is the possible damage to […]
Read more...We noted yesterday that we had reservations about Countrywide’s announcement that it was launching a program to modify terms on up to $16 billion of mortgages, However, the stock market appears to believe the initiative will have some impact, since its stock fell 4% today. CNBC (hat tip gaius marius), the Wall Street Journal, and […]
Read more...Hank Paulson must be very unhappy with the Wall Street Journal. While the newspaper briefly fell into line and issued one story that reported that the his pet project, the structured investment vehicle rescue plan, was getting traction, pretty much all its news coverage coverage has been skeptical, and its editorial comments have been downright […]
Read more...The Financial Times reports that rates in the interbank money market are well above normal levels, indicating considerable lender worry, and that the effect of the announcement of the SIV rescue plan appears to have more than offset the anticipation of further interest rate reductions by the Fed. From the Financial Times: The cost of […]
Read more...Countrywide, a leading player in subprime lending, has announced that it may modify terms on as much at $16 billion worth of loans before the end of 2008. I am enough of a skeptic about Countrywide to wonder what this move really signifies. However, the stock market seems to be taking the program at face […]
Read more...I’m late to a very useful tidbit on the structured investment vehicle front, and will also provide an update on the continuing skepticism regarding the proposed rescue plan, the Master Liquidity Enhancement Conduit, the MLEC (aka The Entity). The Financial Times via its Alphville blog, provided a chart and some commentary on SIVs from the […]
Read more...A wry and informative article, “Slicing and dicing risk rebounds on banks,” by John Dizard at the Financial Times tells us that newfangled investment vehicles considered to be a good thing because it moved risk assumption away from large banks (and therefore ultimately central banks) to the wealthy. But Dizard explains the rich were too […]
Read more...Rising defaults across a range of debt products confirm that credit woes are not just a subprime affair. Stories in the New York Times and the Financial Times focus on different aspects of this problem. The Times tells us that collateralized debt obligations, complex structured credits that can contain tranches of other structured credit deals, […]
Read more...On Friday, a Reuters story reported, ultimately based on a statement by Treasury Secretary Henry Paulson, that bond giant Pimco has decided to join the SIV bailout plan. The news seemed odd at the time, since Pimco’s co-chief Bill Gross had labeled the plan as “lame” and Pimco has just about zero presence in the […]
Read more...By an interesting happenstance of timing, Barclays and the Royal Bank of Scotland have announced the establishment of $30 billion of facilities between them from the Federal Reserve. The Fed approved this move 10 days ago but it came to light only over the weekend. Both banks said these applications were unrelated to the SIV […]
Read more...A reader question got me to work through a back of the envelope calculation of what the SIV rescue plan, the so-called Master Enhanced Liquidity Conduit, would buy for its chief beneficiary, Citigroup. What I came up with gives cause for pause. It’s one thing to know in a general way that a proposal is […]
Read more...Last Sunday, we made this observation about the SIV rescue plan, the so-called Master Liquidity Enhancement Conduit (MLEC), sponsored by Citigroup, JP Morgan, and Bank of America: Yesterday, we voiced doubts that this program could get done. Now that we understand that the primary goals is legerdemain, we think that it is likely that some […]
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