A Match Made In Subprime Hell

Just in time for both total auto loans and total student debt outstanding to top the $1 trillion mark, we get a match made in FICO hell as the subprime lending unit of AIG Springleaf, has purchased OneMain, another subprime lender that’s been relegated to Citi’s Citi Holdings trash bin for years. The deal creates a subprime lending powerhouse with some $14 billion in possibly-not-toxic receivables.

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They can be handcuffed, they can be given coffins, they can be parachuted, they can be bungee’d, they can be life-jackets, they can be a hello and they can have their hands shaken. What are we talking about? Well, all of these things seem to have one thing in common, they are golden!

Subprime ABS Securitizations Are Back As Absolute Worst Of The Credit Bubble Returns

Back in 2007, at the peak of the credit and housing bubble, Wall Street knew very well the securitization (and every other) party was ending, which is why the internal names used for most of the Collateralized Debt Obligations - securitized products designed to provide a last dash trace of yield in a market in which all the upside had already been taken out - sold to less sophisticated, primarily European, investors were as follows: "Subprime Meltdown," "Hitman," "Nuclear Holocaust," "Mike Tyson's Punchout," and, naturally, "Shitbag." Yet even in the last days of the bubble, Wall Street had a certain integrity - it sold securitized products collateralized by houses, which as S&P, and certainly Moody's, will attest were expected to never drop in price again. But one thing that was hardly ever sold even in the peak days of the 2007 credit bubble were securitizations based on personal-loans, the reason being even back then everyone's memory was still fresh with the recollection that it was precisely personal-loan securitization that was at the core of the previous, and in some ways worse, credit bubble - that of the late 1990s, which resulted with the bankruptcy of Conseco Finance. Well, in a few short days, those stalwarts of suicidal financial innovation Fortress and AIG, are about to unleash on the market (or at least those who invest other people's money in the absolutely worst possible trash to preserve their Wall Street careers while chasing a few basis points of yield) the second coming of the very worst of the last two credit bubbles.

Daily Highlights: 12.16.09

  • Asian stocks rise, led by Japanese financial companies; Dollar strengthens.
  • Australia's Q3 GDP grew 0.2%- showing growth momentum isn't yet self sustaining.
  • FDIC in 2010 plans to add more than 1,600 staffers, mostly to handle bank failures.
  • India to levy antidumping duties of as high as more than 3x the value on some Chinese telecommunication equipments.
  • Senate rejects plan to import low-cost drugs.
  • Sugar jumps to highest price since 1981 in New York on deficit concerns.
  • US Industrial output rises 0.8% - most in three months as recovery gains speed.

Paulson Adds $1.5 Billion Of Citi Stock, Sells Entire Goldman Stake And Some Bank Of America

The latest Paulson & Co. 13F is out: the man who inspires a million hedge fund clone portfolios has made some interesting changes to his holdings. The most notable is the documented addition of 300 million shares of Citigroup, a new position for the firm. Offsetting this is the sale of 8.2 million shares of Bank of America (which at 160 million shares is still the firm's second largest holding). Paulson has also divested his entire 2MM share Goldman Sachs stake.

Paulson Buys 9.9% Of Insurer Conseco

After making repeated killings as a short (and being compensated for it), John Paulson is now actively looking for undervalued long opportunities (that are not misreported by the NYPost). Such seems to be the reasoning behind his latest disclosed involvement in insurer Conseco, where he is now the proud owner of 9.9% of the common stock after a $280 million investment.

Daily Highlights: 7.30.09

  • Alcatel-Lucent swung to a net profit of €14M ($19.6M) vs. a year-ago loss of €1.1B.
  • Ambac Fincl expects Q2 impairment losses on credit derivatives to rise by ~$1.6B to $4.9B.
  • BAE Systems swung to 1H loss of $134M; revs jump 28%.
  • British American Tobacco H1 profit up 16 pct to 1.45 billion pounds.
  • British Sky Broadcasting posts a solid fourth-quarter net profit.