Thursday, February 05, 2009

Revisiting The Bear Stearns / Maiden Laine Portfolio......A Foretaste Of What To Expect From The "Bad Bank".......

I expect similar outcomes when Geithner is coming up with "cash for trash" overpaying for highly inflated assets & probably leaving the bondholders without any or a significant haircut..... .... See also Bad Bank, Bad Pricing.... & the Update from Naked Capitalism......On top of this add the populism ( see Confirmed: Executive Pay Caps Are A Joke ) from Obama and it is clear that this is change we can´t believe in..... UPDATE: Excellent rant David Sirota: "Obama's Team of Zombies" (Updated: Frank Rich on Geithner) via Naked Capitalism

Denke das dieses Beispiel schon einmal vorwegnimmt was uns ( STEUERZAHLER ) die Bad Bank bringen wird...... Siehe auch Bad Bank, Bad Pricing.... sowie das Update von Naked Capitalism. Das ganze wird noch unerträglicher wenn selbst der Heilsbringer Obama sich immer mehr als ganz gewöhnlicher Populist herausstellt ( siehe Confirmed: Executive Pay Caps Are A Joke ). Bisher muß man bei Ihm leider das Fazit ziehen das eher der Spruch "We Can´t" angebracht ist...... Wenn man sich Leute wie Geithner ins Boot holt muß einen das allerdings auch nicht weiter wundern....... UPDATE: Traurige Bestandsaufnahme von Anspruch und Wirklichkeit David Sirota: "Obama's Team of Zombies" (Updated: Frank Rich on Geithner) mal wieder via Naked Capitalism

Structured finance paramnesia, Bear Stearns edition FT Alphaville

The transaction was not structured with adequate over- collateralization…
Ever was it so.

Point in case: the Maiden Lane/Bear Stearns portfolio, which, since June, has declined by $4.22bn in value. See Bloomberg’s Chart Of The Day.

> Make sure you see the chart ( Go to the GRAPHIC icon ). And it is safe to say that things will get worse.......

> Der Chart ist einen Blick wert ( Auf das Icon Graphic klicken ) . Und es so ncht mutig zu behaupten das die Verluste weiter dramatisch ansteigen werden....

The “equity” tranche of the Maiden Lane deal, by which JP Morgan takes the first hit on any losses, was, at $1.15bn, a pretty flimsy sliver of subordination, even by 05′ vintage CDO standards. And of course, it has been far overrun by the current losses, which are now eating into the Fed/taxpayer-owned tranch.

Amid swap lines and liquidity facilities of many tens, if not hundreds of billions, it’s easy to dismiss $4.22bn as a drop in the ocean. But forget not that we’re talking pure credit risk for the Fed here. These are unchartered territories.

Keep smiling:

The central bank’s Board of Governors wrote in a Dec. 29 report to Congress that it didn’t expect “any net loss to the Federal Reserve or taxpayers” from the Bear Stearns holdings.


Yves Smith over at Naked Capitalism has a scathing criticism of the Obama Administration’s plan to fix the nation’s banks.

“The Obama Administration is as obviously and fully hostage to the interests of the financial services industry as the Bush crowd was. We have no new thinking, no willingness to take measures that are completely defensible (in fact not doing them takes some creative positioning) like wiping out shareholders at obviously dud banks (Citi is top of the list), forcing bondholder haircuts and/or equity swaps, replacing management, writing off and/or restructuring bad loans, and deciding whether and how to reorganize and restructure the company. Instead, the banks are now getting the AIG treatment: every demand is being met, no tough questions asked, no probing of the accounts (or more important, the accounting).”


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Banker Bashing Gives Cover to Far Bigger Culprits: David Reilly

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