Thursday, May 14, 2009

No Jig for Fail

(Three thoughts here: 1) Aren't more than just a minority of OTC custom? ; 2) Where will the manpower come from to fit the custom square into the standardized circle?; and 3)IF they can push 'em onto an exchange won't that separate the winners from the sinners i.e., no jig for fail? -AM)

Financial Times
By Sarah O'Connor in Washington and Francesco Guerrera,,Aline van Duyn and Henny Sender in New York
Published: May 14 2009 03:00 | Last updated: May 14 2009 03:00

The Obama administration yesterday unveiled a sweeping plan to regulate over-the-counter derivatives in a bid to seize greater control over an opaque market that has been blamed for exacerbating the financial crisis.

The move is intended to increase transparency and reduce risk in a market that is worth more than $680,000bn but has been largely unregulated because of the laisser-faire regime sanctioned by US authorities at the start of the decade.

The new government plan would force all "standardised" OTC derivatives to be cleared through central clearing houses, to reduce the risk of investors being dangerously exposed to a single counterparty. These types of derivatives, which are estimated to make up the bulk of the market, would also have to be traded on regulated exchanges via electronic systems. Currently many trades are done over the phone, making them hard to track and record.

Green shoots soup

(What S&P is not taking into consideration is the next round of bankster bailouts that will be coming after the PPIP fails. After all, insiders of the Dunham administration have admitted that they believe they have time to come up with additional solutions if we leg down. -AM)

Wed May 13, 2009 5:32pm EDT
By Jonathan Stempel

NEW YORK (Reuters) - A day after saying big U.S. banks probably needed to raise only one-fourth the capital demanded by the government, Standard & Poor's said the nation's banking crisis has "merely entered a new phase" and might not end before 2013.

The credit rating agency said the industry is being propped up by hundreds of billions of dollars of government support, especially for lenders considered too important to the financial system to fail.

While efforts to spur lending, take bad assets off banks' balance sheets, and restart the market for packaging and selling securities may help the sector, S&P said banks will have a tough time surviving absent a bigger capital cushion than regulators require.

"There's nothing to say that this banking crisis can't go on for another three or four years," S&P Managing Director Tanya Azarchs said.

S&P did not immediately return a request for comment.

On Tuesday, S&P said major U.S. banks need to raise about $18 billion of capital to protect themselves from the economic downturn, though this amount could grow if conditions worsen.

The amount is well below the $74.6 billion that the government last week ordered 10 of the largest U.S. banks, led by Bank of America Corp and Wells Fargo & Co, to plug potential capital shortfalls.

These 10 banks were among 19 subjected to government "stress tests" to gauge their readiness to withstand a particularly severe recession in 2009 and 2010.

The other nine, including JPMorgan Chase & Co and Goldman Sachs Group Inc, got clean bills of health when stress test results were released on May 7.

S&P on May 4 said it may lower its ratings for 23 U.S. banks and thrifts, including 10 that underwent stress tests, citing concern about the industry's capitalization.

It said the 23 companies had at least a 50 percent chance of being downgraded within 90 days.

Wednesday, May 13, 2009

Some Risks are more Equal than others

(Oh and by the way the IQ tests administered to the public.. uh I mean the stress tests on the banks didn't take into consideration operational, liquidity and reputational(?) -we're not as think as you broke we are- risks. In fact the banksters should take it upon themselves to identify all other risks that weren't addressed in the Federals P.R. campaign. Its' a risky business doncha' know. -AM)

By Scott Lanman and Steve Matthews
May 12 (Bloomberg)

Federal Reserve Chairman Ben S. Bernanke said efforts by U.S. banks to raise capital are “encouraging” and called on firms to identify other risks through internal stress tests.

The banks, especially those with “trading and investment banking businesses,” should keep monitoring “operational, liquidity and reputational risks,” which weren’t addressed by the exam concluded last week, Bernanke said in a speech yesterday at a Fed conference in Jekyll Island, Georgia.

“Ideally, the stress tests used in the assessment program should be part of a broader palette of internal stress tests conducted by firms,” Bernanke said at the event hosted by the Atlanta Fed district bank. “Indeed, we do not intend that the capital assessments should be taken as all that those firms need to do.”

“You wouldn’t expect Bernanke to say anything else,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “Any negative attached to the stress tests has been carefully managed by people like Bernanke.”

Taylor Fade

(So Taylor is saying that the Federales are off on their calculation by more than 10x? Its' little wonder that the hedgies are crowding into the gold trade, that equities have become the new carry trade and oil is spiking as speculative monies flow. However for the most part every green shoot cited over the last several months has a caveat that mitigates the bullisht 'truthiness'. Birth death model for unemployment; manipulation of past data to foster the appearance of improvement, e.g., retail sales; and of course the mind-numbing Bank I.Q. tests and subsequent equity dilution across the board which has only mitigated solvency risk in the sense that a 10 am cocktail mitigates hangover risk. -AM)

Tue May 12, 2009 8:45pm EDT
By Mark Felsenthal and Alister Bull

(Reuters) - A sharp critic of the Federal Reserve and prominent authority on monetary policy on Tuesday slammed the U.S. central bank for risking inflation and warned that government action had "caused, prolonged and worsened" the country's financial crisis.

John Taylor, a former undersecretary of the Treasury for international affairs and author of the widely cited Taylor Rule of central banking, ran his own numbers for the U.S. economy and said the Fed's monetary stance was way too loose.

"My calculation implies that we may not have as much time before the Fed has to remove excess reserves and raise the rate," he said in remarks prepared for a financial markets conference hosted by the Federal Reserve Bank of Atlanta.

"We don't know what will happen in the future, but there is a risk here and it is a systemic risk," he said.

He noted a recent Financial Times report of internal Fed estimates using the Taylor Rule. This found interest rates should be minus 5 percent at the moment to compensate for the headwinds on the U.S. economy.

But Taylor said that his own analysis suggested a rate of 0.5 percent, indicating that the Fed could have a lot less time to raise interest rates than it may currently think.

In addition, the Fed has pumped hundreds of billions of dollars into the economy to support credit markets in the face of a severe U.S. recession, and may find it very hard to remove this expansion by shrinking its balance sheet in the future.

"While Federal Reserve officials say that they will be able to sell newly acquired assets at a sufficient rate to prevent these reserves from igniting inflation, they or their successors may face political difficulties in doing so.

"That raises doubts and therefore risks. The risk is systemic because of the economy-wide harm such an outcome would cause," Taylor said.

Taylor used these cases to illustrate examples of where government intervention had magnified market failures and turned them into system-wide problems.

However, he saw much more risk coming from the planned U.S. government budget deficits, which could place the Fed under extreme pressure to allow inflation, as this would diminish the debt burden.

"The emphasis should be on proposals to stop the systemically risky budget deficits projected out as far as the eye can see, to exit from extraordinary monetary policy actions, and to end the bailout mentality," he said.

Giving the Fed formal responsibility for ensuring the soundness of the broader financial system would interfere with the Fed's task of ensuring stable and low inflation and sustainable economic growth, Taylor said. Congress is considering giving systemic risk oversight powers to a regulatory agency as a way to prevent the future financial crises.

"Locating a systemic risk regulator at the Fed is not a good idea because it would interfere with its essential monetary policy function," Taylor said.

Taylor questioned whether a systemic risk regulator would have been able to prevent the financial crisis in the first place. For example, a systemic regulator would not have been able to prevent the Fed from holding rates low for so long, he said.

Wednesday, May 6, 2009

We stress that it is an IQ test

VIA Jason Goepfert

Banksters wookin pa nub

by The Associated Press, May 4, 2009

Federal regulators are asking Wells Fargo & Co. to raise more capital after government "stress tests" showed the bank would have trouble surviving if the recession worsens.

Wells Fargo is one of several banks that regulators will force to boost their buffers against losses when results of the tests are announced Thursday, according to two people familiar with the matter who spoke on condition of anonymity because of the sensitivity of the process.

San Francisco-based Wells Fargo is trying to dissuade regulators from forcing it to raise capital, these people say. (We're not as think as you broke we are!-AM) The government will brief banks Tuesday on its final decisions about their appeals.

Bank of America Corp. and Citigroup Inc. also will be asked to raise money, sources have told The Associated Press.

(How much of Bank of America?-AM)

By Karey Wutkowski and Jonathan Stempel Karey Wutkowski And Jonathan Stempel – Wed May 6, 7:07 am ET

WASHINGTON/NEW YORK (Reuters) – Bank of America Corp has been deemed to need as much as $34 billion in additional capital, according to the results of a government stress test, a source familiar with the results told Reuters late on Tuesday.

(How much of Citigroup? -AM)

Wed May 6, 2009 7:39am BST

Reuters) - Citigroup (C.N) may have to raise $5-$10 billion (3.3-6.6 billion pounds) in new capital to meet a U.S. government requirement that it holds up to $55 billion in capital, the New York Times said, citing people familiar with the matter.

(55 billion is 2% cushion against the notional value of about 3 trillion. Citi has $2.1 trillion of on-book assets and $1.2 trillion of off-balance sheet assets with 300 odd- billion of guarantees. Citigroup looks like a Federales private equity shop in that they are going to be holdin' 'em for a long time. -AM)

Sunday, May 3, 2009

Me or your lyin' eyes ...

(At some level you should just be offended by it all.

And still how can you not be impressed by this successfully played game of 'who ya gonna believe? Me or your lyin'eyes?'

Just pretend that when Meredith Whitney said... -AM)

Citi has $2.1 trillion of on-book assets and $1.2 trillion of off-balance sheet assets compared to less than $10 billion of tangible common equity. Depending on how much of those off-balance sheet assets have to be taken back onto the balance sheet, Citi’s leverage ratio is impossibly high for the bank to keep operating without government guarantees.

If I’m reading their financials correctly, and I think I am, in addition to the $3.3 trillion of on/off balance sheet assets, the company has another $1.3 trillion in untapped credit commitments (see page 78 of the most recent quarterly filing), over 70% of which is for untapped credit card lines. If you’ve got a Citi card with an outstanding balance of $3,000 and a credit limit of $10,000, then Citi stands ready to provide you with $7,000 of additional credit on demand. As other forms of credit (like Home Equity Loans) disappear, consumers will turn to more expensive funding sources like credit cards to help them get by. So as those credit lines are tapped, the additional credit goes onto the asset side of Citi’s balance sheet, increasing leverage.

The trouble, of course, is that Citi’s balance sheet is already over-leveraged relative to its tangible equity. It doesn’t have the balance sheet capacity to expand credit. In fact, to protect itself and taxpayers (who now implicitly back the company’s debts) it must reduce its credit commitments significantly in order to reduce its leverage ratio.

This is “de-leveraging.” It’s what happens during a “credit crunch.” Those employing too much leverage to begin with, like all the banks, have to shrink their balance sheets by crunching credit: cutting credit lines, selling good assets and raising capital (either from the government or privately). Leverage = Assets / Equity. Reducing credit lines shrinks the numerator; selling assets shrinks the numerator and plugs cash into the denominator; raising capital grows the denominator.

By pulling credit out of the economy, de-leveraging leads to deflation. Credit is a form of money just like cash. Removing it from the economy reduces the amount of dollars chasing goods and services, lowering prices. We’ve already seen this with housing prices of course: As mortgages are harder to come by, fewer people are able to buy a house. Demand falls relative to supply, so prices fall too.

Senators and Congressman may want the banks to lend more, but they simply don’t have sufficient equity capital on their balance sheets to do so.

(Just pretend that there is no Meredith Whitney and if there were she would be speaking gibberish.

At the end of the day this is done the ol' fashioned American Way, sell it like soap and pump it with hope.

You have to admire the sheer chutzpah of it all, the Federales are hoping to have the cake being served by getting more capital by saying they don't need much more capital. That's the only route to win helping the banksters make as much as possible to earn their way out. To recognize the losses is to be consumed by them so you angle for a stealth nationalization where you all smile and dial your way to prosperity.

Why let's just say the bank is money good on all the on-balance sheet stuff save for 0.3% of it not countin' for the 1.2 trillion held off-balance sheet... that would come to let's see 10 billion... oh and untapped lines are money good... agreed?

Seriously, do you think someone snickers when they first come up with this number? -AM)

Reuters - Saturday, May 2

NEW YORK - Citigroup Inc may need to generate up to $10 billion in new capital to meet the requirements of the U.S. government's stress tests, the Wall Street Journal reported on its website on Friday,

Like other financial institutions, the bank is in talks with the Federal Reserve about whether it needs more capital, the Journal said, citing unnamed sources.

Citigroup may need less if regulators accept its arguments about its financial health. In a best-case scenario, Citigroup could have a roughly $500 million cushion above what the government requires, the paper reported.

(Who you gonna believe me or your lyin' eyes.-AM)

Friday, May 1, 2009

Danger of being a perma-bear at the low

David Rosenberg via ZERO HEDGE

It’s time to set the record straight

We acknowledge that we have felt like salmon swimming upstream. And, we constantly preach that everyone should keep an open mind and about the dangers of being perma-bears at the low (not our intention!) – but it’s time to set the record straight.

Big money investors have been on the sidelines

We have talked to so many bewildered clients about the massive equity market rally from the March lows that we’ve lost count. Few, if any (especially in the hedge fund community) seem to be celebrating the fact that the S&P 500 has rallied 30%, which tells us that big-money investors have been on the sidelines through this entire move. From our lens – and you can see this clearly from the twice-monthly NYSE data – the buying power for this market has actually come from severe short-covering as the bears head for the hills.

Few market-makers share enthusiasm of most economists

We don’t really share the view that the recovery, if and when it comes, will be sustained. We understand the historical record that even in the face of monumental fiscal and monetary easing, it takes a good four years for the economy to work through the aftershocks of a collapse in credit and asset values. While most economists are now waving the pom-poms, we find very few marketmakers who share their enthusiasm.

By and large, this rally has been a clear technical event

Gaps get filled rapidly and the primary source of buying power seems to be coming from a huge short-squeeze, and perhaps some pension fund rebalancing, which always seems to happen after the market makes a new low. To be sure, there is always the chance that the dry powder (money on the sidelines) is put to work and investors chase this rally. And nothing says that the S&P 500 cannot go as high as the 200-day moving average of 970 over the near term. We have seen these kinds of rallies in the past There were four of these kinds of rallies from 1929 to 1932; a half-dozen in the 19-year-old Japanese bear phase; and no fewer than 40,000 rally points in the Nasdaq that were fun to play in the 2000-2003 bear market – but the fundamental downtrend was obviously still intact.

Stock market not good at predicting inflection points

The stock market bottomed for good in the spring of 2003 because at that time, we were on the cusp of a 4%+ real GDP growth rate over the ensuing four quarters. The reason the rally of late 2001 to early 2002 failed was because the market realized the recovery would be delayed. Let’s just say that a 21% rally in the S&P 500 from Sept 2001 to January 2002 was not a bounce that was pricing in a 1.5% GDP growth rate for the ensuing four quarters, which is what we ended up with.

We can look at the situation in reverse. Did the 20% slide in the S&P 500 in the summer accurately predict the 4-1/2% GDP growth trend we were going to see the following year? No. And even in this cycle, the equity market was peaking just as the recession started in the fourth quarter of 2007. So, this notion that the equity market is telling us anything meaningful about the economic outlook, as Larry Kudlow would have us believe, is open for debate. The stock market’s track record is just about as good as the economics community at predicting the inflection points in the business cycle – and that’s not very good.

The market, as a whole, cannot be considered cheap

While there are some good blue-chip companies trading at low multiples, the market as a whole can hardly be considered cheap. That may have been the case two months ago, but no longer. As for the earnings landscape, it has become fashionable to talk about how the vast majority of companies are beating estimates in their 1Q results, but the bar was set extremely low to begin with after that epic 4Q operating and reported loss on S&P 500 EPS. In the meantime, earnings forecasts are being trimmed steadily for the balance of the year. In fact, forward P/E multiple of 15x operating and 30x on reported EPS are not that compelling. So, we do not have a strong valuation argument. We do not have a strong earnings argument. The seasonals ("sell in May”) are about to become less compelling too.

New lows in S&P won’t happen as soon as we thought

We would, at the same time, acknowledge that if the terms of engagement have changed, the Obama economics team and the Fed have made it exceedingly difficult for the shorts to make money in this market. Tail risks, notably in terms of the banking system, have been removed. This, in turn, does mean that even if we break to new lows in the S&P 500, it probably will not happen as soon as we had thought.

Government will do whatever it takes

At the March 9 lows, there was a real feeling of possible bankruptcy in the financial system. But it is now abundantly clear the government will not allow any big financial institution to fail. The end of mark-to-market accounting rules and the super-steep yield curve have returned most of the banks to profitability. Uncle Sam can be relied on to remain the capital provider of last resort, even for those banks that do not pass the coming stress test (which has been delayed, in part because the government wants to assess how to deal with the fallout of those particular institutions). More and more taxpayer money is being thrown at the credit crisis, and now we hear that $50 billion will be allocated toward easing debt-service strains among those households that took on second mortgages during the housing bubble. And, until recently when the green shoots started to appear, there was growing talk of yet another fiscal blockbuster coming down the pike to underpin the economy.

Green shoots can turn into a dandelion or a beanstalk

We are more impressed with solid roots than we are with green shoots. The economy and the capital markets are being held together by tape and glue, in our view. Private sector activity is contracting and will continue to lose its share of GDP as the government’s influence rises on a secular basis. Tax rates will inevitably rise, as they are already doing at the state and local government level. The public sector is now involved in the mortgage market, the insurance sector, the banking industry, and of course, the automotive business.

Economy transforming into an early 1980s European model

As economists, strategists, analysts, and the media, focus on the noise – which is what green shoots really are: a blip in a fundamental downtrend – a dramatic transformation of the economy toward a 1970s/early 1980s European model is unfolding. That post-Mitterrand, pre-Thatcher model, if memory serves us correctly, was one of low-potential real GDP growth rates, low-fair-value P/E multiples, low rates of return on capital and a sclerotic economic system. Economy is not in free-fall but is hardly stabilizing.

Now let’s get to the economy and those fabled green shoots

There is no doubt that the economy is no longer in free-fall, but it is hardly stabilizing, even if the data have improved from deeply negative trends at the turn of the year. There are pundits claiming that because initial jobless claims have managed to come off their recent highs, the end of the recession is in sight. That is a fairy tale, in our opinion.

Slack still being built up in the labor market

Given the looming wave of auto sector layoffs, we expect claims to break to above 700,000 this summer, which would be a new record. So, jobless claims do not appear to have peaked yet. In fact, the relentless surge in continuing claims signals that an ever-increasing amount of slack is being built up in the labor market. There has never been a peaking out in gross claims without there being a confirmation from a similar turn in the continuing jobless claim data. Moreover, initial jobless claims have topped the 600,000 threshold now for 13 weeks in a row, and that is the real story.

To suggest that claims have stabilized above 600,000 and that this is a good thing is ridiculous. It would mean that by this time next year, the unemployment rate could potentially reach 15%. The reason is because employment losses do not end until claims actually break below 400,000. No recession ever ended until claims broke below 600,000, and on average, recessions only end once claims drop below 500,000 (when the last recession ended in November 2001, as an example, claims were 450,000).

Job losses will not end until the end of the year

Employment is one of the four critical ingredients that go into the recession call, not jobless claims, and at over 600,000 on claims, we lose payrolls at a monthly rate of around 600,000. That is hardly what we would call a stable economic backdrop. We do not see job losses ending before the end of the year. Industrial production and real manufacturing/trade sales are two other components that go into the NBER recession-determination model, and our forecast suggests that they too will not bottom conclusively until 2010.

Real organic personal income decrease is unprecedented

What really caught our eye is the fourth horseman of the recession call – real organic personal income. This metric peaked in October 2007 and was early in predicting the official onset of the recession, which began in December of that year. This measure of household income – it nets out government benefits – slipped 0.5% in March and has declined for five months in a row (and six of the past seven). Over that stretch, it declined at over a 6% annual rate, which is unprecedented (the data series go back to 1954).

Expect consumer spending to lag because of lost income

Since August of last year, the consumer sector has lost $266 billion of organic income (in nominal dollars at an annual rate) as job losses mounted, hours worked cut back, and full-time positions shifted to part-time. This lost income – not to mention $20 trillion of evaporated net worth – will likely bring long lags in dampening consumer discretionary spending. We realize that one of the bright spots in the 1Q GDP report was the +2.2% print on real consumer spending. But let’s face facts: The bounce was concentrated in January after a record 30% plunge in retail sales (at an annual rate) in the final three months of 2008. We already know that sales were down in both February and March and that the statistical handoff with respect to consumer spending is negative as we head into the second quarter.

The government does not create income; it redistributes it

We mentioned tape and glue above because the only component of household income that is rising is government transfers (mostly jobless benefits), which rose 0.9% in March and by more than 12% on a year-over-year basis. The government share of personal income at 16.3% is higher today than at any other time in the past six decades (and that covers the LBJ Great Society social benefit transfer of the 1960s). But keep in mind that the government does not create income – it distributes income by borrowing from today’s bondholders and tomorrow’s taxpayer. Not until we begin to see real incomes rise without the crutch of Uncle Sam’s checkbook will it be safe to call for the end of the recession. And again, we see this as more a 2010 story than a 2009 story, although very clearly the markets are suggesting the latter (insofar as they are signaling anything about the economic outlook).

The worst is over

In any event, the economy has certainly passed its worst point of the cycle even if we do not yet see the bottom that many others do at this time. And it may very well be that we overstayed our bearish call on the equity market and that the lows were turned in on March 9. Many pundits who have been around far longer seem to believe that, and they could be right. But there is no sense crying over spilled milk, even after a 30% run-up in the S&P 500 and a 100 basis point surge in the 10-year note yield from the lows. It just broke above its 200-day moving average, and there is nothing but empty space on the chart to 3.8% – that is an observation, not a forecast, by the way.

Lessons learned from the Great Depression

With all that in mind, we thought it would be instructive to look back to the experience of the 1930s. A credit collapse, asset deflation and massive decline in economic activity were finally stopped in their tracks by massive doses of fiscal and monetary stimulus. The S&P 500 bottomed in the summer of 1932 and the trough in GDP occurred shortly thereafter. But if history is any indication, the depression did not end for another nine years. Even after the massive relief efforts and government intervention from the New Deal, we closed the 1930s with a 15% unemployment rate and consumer prices deflating at a 2% annual rate.

Focus on SIRP — safety and yield at a reasonable price

Because the attention now has shifted to the green shoots, as was likely the case after the 1932 low as well, we highly recommend that investors focus on the big picture, which is that the aftershocks of a credit collapse and an asset deflation of this magnitude last for years, even with public sector support. Now go back to that June 1932 low in the S&P 500 (below 5) and the initial surge was breathtaking – the market roared ahead by 75% in just the first three months. But guess what? For buy-and-hold investors, by the end of 1941, the S&P 500 was at the same level as in the fall of 1932. Nine years of nothing, unless you are the most astute trader around.

Folks who chased the rally after the market broke out of the gate woefully underperformed those who stuck with their focus on generating cash flows from the fixed-income market. The yield on long Treasuries fell from 3.8% to 2.5% (Fall of 1932 to the end of 1941) while Baa corporates did even better – rallying from 7.1% to 4.4%. So from this point forward, unless you are comfortable that you have the discipline as to when to get out, the lesson of the last post-credit crunch/asset deflation/depression seven decades ago is to retain your focus on SIRP – safety and yield at a reasonable price. Passive buy-and-hold strategies are destined to fail, in our view.

Bartender ... more sand!!!

(One of the most obnoxious aspects of the pablum narrative that is spewed out by the MSM is the ridiculous term 'toxic assets that are impossible to price'. The incessant marketing of language in order to manufacture opinion never ceases to amaze me but then again if it didn't work then folks wouldn't do it. People ... please, we can put a man on the moon, we can build particle accelerators to peer into the early moments of creation but no matter how hard we try we just cannot apply our opposable thumbs to a keyboard in order to make that spreadsheet tell us what these rich folks' bad speculative bets are worth... IT'S ... JUST ... TOO ... COMPLEX! Indymac at 37 cents - koff, koff move along nothing to see here- Whitejacket at 67 percent -harummph each toxic assets is like a snowflake, doncha know ...

Bartender, more sand! -AM

By Neil Unmack
April 30 (Bloomberg)

Whistlejacket Capital Ltd., the defaulted structured investment vehicle, sold more than $2.5 billion of its assets at an average discount of 33 percent, according to three people with knowledge of the matter.

Receivers at Deloitte & Touche LLP sold 54 percent of the SIV’s $5 billion investments at an auction yesterday, said the people, who declined to be identified because the full results weren’t disclosed. The average price was 67.1 percent of face value for securities that included bank bonds and mortgage- backed debt, Deloitte said in a statement today.

Whistlejacket, set up by London-based Standard Chartered Plc, defaulted in February 2008 when investors stopped buying the short-term debt that SIVs relied on to fund higher-yielding assets. The proportion of assets sold at Whistlejacket’s auction was more than double the share investors liquidated in July at a sale for Cheyne Finance Plc, the first SIV to auction assets.

(On a personal note I once sat at a conference with some folks from Cheyne related to the asset class I operate in. They were all excited about committing huge amounts of capital and were as clueless as anyone I've ever met.-AM)

Marketing Campaign Delayed

May 1 (Bloomberg)
By Craig Torres and Robert Schmidt

(Seems like the new marketing campaign of 'No Bank Left Behind' has been delayed so that the Federales PR firm can work out the 'kinks'. -AM)

The Federal Reserve is postponing the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.

The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as today, they said.

Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.

The Fed led the stress tests, using as many as 140 staff members working in consultation with 60 people from other bank oversight agencies.