Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (77129)	10/22/2007 5:34:22 PM
From: re3	Read Replies (3) \| Respond to of 94695

bought a lil MZZ 52.34 late this aft... so we can go up tomorrow and into the blue yonder again...

To: Real Man who wrote (77129)	10/23/2007 5:03:02 PM
From: Qualified Opinion	Respond to of 94695

S&P: Banks' Credit Unaffected by SIVs Tuesday October 23, 3:15 pm ET Standard & Poor's Says Big Banks' Credit Ratings Will Not Be Affected by SIV Problem NEW YORK (AP) -- Major banks' debt ratings do not hinge on the fate of a $100 billion fund established to bail out a handful of struggling investment partnerships, Standard & Poor's Ratings Services said Tuesday. The credit-ratings agency said in a report the banks involved in this fund have enough cash to manage the most likely outcomes. Citigroup Inc. is spearheading the creation of an $80 billion to $100 billion fund to buy investments from a type of investment called a structured investment vehicle. Investment banks create SIVs, which are designed to borrow money at one interest rate, use the borrowed money to buy risky investments that bear a higher interest rate and profit off the spread. Roughly 29 SIVs manage as much as $400 billion in investments, many of which are bonds backed by mortgages that have lost a lot of value this year. The danger is the lenders that finance these SIVs will demand their money back. This could force SIVs to sell their investments at depressed prices in order to raise the cash to repay lenders. In order to prevent SIVs from selling this debt at much lower prices than they bought it for, Citigroup is partnering with JPMorgan Chase & Co., Bank of America Corp., and others to create a fund to buy some of the debt. S&P said this situation is not likely to affect the credit ratings of banks involved. Unless a bank commits to lending to an SIV or providing it some other type of liquidity, the banks do not owe the SIVs anything. The SIVs' commitments belong to the investors that bought stakes in the partnerships, S&P said. Thus the banks' obligations are a fraction of the debt owed by the SIVs they sponsor, S&P said. For example, Citigroup sponsors $88.6 billion in SIVs. In all likelihood, the bank's commitments to those SIVs are a small portion of that, said Tanya Azarchs, the S&P analyst who wrote the report, in an interview. In its last quarterly report, Citigroup said it has $117 billion in exposure to "variable interest entities," which Azarchs said is a broad category that includes SIVs among other things. Citigroup said it has "significant involvement" in structured finance deals totaling $37.4 billion. Azarchs said it is improbable that banks will assume control of SIVs and report their results as part of their balance sheets. Earlier this month, the Center for Audit Quality issued a research report that concluded banks absorbing a majority of an SIV's losses would be forced to incorporate the funds into their books. Azarchs said it is unlikely any bank would expose itself to a majority of a SIV's losses. Most likely, the only way banks would accept a SIV's losses is voluntarily, she said. "It will have to be a business decision on their part if they feel that their reputation is at risk or they would lose customers in some fashion," she said. "They might voluntarily decide to do that, but they are not obligated to." The banks will try other strategies before stomaching losses from SIVs, she said. Azarchs said it is too early for her to form an opinion about the viability of the fund the banks are creating. Link: biz.yahoo.com