Leave the SIV, take the cannoli
October 16, 2007 4:24 PM Subscribe
posted by Asparagirl (82 comments total)
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At a time when fed-up American citizens are petitioning Congress
to end the imprudent financial practices that caused the
housing bubble sub-prime mortgage crisis liquidity crisis
impending recession -- including the banning of SIV's
and refusing any bailouts
for Wall Street, banks, or mortgage companies -- the United States Treasury Department has just announced
the creation of a giant-mega-ultra SIV called "M-LEC" made up of assets from several of the largest American banks. Already unofficially nicknamed "Sivie Mae" (or worse, "the Frankenstein Fund"
), it would be an off-balance-sheet way for these banks to pool and price the ABCP
's that they've lately been having trouble pricing and thus selling -- i.e. the liquidity crisis.
But one financial blogger looks at this odd occurence using the film "The Godfather" as a reference point
and concludes that something fishy is going on with Citibank
, in particular. Phrases like "smoke and mirrors"
and references to deck chairs on the Titanic
are being thrown around the blogosphere
. The suspicion
grows: is the real problem facing these "too big to fail" banks "just" a temporary one of liquidity...or one of solvency? As Don Corleone might say, this wacky pseudo-bailout idea might be an offer that the Treasury Department can't refuse.