Thread: Hedge Fund Collapse

Treasury officials seek to help battered SIVs
Treasury officials are looking into ways to help investment vehicles called SIVs that have been battered by this summer's credit crisis, sources familiar with the situation said on Friday. Big banks, including Citigroup Inc, are discussing a plan to pool together and financially back as much as $100 billion in these investments, which include mortgage securities. Treasury representatives met about two weeks ago with sponsors of these vehicles, Wall Street banks and investors to discuss "how to alleviate some of the issues in the SIV market," one source informed of the meeting by participants said. SIVs are investment vehicles that raise cash by issuing short-term debt called commercial paper and use the proceeds to buy higher-yielding securities, often tied to U.S. mortgages. The vehicles, often set up by banks, make money by pocketing the difference between their funding costs and investment returns. One plan that was discussed at the meeting involved setting up a "super fund" where "each SIV in the market could pledge up to one-third of its assets and get financing," the source said. A government source also confirmed that there is a Treasury initiative to ease funding costs in the SIV market. U.S. treasury Secretary Henry Paulson is scheduled to speak on Tuesday in Washington on home ownership, mortgage markets, and the U.S. economy. The investment vehicles have been unable to sell new commercial paper for months as investors fearful of contagion from subprime mortgages have shunned most types of asset-backed commercial paper. As a result, many SIVs have run into trouble. Treasury officials also separately met with Wall Street bank treasurers a few days after the SIV meeting to discuss the state of the U.S. asset-backed commercial paper market, the source said.

http://news.yahoo.com/s/nm/20071013/...QcdfuLHIwE1vAI

Well, certainly a mistake to pitch them to me. I was approached about an offshore hedge fund, but maybe another motive at work.

So -- I take it you're in the same Sub-5mil boat as the reset of us TSP investors, Gail.
Good luck.
Brian.

I would like to hear opinions on the banks coming together to supply liquidity for the sub-prime mess (commercial paper). What should we take from this? Another band-aid on the problem? Or do you think they have a genuine buisness plan that could actually work?

tia
Debbie

Originally Posted by wv-girl

I would like to hear opinions on the banks coming together to supply liquidity for the sub-prime mess (commercial paper). What should we take from this? Another band-aid on the problem? Or do you think they have a genuine buisness plan that could actually work?

tia
Debbie

You can bet that there is a profit motive involved in the banks move. No noble motive, they will refi those that can, and foreclose those that can’t. They will make money. The amounts that have been kicked around do not seem sufficient to cover the subprime mess, I don’t think it’s enough to make the problem go away. Band-aid would be a good description, and it's for a major hemorrhage.

What amazes me is they (the investors and builders) continue to slap track houses together seemingly everywhere, despite this crisis.

I guess all those folks foreclosed upon are going to need some place to RENT sooner or later.

Damn slum lords.

http://www.rgemonitor.com/blog/roubini/220816/

Nouriel Roubini's Blog
Super-Conduit or Super-Bailout Shell Game?


Roubini can be.....well a downer, but he does give some insight without the talking head spin we get from many other sources.

On the flip-lighter side of that complex article, we're all going to get a great buying opportunity on today's $400K homes in just a couple years; or less.

Originally Posted by Oldcoin

http://www.rgemonitor.com/blog/roubini/220816/

Nouriel Roubini's Blog
Super-Conduit or Super-Bailout Shell Game?


Roubini can be.....well a downer, but he does give some insight without the talking head spin we get from many other sources.

European hedge funds have been forced to introduce emergency measures to protect their businesses from collapsing in the wake of the turmoil in financial markets. Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

http://business.timesonline.co.uk/to...cle3256253.ece

Originally Posted by Bullitt

European hedge funds have been forced to introduce emergency measures to protect their businesses from collapsing in the wake of the turmoil in financial markets. Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.

http://business.timesonline.co.uk/to...cle3256253.ece

There was a related story on the subprime mess on "60 Minutes" last night .. they were trying to explain how we got into this mess and what to expect from here. The impression I got was that we haven't seen the end of this yet, expect more pain in the future.

One guy they interviewed said that, and I'm paraphrasing, "Yes, we have the situation contained - it seems be confined solely to Planet Earth."

Where it all began on that hot summer day with BSC's announcement that a hedge fund was in distress. I keep hearing that the bottom won't be in until some major players go under. Carlyle group is toast, and BSC might be as well. Love it or hate it, the bailout is necessary for the long run. Let's just hope there aren't any additional collapses on the horizon. I'm worried about Lehman and Merrill, but glad to see GS taking a hit for once.

http://biz.yahoo.com/ap/080314/bear_..._q_a.html?.v=1