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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (8101)8/10/2007 8:36:38 AM
From: Elroy  Read Replies (1) of 33421
 
BNP Paribas halted withdrawals from three investment funds because their assets -- of which more than one-third are related to subprime mortgages -- were impossible to value in the nonfunctioning secondary market. A week ago, the big French bank's chief executive asserted its exposure to U.S. subprime "is absolutely negligible."

These two statements are entirely compatible, right? The funds may be impossible to value because the underlying assets are not being traded, and since Paribas itself is probably a manager of, not an investor in, the funds, Paribas sub-prime exposure might be zero. In other words, if the fund investors lose all their investment capital, Paribas may not lose anything other than the management fees that were coming from those (heading toward zero value) funds. Right?
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