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’CDO lemons, a government fruit bowl
‘Asymmetric information’ in Collateralised Debt Obligations is not a good thing.
That much we know from Goldman Sachs’ Abacus 2007-AC1 CDO and, err, Goldman Sachs’ Abacus 2006-13 and Abacus 2006-17 deals.
A German bad bank, a collateral switch
Hypo Real Estate — the nationalised German bank and the only one to have failed this summer’s stress tests — passed a(nother) milestone earlier this month.
It transferred assets worth a nominal €173bn to FMS Wertmanagement (FMSW) — the big bad bank set up by the German state earlier this year specifically to take on non-strategic assets and ‘risk positions’ from Hypo.
Bank desperation, mark-to-market edition
Bank investors are really desperate determined.
From Monument Securities’ Stephen Lewis.
A story that ‘mark-to-market’ rules for valuing banks’ assets might be abandoned was the basis for a 250-point rally in the Dow Jones industrials index.
The bad bank revival
Odd comments this morning from the Chancellor. Way back in January, when banks’ share prices were again spiralling to zero, the government announced plans for its troubled asset insurance scheme – what then seemed like a rather elegant alternative to the clunky bad bank plan.
Bad bank, bad pricing?
One bank to buy them all, one bank to find them,
One bank to price them all, and in the darkness bind them.
Toxic assets that is. A US ‘bad bank’ that would help separate the banking system’s good assets from the bad ones is looking increasingly likely.
So where’s the ‘good bank’?
While British politicians continue to procrastinate over the wisdom of a ‘bad bank’ rescue scheme for the sector, a strange thing happened on Friday: shares in UK banks went up.
Ironic given that the FSA’s shorting ban has now been lifted.
Bad bank brewing
Well, maybe.
Contrary to an earlier blog-entry from Pestowire, the Telegraph is reporting that the Treasury is indeed planning a ‘bad bank.’
From the paper:
Treasury plans ‘bad bank’ to buy toxic assets
A state owned “bad bank”