Die Bear Stearns Saga geht in eine neue Runde.....nett zu sehen das der Hebel nur bei 10:1 lag.....da das Vehikel der ABS Finanzierung vermehrt an Fahrt gewinnt dürften wir in den nächsten Jahren noch genügend verglecihbares erleben.
After the first cracks in the subprime mortgage business appeared late last year, several large lenders were forced into bankruptcy
Now, the stress is sending tremors down Wall Street, as investment funds that bought a stake in those loans are starting to wobble.
Industry officials say they expect this second act to be longer and slower, unwinding over the next 12 to 18 months. The fallout could further constrict consumers with weak, or subprime, credit while helping to prolong the housing downturn.
On Wall Street, the impact could be far more significant: It could force banks, hedge funds and pension funds to acknowledge substantial losses, which had been tucked away in complex investment vehicles that are hard to evaluate. In turn, that could limit the money available for mortgage lending.
Yesterday, two hedge funds operated by a division of Bear Stearns, an investment bank that is a dominant player in mortgage bonds, fought for their survival as three lenders — Merrill Lynch, Citigroup and JPMorgan Chase — asked Bear Stearns to put up more capital.
The funds appeared to have won a reprieve after executives at Bear Stearns Asset Management told creditors that they had lined up $500 million in new capital from a consortium led by Citigroup and Barclays, the British bank, according to a person who had been briefed but was not authorized to speak publicly. Last week, the fund sold about $3.6 billion in high-grade securities backed by subprime mortgages.
The leveraged fund, which had raised $600 million in investments when it was started 10 months ago, leveraged itself, or borrowed, about $6 billion from numerous Wall Street banks and brokerage houses. When losses began mounting this spring, some investors stepped forward to redeem their money. In May, the fund stopped allowing redemptions......
The riskiest portions of mortgage bonds — which also hold the promise of higher returns — are held by a small group of investors. The biggest holders of that risk are investment funds known as collateralized debt obligations, or C.D.O.’s.
The holdings of these funds, which are once or twice removed from the underlying loans, are often hard to value because it is often unclear what portion of a bond they may own.....