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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Joe Stocks who wrote (85315)	8/19/2007 2:48:45 PM
From: XoFruitCake	Respond to of 110194

"So, who are the net benefactors? Here is CFC's July numbers. Are they?" the question for lender like CFC is not so much about their lending volume, it is all depend on where they get the funding and whether they can sell their loan or securitize their loan at a profit. CFC has a very big warehouse line (120B or so???), but given rate of lending, they may run out of the line in a couple months. The big news is going to be the term of the next securitization (and a big "IF" in this market on when is their next securitization). Remember they made a lot of loans in Apr, May, Jun, July under the old guideline, the open question is whether they can get 104%-105% of the loan value with other old loan to make them profitable. If they need to sell them at 95%, CFC will be in big trouble. I would love to see how someone can rescue CFC if they cannot take care of their loan sitting in their warehouse line.

To: Joe Stocks who wrote (85315)	8/19/2007 9:10:34 PM
From: Joe Stocks	Respond to of 110194

I am not going say that all preferreds are alike, but here is a chart showing what happened to a preferred trust holding Mirant debt during bankruptcy. I am also not saying that taking these type risk are for everyone. These are just very interesting speculative plays as some of the large holders of these trust are forced to get out of the equities due to their institutional contractual by-laws. In many cases the selling is overdone. I think CFC getting down to $11.00 last week was overdone for this time frame. I expect to see a nice bounce until the next bomb hits. Believe me, I have been around these situations enough that I am not naive enough to think that someday these could be worthless. Just an idea for a speculative trade - that is all it is.