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Inside MBS & ABS

October 31, 2008

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Securities Market Hopeful, But Cautious About TARP Potential to Boost Liquidity

While the Treasury Department continues to find new uses for its massive $700 billion expense account to revive U.S. financial markets, industry experts are hopeful that the government will eventually restore a long-needed shot of liquidity into the MBS market. With an unusually sparse legislative history and an emergency response mentality among its managers, the Troubled... Read More

GSE Conservatorships Off to Slow Start: Little Portfolio Growth and More Financial Pressure

Moving Fannie Mae and Freddie Mac into the protective custody of government conservatorship was supposed to stabilize the two bulwarks of the secondary mortgage market and allow them to pump additional liquidity into the market by expanding their portfolio capacity. It hasn’t worked out that way, at least during the first three weeks of conservatorship... [Includes one chart] Read More

Outlook for U.S. Covered Bonds Tied To Fate of GSEs, Chicken-Egg Dilemma

The covered bond market in the U.S. somehow has to build momentum by ramping up production and stimulating investor interest at a time when its major competition in the residential mortgage funding market – government-sponsored credit – has become the only game in town. The best thing going for the fledgling covered bond market... Read More

Wall Street Urges New Asset Guarantee Program Cover MBS Loans, Lenders Want Focus on Loans

The MBS and ABS markets want the Treasury Department to use a new troubled asset guarantee program to improve liquidity for existing mortgage securities, but some banking groups say the program should emphasize whole loans stuck on lenders’ balance sheets. The Emergency Economic Stabilization Act of 2008 gave Treasury authority to launch a new guarantee program for... Read More

MBS Investors Sue Citigroup for Bad Disclosures; Law Firm Plans Challenge to CFC, AGs Settlement

More investors are gearing up to obtain relief and damages for massive losses they suffered during the worst financial crisis in the nation’s history. Institutional investors in Michigan filed a class-action lawsuit against Citigroup Mortgage for allegedly misleading and deceiving them about the quality of MBS they purchased shortly before the deals went sour. The class action... Read More

Investors Say Carbon and Green Financing Will be Major Asset for U.S. Securitization, But Future is Still Foggy

Global warming may not be good for the planet, but it could provide a new asset for securitization in the U.S. if policy-makers here follow Europe in creating an energy finance market. Experts at last week’s ABS East conference sponsored by Information Management Network said an active carbon securitization market like the one that exists in Europe isn’t going to grow on... Read More

Former FDIC Chief Slams Mark-to-Market, Accuses Proponents of Being in ‘State of Denial’

A former chairman of the Federal Deposit Insurance Corp. accused fair-value or mark-to-market accounting of being “senselessly destructive” to bank capital and called for its immediate withdrawal and elimination. William Isaac, chairman of The Secura Group and FDIC chairman from 1978 to 1985, strongly condemned fair-value accounting as a major cause of the current financial... Read More

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