This pointer came from a reader: the largest enhanced cash fund, Columbia Funds Strategic Cash, has halted redemptions, which had taken the fund down from $40 billion to $33 billion over several weeks. However, this report has not been confirmed by the fund manager, Columbia Management, nor has it been picked up by any of […]
Read more...Once again, another example of the Wall Street Journal basically printing a press release and calling it a story, as contrasted with the Financial Times, which did some real reporting. The object lesson today is the latest news on the SIV rescue plan, which has retreated from the limelight as the Treasury’s other brainchild, the […]
Read more...The quality of debate in America has become so debased that for the most part we have become desensitized to the use of ad hominem attacks. In logic and rhetoric, an ad hominem argument, which attempts to discredit the person mounting the criticism, is considered invalid, since the substance of the charge has not been […]
Read more...Two Bloomberg stories discussed the conflicting currents in the short term markets. First on the reduced expectations of a large Fed funds rate reductions: Futures contracts on the Chicago Board of Trade indicated a 24 percent chance that policy makers will lower the 4.5 percent target rate for overnight lending between banks by a half- […]
Read more...Dear readers, I had wanted to go through the geeky American CoreLogic Mortgage Resets study, which gives mind-numbing detail on what type of mortgages reset when to come up with a more refined guesstimate of how many borrowers might be eligible for the formerly-Paulson, now Administration subprime program. The Administration claims its program could help […]
Read more...Minyanville has a post on three potential sources of systemic risk that have been largely overlooked by the media and in the markets. 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. But the first, the impact […]
Read more...Duh. Note how, nevertheless, S&P bends over backwards to look supportive…. From Bloomberg: U.S. Treasury Secretary Henry Paulson’s plan to freeze some subprime mortgage rates in an effort to stop a wave of foreclosures may lead to ratings cuts on some mortgage bonds, Standard & Poor’s said. “Simply freezing interest rates on some U.S. first-lien […]
Read more...As some cynics speculated, the subprime freeze proposal, scheduled to be unveiled early this afternoon, got a considerable push from worries about legislation sponsored by Barney Frank which would have allowed judges in bankruptcy some ability to change mortgage terms in bankruptcy. Note that these proposed rules merely put consumers on the same footing as […]
Read more...Events have overtaken the SIV rescue plan brokered by the Treasury Department and sponsored by Citigroup, Bank of America, and JP Morgan. The concept, first announced as a way to unfreeze the commercial paper market, is now being depicted as providing only modest benefits, namely, giving bank sponsors more time to sell the vehicles’ assets, […]
Read more...David Gaffen at the Wall Street Journal’s MarketBeat blog found some information showing why subprime borrowers lose their homes via foreclosure. The data is from a Countrywide presentation at the Bank of America investing conference, courtesy Peridot Capitalist: Causes of Foreclosure (July 2007) 58.3% Curtailment of income13.2% Illness/Medical8.4% Divorce6.1% Investment property/Unable to sell5.5% Low regard […]
Read more...Yesterday we fulminated at the failure of the Treasury Department to include mortgage counselors, one of the constituencies in the original Hope Now Alliance, in the efforts to craft a plan a to salvage subprime borrowers facing resets. This was a major oversight since the counsellors will play an essential role in gathering information from […]
Read more...The inching towards a downgrade of the monoline insurers continues. As most reader likely know, the so-called monolines provide credit enhancement to various credit products, historically very low risk ones (state and municipal bonds) and in recent years have ventured into more speculative territory. As we’ve noted before, the rating agencies are faced with a […]
Read more...Just as some companies seem to be recidivists as far as getting into financial trouble is concerned (Citi, First Boston before it was finally absorbed by Credit Suisse), so to are some investors. Orange County’s latest escapade apparently isn’t as serious at the one visited upon them by former treasurer Robert Citron, namely, $1.6 billion […]
Read more...According to Bloomberg, there was a banking confessional of sorts in Parliament: Citigroup Inc., the biggest U.S. bank by assets, lost more money than it made from financial instruments based on U.S. subprime mortgages, a senior company executive said in a meeting at the British Parliament. William Mills, chief executive officer of Citigroup’s markets and […]
Read more...This story on the sentiment among traders appeared on Bloomberg this afternoon. It appears the Fed’s bout of hawkishness was awfully short lived, since the latest move is in reaction to Kohn’s and Bernanke’s latest statements, plus the rising in dollar Libor, which is now 65 basis points over the Fed funds rate. The 50% […]
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