Archive - Mar 2009 - Story

• The Big Takeover (Rolling Stone)
• Krugman: The Zombie ideas have won (New York Times)
• Ken Rogoff: The worst is yet to come (PBS)
• Jeremy Bulow: Fix the banks by focusing on liabilities not assets (Vox)
• Buite
  

• The Big Takeover (Rolling Stone)
• Krugman: The Zombie ideas have won (New York Times)
• Ken Rogoff: The worst is yet to come (PBS)
• Jeremy Bulow: Fix the banks by focusing on liabilities not assets (Vox)
• Buite
  

The greatest bait and switch of this generation in all its visual splendor. As a result of the TALF's non-recourse/non-margin nature, a hedge fund X can buy Bank X's MBS Portfolio which is marked on the bank's books at 80 cents on the dollar (but has a market price of 20 cents) for the marked price with a 3% equity check and TALF filling the balance.

The greatest bait and switch of this generation in all its visual splendor. As a result of the TALF's non-recourse/non-margin nature, a hedge fund X can buy Bank X's MBS Portfolio which is marked on the bank's books at 80 cents on the dollar (but has a market price of 20 cents) for the marked price with a 3% equity check and TALF filling the balance.

As I dug a little more into the mystery of the amended Bloomberg headline discussing FDIC's travails, some interesting facts came up.

In response for requests for information on where the capital markets objectively evaluate commercial mortgage backed securities, and also to demonstrate the recent knee jerk reaction of how CMBX spreads ripped wider once it became clear older vintage, sub-AAA would not be eligible for TALF 1.0 participation, I am presenting the recent trading levels of CMBX 1 through CMBX 5, segregated by tranching (rule of thumb: the higher the chart line, the lower the underlying value, the more MTM pain for sellers of the CMBX tranche i.e. banks).

As Zero Hedge wrote previously, the TALF in its current formulation is merely a lot of hot air as it provides an incentive to buy assets that nobody really cares about (AAA-backed, newly issued "securitized" equivalents).

As Zero Hedge wrote previously, the TALF in its current formulation is merely a lot of hot air as it provides an incentive to buy assets that nobody really cares about (AAA-backed, newly issued "securitized" equivalents).