New York Attorney General Elliott Spitzer has turned his sights on the financial insurance business, as Swiss RE and MBIA were issued subpoenas from both the Attorney General's office as well as the Securities and Exchange Commission. Specifically, the SEC and Attorney General inquired about "nontraditional or loss mitigation insurance products developed, offered, or sold by MBIA to third parties from January 1, 1998 to the present," according to a release. Fitch Ratings speculated in a report issued following the announcement that the inquiries were due to finite risk reinsurance, used for deferring losses into future periods for earnings management purposes.
Andrew Lipton is retiring from his position as vice president and senior credit officer at Moody's Investors Service after more than 20-years in the structured finance group. In his career at Moody's, Lipton had worked in the ABS, RMBS and ABCP groups throughout the years. Among the first-time transactions Lipton worked on were the first-ever auto loan and lease deals, credit card and mortgage derivative transactions.
Scott Davidson, co-head of ABS origination at JPMorgan Securities recently left the firm along with four other managing directors in other fixed-income groups. The move leaves Managing Director Christine Cole as the head of JPMorgan's term and conduit ABS operations, along with MD Bill King. Cole and King report to Patrik Edsparr, head of North American trading and Carlos Hernandez, head of North American Markets, origination and distribution.
GE Commercial Finance acquired the transportation finance business of Citigroup Inc. for a reported $4.4 billion last week. The unit provides lease financing and asset-based lending to the commercial trucking industry. The transaction is expected to close by year-end 2004.
Wachovia Corp. has created a new financial re-insurer, named BluePoint Re, designed to strengthen its relationships with the financial insurance industry. BluePoint will re-insure the exposure of monoline guarantors' exposure to both structured and municipal finance. Former Creditex CEO John McEvoy was named CEO of BluePoint, with former FSA ABS head Dan Farrell as president. BluePoint was initially funded with $300 million and Wachovia will not pay a dividend from any retained earnings or capital from BluePoint Re for at least five years. "Wachovia can now provide additional financial guaranty capacity to its clients and strengthen its ties to the primary insurers," the company stated in a release. BluePoint has received an Aa3 rating from Moody's Investor Service and AA' from Standard & Poor's, respectively.
Greg Raab recently left his position as senior managing director and head of commercial ABS at FGIC to accept a position at Ascend, where he serves as president. He had been with FGIC since 2000, when he joined the firm from what was then called Fitch IBCA. Managing Directors Ken Degan and Rajat Basu will split Raab's responsibilities in the near term.
U.S. Congress recommended that Office of Federal Housing Enterprise Oversight Director Armando Falcon Jr. and Deputy Director Stephen Blumenthal be removed from their posts. The recommendation was included in the $388 billion spending bill passed recently by both the House of Representatives and Senate. The move follows the release of a report from the Department of Housing and Urban Development on OFHEO's performance in regulating the GSEs (see story p. 14).
Fitch Ratings downgraded four classes of auto ABS issued by Mitsubishi Motor Credit. The downgrades include one senior class of the MMCA 2001-3 Auto Owner Trust and three subordinate classes of the MMCA 2002-2 Auto Owner Trust transaction. The rating agency attributed the downgrades to higher than expected cumulative gross and net losses. The delinquency and annualized net loss rates remain high on these pools despite recent actions undertaken by the automaker to offset these problems. The series 2002-2 deal is currently under-collateralized with the reserve account at zero, according to Fitch. On a more positive note, Fitch upgraded the subordinate B class of MMCA 2001-1 Auto Owner Trust to AA from its original A'.
Freddie Mac disclosed last week that a customer unwound a $1.52 billion mortgage-backed securities position this year that the GSE had created for it, reported ASR sister publication American Banker. According to a spokeswoman, the securities were swapped for the underlying loans in February and October. The spokeswoman declined to name the customer. The unwinding was revealed in a footnote to Freddie's monthly volume summary because it materially speeded up the rate at which Freddie's securities were liquidating.
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