Several of the world's biggest banks are putting together a backup fund whose proceeds would be used to buy risky mortgage securities, according to several news reports. The fund, whose assets are estimated to be between $75 billion and $100 billion, could be up and running within 90 days, and is being set up at the urging of the U.S. Treasury. The idea is to convince wary investors to flow more money into the beleaguered credit market, and strengthen troubled structured investment vehicles (SIVs). As of August, SIVs have held about $400 billion in assets, but have recently struggled to refinance their debt. The backup fund would issue short-term notes to bankroll the purchase of assets held by SIVs associated with the banks. As investors have stopped buying SIV-backed commercial paper some analysts are concerned that the roughly 30 SIVs will simultaneously dump billions of dollars worth of mortgage-related assets, sending negative ripples across the broader credit market. Critics argue that the move is nothing more than a bailout for banks that made bad bets, echoing the 1998 bailout of hedge fund Long Term Capital Management. About 10 banks, including JPMorgan Chase, Citigroup and Bank of America, began meeting three weeks ago in talks organized by Henry M. Paulson, the Treasury secretary. A framework for the plan could be announced this week, according to the reports, with another set of meetings scheduled for this weekend.
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Broken down by product type, the agency's NJCLASS Standard Fixed product should account for a large majority of the loans, 75.4%. NJCLASS Consolidation will account for the next-largest group, 14.1%.
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The notes will price against Treasurys, with spreads expected to fall between 85 and 90 basis points over the benchmark.
April 24 -
The JPMorgan Chase CEO took aim Tuesday at the proposed Basel III endgame rules, hindrances to mergers and bureaucratic burdens. "I would love to have a more productive relationship with regulators, but I think it takes conversation," Dimon said.
April 24 -
Bluegreen Vacation originated the loans and Fitch expressed confidence in its record of good performance as servicer.
April 23 -
Many legal experts think the Supreme Court will rule in favor of the Consumer Financial Protection Bureau in a case challenging its funding. Such a ruling would unleash a flurry of litigation that has been on hold pending the outcome of the constitutional challenge.
April 23 -
Lendbuzz sells the notes as it juggles mixed performance results from 2023. Originations and revenues saw huge jumps, but so did operating expenses.
April 23