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...Chairman of the House Financial Services Committee Barney Frank has proposed legislation to tighten up practices in mortgage lending. Because Frank is more interested in substance than most legislators, his draft has elicited howls from the usual suspects, no doubt a strong indication that it is on track. Frank’s general aim is to create clearer […]
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...The Financial Times reports that the G-7 meetings this weekend did not even address one of the two main issues on the agenda, the dollar, and along with the concurrent IMF meetings, featured a good deal of acrimony and disarray. Exactly what you don’t need with a crisis looming. From the Financial Times: After Friday’s […]
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...The International Herald Tribune gives a particularly interesting report on a semi-annual meeting hosted in Washington by the IMF and World Bank. It illustrates that the influence of the US and of US sponsored institutions is waning. One item mentioned in other reports on these meetings is the concern with the impact of food inflation […]
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 […]
Read more...Marguerite Yourcenar’s Memoirs of Hadrian contains a stunning line: “I begin to discern the profile of my death.” The news of this evening has given me the perhaps mistaken impression that the end game of this credit crunch is similarly coming into view. Before, it seemed an open question as to what measures would be […]
Read more...Greenspan has at points proven to be the bane of Bernanike’s existence. Now it appears Paulson is getting a dose of the same. A reader pointed us to this article in Emerging Markets, which features an exclusive interview with the former Fed chairman Alan Greenspan. The Maestro warned that the SIV rescue program, the so-called […]
Read more...The Wall Street Journal and the New York Times report that Citigroup obtained funding through the end of the year for $80 billion of SIVs (for background, please see here and here). This development is newsworthy, since Citigroup had indicated it faced a crunch in November as commercial paper funding SIVs mature, yet the widely […]
Read more...In the Financial Times, Avinash Persaud, an emeritus professor at Gresham College and a director of Global Association of Risk Professionals. offers some sensible recommendations for regulating rating agencies, first, standardizing their ratings definitions and second, changing the rating agencies’ incentives (although this idea is not spelled out in sufficient detail). What is perhaps most […]
Read more...Courtesy Calculated Risk, here is a MarkIt chart showing the latest tumble in the ABX (the chart in question is of the HE-BBB-07-2, a proxy for recent vintage BBB- subprimes): This plunge is troublingly parallel the past falls in February and July. Here is a quote from a Wall Street Journal article in July, the […]
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