"The bank -- along with JPMorgan Chase & Co. and Bank of America Corp. -- announced the creation of a fund used to help revive the asset-backed commercial paper market. The fund will buy assets from structured investment vehicles, also known as SIVs, which buy corporate bonds and subprime mortgage debt. The bailout was orchestrated by the Treasury Department to avoid a fire sale in the market." http://biz.yahoo.com/ap/071015/wall_street.html http://www.bloomberg.com/apps/news?pid=20601087&sid=aY13ukdFzGSE&refer=home
They'll get the last laugh. You can only toy with this situation for too long. All they're going to do is make this snowball unstoppable. They thought the Titanic was un-sinkable
This is similar to what Enron was doing. Enron set up partnerships that they funded and controlled to do business with Enron. You canât make money selling to yourself. What is proposed here is for the Banks (Enron) to set up a Fund (partnership) to buy debt from the Banks but more importantly set a market value for the debt so as to limit loses of the Banks (Enron) or perhaps even book profits as the values are applied to the trillions they are exposed to through derivatives contracts. Creating an artificial value for the debt of the banks own will then support many hundreds of billions in valuations for the banks. It's like when a house sells in a subdivison, it provides a benchmark value for other similar homes.. They don't have to buy all the debt, just enough to support the values they have on the books. John
my understanding is citigroup is on the hook the most...ie - they have the most exposure. they quarterbacked this whole thing and also, surprise surprise, began upgarding a number of homebuilders last week (despite acknowleding the bottom is nowhere to be seen). these guys are pigs..