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The Biggest Beneficiary Of Mario Draghi's ABS-Purchasing Plan Has Been Revealed
So far the ECB's attempts to stimulate the Eurozone economy with relentless jawboning have been a failure as absent the GDP boost from "drugs and prostitution", Europe would be in a triple-dip recession by now. Furthermore, while its recent foray into covered bond purchases is commendable, the lack of freely floating assets available for purchase has meant that the central bank has been limited in buying up to a paltry €3 billion in covered bonds weekly as we learned most recently yesterday:
And while the world debates if the ECB will finally unleash government bond QE, or not over the resistance of the Bundesbank and in direct contravention with the ECB's mandate to not engage in government monetary financing (in Draghi's own words), there remains one last wildcard: the previously announced purchases of ABS securities. The problem here, however, is that even the ECB itself is not sure what it can and can not monetize, having changed its eligibility criteriea at least twice already as reported in "The ECB Changes Its Mind Which Bonds It Will Monetize, Then It Changes It Again." That and the now generic issue plaguing Europe: an insufficient amount of securities available to buy to make much of a dent in the ECB's planned €1 trillion balance sheet expansion.
And yet one bank is already set to benefit from the ABS program no matter what its actual outcome and impact on the European economy: the same bank that spawned none other than ECB's head... Mario Draghi. According to Bloomberg, Goldman Sachs Group says it’s adding staff to its European asset-backed securities business as the bank prepares for a resurgence in the $305 billion market that shrank more than 40 percent over the past four years.
New securities will be generated as hedge funds and private equity firms seek to repackage debt as they enter the direct lending market, according to Simone Verri, who is co-head of financial institutions group financing at Goldman in London. Investors buying bad loans from the region’s banks will also want to securitize the assets, he said.
Why? Because the ECB is there as a backstop and will buy the worst of the worst as it rushes to become Europe's bad bank, pardon bad hedge fund.
“We have invested a lot in this opportunity by hiring more people, especially for ABS structuring,” said Verri, a partner at the New York-based investment bank. “The specialty finance players and quasi-banking sector could use ABS to fund loan origination and that’s a very attractive commercial opportunity in the medium term.”
“Buyers of loan portfolios need financing and they can get that either from an investment bank or eventually via selling ABS backed by these loans,” said Verri. “This could be an important development as non-performing loan disposals will improve banks’ balance sheets and risk capital.”
And just so there is no confusion, the ECB's ABS purchase program may be good for Goldman; others? Not so much.
While the program signals the ABS market has been rehabilitated after being blamed for worsening the financial crisis, its impact on bank lending will be limited, said Verri. “Many European banks are capital constrained, so I don’t see the ECB’s ABS purchase program necessarily as a game changer,” said Verri. “It doesn’t address capital needs and therefore it doesn’t necessarily unlock credit origination.”
In other words, the stated purpose of the ECB's buying of ABS, "unlocking credit origination" will not succeed. It will however succeed in making Goldman richer as it branches out to cover yet another riskless market.
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I am Jack's complete lack of surprise.
-TD
how have they not arrested this guy yet
It is a testament to the general goodness of humanity that these elitist parasitic trash have not long ago been systematically been sent back to hell where they came from.
Because they are doing God's work (that and they own everybody). I know this because they said so.
Loki?
When you need fraud at its finest, "who ya gonna call".
"God's banker" of course ...
"Because the ECB is there as a backstop and will buy the worst of the worst as it rushes to become Europe's bad bank"
Really?
Germans signed off on this?
that is what i thought
Boy, it's a good thing there's no conflict of interest between Draghi and Goldman.
Gollum Ballsacs with it's blood funnel into everything.
Goldman will not be bailed out in europe. they will have to eat it all when the euro assets go south. Unless they think the Fed will buy up their euro assets.
" they will have to eat it all when the euro assets go south" ... LOL
If it gets bad enough, they'll just activate Dodd-Frank and keep their customer's money.
The system literally is set up so the banks can't lose, period, unless the USD dies completely.
Meanwhile Putin had this to say as ther German Foreign minister visits moscow
"They (United States) do not want to humiliate us, they want to subdue us, solve their problems at our expense," Putin told a meeting with a core support group, the People's Front, triggering loud applause. "No one in history ever managed to achieve this with Russia, and no one ever will."
It's good to be king.
~The Vampire Squid
Off with his head!!
-the proles
Goldman is "The New World Order".
Goldman is "The Current World Odor".
Another thought too.
MY GOD the Sheeple are in for a big surprise one day lol
What, what were you saying? I was busy looking for Kardouchean photos as she break the internet.
The only assets backing those securities are the lives of regular people and their children, which is the way these vampires want things.
I hope this is a wake up call to german voters. They are the only ones that can stop this madness.
They will not stop it because 3 to 5 % of the german population know whats going on. The rest enjoys urlaub, fussball und bier! As they always did btw
No,it's around 25 % and growing...Still not enough ,but there is also a Tea Party in Germany : Alternative für Deutschland ,now around 8 % !
i guess some just don't get it.
BIS through the fed., ebc., boj., and boe. want americans, europeans, japanese, and brits assets worth nothing, (no individual freedom).
you'll still owe, and the only asset you'll have is, the next 10 generations of your families labor.
99.5 % redistibuted-done
99.5% inequality-solved
.5% unredistibuted, unequal-approved