HSBC to provide $35 billion in funding to SIVs

Discussion in 'Wall St. News' started by ASusilovic, Nov 26, 2007.

  1. LONDON (MarketWatch) -- HSBC Holdings on Monday said it would move two of its structured investment vehicles onto its balance sheet and provide up to $35 billion in funding, saying it doesn't expect a near-term resolution of the funding problems faced by the vehicles that it and other banks hold.
    In a structured investment vehicle, short-term commercial paper is issued, with the bank then re-investing the proceeds in higher-yielding, and longer-maturity debt. Because of the spillover from the U.S. subprime mortgage lending crisis, investors have been reluctant to buy the commercial paper that these vehicles depend on.}&dist=hplatest

    Never-ending story...
  2. I am not sure there is really a problem here, more of an opportunity for people that seek panic and hysteria.

    The Savings and Loan crisis of the 1980's appears to me to be similar to the current subprime mortgage crisis:

    "In an effort to take advantage of the real estate boom (outstanding US mortgage loans: 1950 $55bn; 1976 $700bn; 1980 $1.2tn) and high interest rates of the late 1970s and early 1980s, many S&Ls lent far more money than was prudent, and to risky ventures which many S&Ls were not qualified to assess."

    As I recall the Dow Jones Industrial Average value increased and decreased during the 1980's much as it did in earlier times. Some stocks showed large price increases during that period (examples MSFT, PEP, MRK).

    I expect the people of the world to survive this subprime mortgage crisis just as we survived other crises. Likely Governments will absorb the losses and inflate the currency to pay costs.

    I find this part of the Wikipedia article interesting:

    "Neil Bush was director of Silverado Savings and Loan when the institution collapsed in 1988, costing taxpayers $1.6 billion. Neil Bush was accused of giving himself a loan from Silverado with the cooperation of Ken Good, of Good International, although Bush stated it was not a conflict of interest.[citation needed] Neil Bush is a brother of President George W. Bush."