Monday, November 26, 2007

The Master-Liquidity Enhancement Conduit

The big guys try to talk the little guys into signing on. The little guys are having none of it. Bloomberg (11.26.07), via Eschaton:
"Bank of America Corp., the nation's second-largest bank, will lead efforts by Citigroup Inc. and JPMorgan Chase & Co. to convince smaller competitors to help finance an $80 billion bailout of short-term debt markets."

Bank of America Takes Lead in Backing `SuperSIV' Fund

"The 'SuperSIV' fund [ed. - Duncan calls it the Super Shitpile], backed by U.S. Treasury Secretary Henry Paulson, would buy assets from so-called structured investment vehicles, whose $300 billion of holdings include corporate and mortgage debt in danger of default."

There is some skepticism, to say the least. "Analysts including Richard Bove of Punk Ziegel & Co. have criticized the proposal because it may saddle new participants with losses created by their bigger rivals."

"'Why should we put something on our balance sheet that is going to result in further writedowns?' is how most contributors will respond, Bove said in an interview. 'The job of the Treasury isn't to go out and defraud investors.'"

"Loomis Sayles & Co. declined to invest after receiving one of 16 invitations for a personal meeting last week with current Fed Chairman Ben Bernanke, said Daniel Fuss, who oversees $22 billion as chief investment officer at the Boston-based firm. The Securities Industries Financial Markets Association trade group extended the invitations, Fuss said."

This is priceless. "'It's so nice to get a personal invitation to go to Washington and have a one-hour visit with Ben Bernanke,' said Fuss, who decided participating wasn't worth the risk to his firm. 'Oh, boy, did I feel important for about 27 seconds, and then you smell a rat.'"

Labels: ,


Post a Comment