One not-widely-reported element of this credit mess is the sub rosa role that various organizations have played in shoring up some of the weakened players. Case in point: the Federal Home Loan banks, which during the acute phase of the credit crunch stood in for commercial paper buyers. From an earlier Bloomberg story: The FHLBs […]
Read more...Bernanke may not be touting the SIV rescue plan with the media, but this article in Bloomberg (hat tip Eschaton) suggests that he is supporting the selling effort: Loomis Sayles & Co. declined to invest [in the SIV rescue plan] after receiving one of 16 invitations for a meeting earlier this month with current Fed […]
Read more...For the most part, we don’t pay much heed to the Fed’s daily market operations since the vast majority of it relates to maturing repurchase agreements, and too many commentators focus on gross rather than net injections, which gives an illusory view of the Fed’s actions (yes, we could get to the bottom of this, […]
Read more...Bloomberg, Reuters, and FT Alphaville report that HSBC Holdings, the biggest bank in Europe, will restructure two SIVs whose assets total $45 billion. HSBC’s SIVs had been performing a bit worse than the norm, in part due to the fact that one of them, Asscher, had about 10% of its assets in collateralized debt obligations. […]
Read more...While a number of analysts, investors, and commentators have said for some time that the credit crisis is serious and is likely to damage the real economy, the only views that the Fed takes seriously are those of highly regarded economists, fellow regulators, and senior industry executives (oh, and of course, that of Fed futures […]
Read more...The most successful fund in the “bet against subprime” game is Lahde Capital, established last year by Andrew Lahde, is up 100% after fees. However, the fund is so small that the article in the Financial Time on its results didn’t say how much has under management. Firms that produce such dazzling returns can turn […]
Read more...In an article in today’s New York Times, Yale Professor Robert Shiller makes a very important point: the remedies proposed by the powers that be for the burgeoning housing mess are woefully inadequate: ….our reaction to the current crisis is anemic….The “Super S.I.V.” rescue plan, instigated in October by Henry M. Paulson Jr., the Treasury […]
Read more...Another day, another adverse development in the credit markets, or so it seems. Except now we are getting more than one troubling sighting a day. The latest tidings: liquidity in the credit markets is falling to the point where the European Central Bank has announced it will inject new cash. The underlying cause is worry […]
Read more...This liquidation of a Credit Suisse CDO, Adams Square Funding I (which I missed and a reader called to my attention) isn’t significant in financial terms (it had issued less than $500 million in securities) but shows investor lack of faith in the likelihood of recovery in the underlying assets. In Adam Square’s case, the […]
Read more...Does being a former Fed chairman mean never having to say you’re sorry? In Oslo, Greenspan maintained that the housing bubble was not due to negative real interest rates in the US, but instead was a “global phenomenon.” He is thus arguing that housing price appreciation in various markets resulted from a common source that […]
Read more...Charles W. Calomiris, the Henry Kaufman professor of financial institutions at Columbia’s business school, has an interesting but ultimately frustrating post at VoxEU in which he argues that the trouble we are seeing in the credit markets is not yet a Minsky moment (in very simplistic terms, the point at which an overlevered and highly […]
Read more...Some state governments have implemented programs to rescue mortgage borrowers in danger of losing their homes. Eight states have committed a total of $900 million to these plans, but a Boston Globe article reports that the uptake has been very low, with only 100 families getting refinancings. If you assume an average mortgage of $300,000, […]
Read more...A reader chided me for being late to this story, but it appears not to have been widely covered yet. Moreover, I would hazard that it means less than the out-of-character reporting in the Financial Times suggests (this “leak” is a PR plant). First, the FT article: BlackRock, the asset manager 49 per cent owned […]
Read more...We didn’t pay much attention to the$2 billion investment by Bank of America in mortgage lender Countrywide at the time because we didn’t like it: I will confess I haven’t studied the details of the deal for a simple reason: I’m appalled that B of A would even consider it. The two banks had reportedly […]
Read more...Companies that provide credit enhancements to bond deals, such as monoline insurers MBIA and Ambac, as well as other type os financial guarantors, have come under a great deal of scrutiny of late as the rapid deterioration in certain types of structured finance products had made their guarantees look less solid. However, lowering their credit […]
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