Archive for November, 2007

Structured Investment Vehicle – SIV’s defined

Written by Timothy Blake on November 26, 2007 under Archives, Definitions

SIVs are investment vehicles which raise money in the short-term commercial paper market and use it to invest in longer-term assets, such as mortgages. In many cases investors let their money roll over, but recently investors have been demanding their money back. It has obliged many of the SIVs to make a forced sale of their assets at a time when the assets themselves are also losing their value.

Losses much greater than forecast as audits near

Written by Timothy Blake on November 25, 2007 under Analysis, Archives, Investors

One factor undermining investor confidence is that the projected size of this year’s credit shock is now rising rapidly. The US government initially forecast $50bn losses on subprime securities. However, investment banks now expect $200bn-$500bn subprime losses – and additional massive losses in other debt markets, such as credit card loans. End of the year audits are another problem. Here is why:

HSBC Chairman Stephen Green calls Household International a disaster

Written by Timothy Blake on November 24, 2007 under Analysis, Archives, International, Lenders

Stephen green made a presentation to analysts on Friday, 23 November. For the first time Green admitted that Household International had been an essentially disastrous acquisition for HSBC, that not all other diversifications had been successful, and that total shareholder return had underperformed peers. Household International is now called HSBC Finance, and HSBC previously said it would keep the HFC and Beneficial Finance brands. Now HSBC is rethinking that logic. HSBC Finance also has credit card operations, auto financing, and owned now-defunct Decision One Mortgage.

Mortgage business destroyed E-Trade

Written by Timothy Blake on November 24, 2007 under Analysis, Archives

Analysts said E*Trade will have to pursue strategic alternatives, such as a deal or sale of some assets, after large losses in its mortgage business. However, its complex balance sheet, which combines banking and brokerage assets, will make it tough to split the two businesses.

Loan officers knew loans would go to foreclosure

Written by Timothy Blake on November 23, 2007 under Adjustables (ARMs), Archives, Foreclosure, Lenders

There may no responsibility to the customer when applying for a loan, but some loan officers felt bad when they knew the customer could not afford the house payment after the loan reset. They made the loans anyway. One website, Settlement Scams, shows how some loan officers made the loans anyway, telling about how they felt bad after the fact.

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