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’ve been having too much fun on other fronts to spend much time on Merrill’s stunning announcement of $8.4 billion in losses for the quarter, which came from a combination of operating losses and writedowns. The reason we’ve taken particular interest in this earnings announcement, aside from the magnitude of the red ink, is that […]
Read more...This invaluable consumer information comes to us courtesy Katie Porter Credit Slips. I think I know what most readers would rather buy…. From Credit Slips: Question: What do phone sex and mortgage servicing have in common? Answer: They both cost $9.99 a minute. This isn’t a joke. It’s a real-life example of the difficulties that […]
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...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 […]
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