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WHISPERS: August 11, 2008

Deutsche Bank has combined its ABS and its capital management divisions. The merged global structured credit products team will be run by Frank Byrne in London and Elad Shraga in New York. Byrne was previously co-head of the securitized products group. Shraga was in the principal finance group that bought and traded assets ranging from metals to power plants. The new team is part of the bank's credit-trading business, run by Colin Fan in London and Boaz Weinstein in New York.

Brigitte Posch, recently hired by Pacific Investment Management Co. (ASR, 7/18/08), will take up the position of executive vice president and portfolio manager for emerging markets, according to a spokesman for the company. A call for further information wasn't returned. A source familiar with the situation said Posch would be reporting to Curtis Mewbourne, managing director and head of emerging markets at Pimco.

Ginnie Mae announced recent enhancements to its risk management strategy. The agency said it will take a multi-faceted approach to establishing a risk committee by appointing a chief risk officer and reconstituting its issuer review board to ensure that its securities continue to remain safe and stable. Ginnie appointed Stephen Ledbetter as chief risk officer. Ledbetter will also continue serving as acting vice president of the Office of MBS in addition to his new role. The chief risk officer is responsible for establishing a risk governance structure and providing independent evaluation and oversight of risk management activities. The issuer review board is responsible for evaluating and overseeing issuer activities and compliance. Ginnie Mae's monthly MBS issuance hit $27 billion in June and $26 billion in July, more than triple what it had been for the same two months in 2007. According to a company release, the enhancements will help the agency keep abreast of the financial condition and program compliance of its issuers, thus minimizing risk to the corporation.

The board of directors of the European Securitization Forum (ESF) has elected its new leadership for 2008 and 2009. Cecilia Tarrant, managing director and European head of agency CMBS and consumer securitization at Morgan Stanley International, will chair the ESF for 2008 while Mark Hickey, managing director and head of financial institution debt capital markets at Royal Bank of Scotland, will act as vice-chair for 2008 and chair for 2009. "We are very pleased to have Cecilia and Mark's leadership at this critical time in the securitization industry," said Rick Watson, managing director of the ESF.

Former BlackRock heavyweight Ron D'Vari is leaving the firm after 14 years to become chief executive officer of New York-based startup NewOak Capital, a financial advisory and asset management firm. In his new position, D'Vari will work with clients to dispose of or restructure distressed assets, according to reports. D'Vari will also become chairman of the board of Edge Mortgage Advisory Corp. (EdgeMAC), the advisory services platform of Agire Mortgage Corp., a mortgage advisory and solutions provider started up by former chief operating officer of New Century Mortgage Robin Cook-Auerbach in October 2006. However, the company officially opened in May 2007. Previously, D'Vari was head of structured finance at BlackRock and was on the board of the Boston Security Analysts Society.

Madeleine M. L. Tan has joined law firm Kaye Scholer as a partner in the firm's corporate and finance department. Tan brings extensive experience in advising on equity and debt offerings as well as asset-backed, tax-advantaged and structured finance transactions, including securitization, derivatives and leveraged leasing. She also advises on subprime market-related issues and has experience working with clients to execute arbitrage and repackaging strategies. Tan also has a hand in structuring commodities products such as carbon credits and securitizations of project finance revenues, as well as whole company securitizations. She joins from Brown Rudnick, where she was a partner in the structured finance group and the climate and energy group.

Cadwalader, Wickersham & Taft hired Thomas O'Riordan as a partner in the financial regulatory practice, resident in the London office. O'Riordan was a practicing barrister with Quadrant Chambers and will collaborate with his new colleagues on structured finance and financial services, regulation and related areas. O'Riordan was previously retained counsel to Cadwalader, a position he assumed following serving as head of the European transactional legal department in London with the Nomura Group. Before Nomura, he was European general counsel and head of the legal and tax department at the London branch of Republic National Bank of New York and general counsel at Sumitomo Finance International.

GE Real Estate (GERE) named Michael Rowan as president of its Americas Equity unit, which sources and manages global investments in office, multifamily, industrial, retail and parking asset classes. Rowan has been managing director of GERE's U.K. region, where he increased assets for both debt and equity to more than $8 billion from roughly $2 billion, the company said. In his new position, he will be responsible for leading all GERE's equity investing operations, which include venture investments, direct investments, the Arden and InterPark operating platforms, its Canadian and Mexican equity investment portfolios and emerging markets equity investing in South America.

Julius Finance, a provider of analytical services and modeling for highly complex securities, announced that it has launched an independent valuation service for credit derivatives including bespoke CDOs, CDO squared, CDO cubed, CPPIs, credit derivatives product companies (CDPCs) and CDSs. The new service will provide independent valuation of these credit derivatives for traders, credit risk managers, auditors, legal professionals and controllers. The firm will also provide market-driven tail-risk estimates for credit default swap and corporate bond portfolio managers, as well as perspective on the monoline companies such as CDPCs.

Baker & McKenzie announced the formation of its new covered bond group, which will be headed by Richard Rudder, the law firm's global co-head of securitization and partner. Rudder will work with associate Jamie Kocis, another securitization professional at the firm. These transactions will enhance service to clients, according to a release from the firm. "Working on these deals in the 1970s, when they were called ‘mortgage-backed bonds,' was extremely innovative for the market," Rudder noted. "It's a unique offering that satisfies the need for both meaningful recourse and high-quality collateral. I am extremely pleased to revisit this sector and am very confident our team will excel in this asset class," Rudder said.

After announcing net losses of $330.5 million for the second quarter of 2008 and $752.1 million for the first half, Financial Security Assurance (FSA) said that it is exiting the ABS sector and will focus mainly on public finance deals. The losses in the first half were primarily driven by the bond insurer's financial guarantees of second-lien RMBS. The company also said that in the second quarter, it increased reserves for estimated losses on HELOC and Alt-A closed-end second-lien transactions and established a reserve for three option ARM insured transactions. This was based on expectations for more severe economic stress until the middle of 2009, at a minimum. FSA said it did not expect the U.S. economy to normalize until late 2010. Dexia, the parent company of FSA, has provided an additional $300 million in capital and said it will take responsibility for the liquidity and credit risk of the financial products business, which primarily issues guaranteed investment contracts.

Investors sued Wachovia Corp. and its affiliates on Monday, charging them with causing losses by incorrectly valuing shares of a now-defunct bond fund and making risky investments in the fund. Investors Albert Krantzberg and Irene Krantzberg claimed in the suit filed in a federal court in Boston that Wachovia and its affiliates "incorrectly" valued and sold the shares of the Evergreen Ultra Short Opportunities Fund "at an artificially inflated price" between August 2007 and June 2008. The suit, which seeks class-action status, names Wachovia and Evergreen Investments, the money management arm of the bank, as well as Evergreen Fixed Income Trust, Evergreen Distributor; Dennis Ferro, chief executive of Evergreen Investments; and Kasey Phillips, principal financial officer of the trust. Wachovia and Evergreen Investments declined to comment on the charges. The fund, which invested in ABS and MBS, as well as other short-duration instruments, was liquidated in June because its net asset value had dropped about 20% in 2008. Evergreen announced in June that the fund's shareholders will be paid $7.48 per share

in cash.

German department store chain Hertie filed for insolvency following failed efforts to restructure its finances. Hertie has 72 stores and employs more than 4,000 staff. Hertie's financial troubles have contributed to the default last week of a loan tied to hundreds of millions of euros of CMBS. According to some market analysts, it is Europe's largest payment default on a CMBS loan.

Fitch Ratings upgraded Ares Finance 2 S.A, the Italian securitization of non-performing loans for Whitehall Fund, Class D notes to single-A and revised the outlook to negative on the Class E notes. Fitch said that the upgrade reflects the limited amount of notes still outstanding paired with expected recoveries, which should further reduce the outstanding balance of Class D notes. Fitch said it was concerned that delays in actual collections on recoveries on the Class E notes may threaten principal repayment by final legal maturity.

Moody's Investors Service said it anticipates deterioration in the U.K. credit card sector over the coming months despite relatively stable credit card indicators reported in June 2008. Although indices presently show a relatively benign trend, Moody's expects a rise in delinquencies and charge-offs over the coming months. The rating agency's negative view is primarily driven by the challenging U.K. economic environment, increasing costs of living, decreased availability of credit and high leverage levels of U.K. consumers. The rating agency said it would be closely monitoring the performance of each U.K. trust, speaking regularly to originators and requesting additional data in order to better understand the potential performance of each portfolio.

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