Geithner wrote yesterday in a Wall Street Journal op-ed the public-private funds “will purchase real-estate related loans from banks and securities from the broader markets.”
Ambiguous’ Wording
One Treasury statement yesterday said the type of securities being targeted are “held by banks as well as insurance companies, pension funds, mutual funds, and funds held in individual retirement accounts.”
with insane marks like these....geithner tipped his hand when he stood by and watched AIG make the counterparties whole with taxpayer monies.....
Tuesday, March 24, 2009
The Ridiculous Marks Of Toxic Assets
Posted by Tyler Durden at 1:27 PM
The Treasury's arbitrary transaction price of 84 for the "pool of residential mortgages" seems to not have been all that arbitrary after all. In fact, as it may turn out, it was gloriously optimistic. A report by Goldman today on the PPIP caught my eye, with one chart in particular, indicating that bank are still marking the bulk of their "assets" at 90-95! Of particular note is Citi's delirious optimism on marks in its assorted asset classes, especially commercial mortgages.
A PPIP transaction at 70 is one thing, one at 95 is very much different, especially when the FMV is in the 30-40s, as the potential equity upside is very limited, while the downside is... well... much less so. Have not had much time to dig into this but present it for consideration and commentary. If banks have expectations for bid levels north of 90 on the bulk of TALF-mediated transactions, this could really end up being a lot of hot air, despite PIMROCK's enthusiastic endorsement of the proposal. |
