meehawl

all that is solid melts into air, all that is holy is profaned

$100 Billion Bank Bailout Broached

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Leading U.S. banks have reportedly been meeting with U.S. Treasury officials about creating an up-to-$100-billion fund to stave off the danger that there could be a fire sale of shaky mortgage-backed securities, collateralized debt obligations and other distressed assets … The focus of the fund would be structured investment vehicles, off-balance sheet funds created by banks and which issue short-term debt such as commercial paper to acquire and finance specific longer-term assets, recently subprime mortgage-backed securities and similar assets.

The vehicles, often set up by banks, make money by pocketing the difference between their funding costs and investment returns … The investment vehicles have been unable to sell new commercial paper for months as investors fearful of contagion from subprime mortgages have shunned most types of asset-backed commercial paper. As a result, many SIVs have run into trouble.

SIV?!?

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