ABS

Let us acknowledge the end of securitization as we have known it. As what began as a "subprime" problem metastasized into, first, a credit market collapse and, ultimately, a worldwide economic crisis, those of us who lived and worked and profited from securitization should do some deep soul-searching. What we now see, with the benefit of hindsight, is not just a series of bad judgments and unintended consequences but instead a wholesale systemic failure of gargantuan proportions. The original securitization paradigm became so corrupted over time by those participating in the MBS/CDO sector that it is pointless to debate whether good technology got into the wrong hands or the technology was itself flawed. It is impossible to distinguish "the dancer from the dance," and the market is, without mercy, sweeping both away.

For collateral managers who focus on CDOs, the most recent stream of troubling news in the financial sector has further shaken up an industry already reeling from more than a year's worth of nega-

The third quarter of 2008 brought a dramatic reorganization of the global banking system and a virtual shutdown in the credit markets. Financial guarantors, which have been battling downgrades for months now, have seen new structured finance opportunities seize up.

Fannie Mae announced two weeks ago that it would cancel the planned increase in its adverse market delivery fee. The hike would have taken effect Nov. 1.

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

More bad news for the MBS sector came in this week, according to a recent report from RBS Greenwich Capital, which showed that housing starts plummeted in September by over 6%, the lowest level since 1991.

The Mortgage Bankers Association (MBA) has hired Len Wolfson to be director of legislative Affairs.

Fitch Ratings announced that it has started a review of its counterparty criteria for global structured finance transactions.

The Bank of New York Mellon (TBNY) has been selected by the U.S. Department of the Treasury to help implement the government's Troubled Asset Relief Program under the Emergency Economic Stabilization Act.

The Treasury Department Tuesday morning said it would use $250 billion of taxpayer money earmarked for the new Troubled Asset Relief Program to invest in dozens of the nation's depositories, including some of the largest: Bank of America (which now owns Countrywide Home Loans), Citigroup, JPMorgan Chase, Merrill Lynch, and Wells Fargo.

Moody's Investors Service withdrew the 'Ca' issuer rating for The Education Resources Institute (TERI).

Fitch Ratings said today that U.K. nonconforming RMBS face increasing downside as a result of the current declining performance trends and downward pressure on house prices.

Eclectica Asset Management appointed Joe Rouncefield and Camilla Panton to its sales and marketing team.

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

Recent events in Russia are putting its RMBS under tighter scrutiny.

Despite getting an increase in the liquidity support originally pledged toward saving Hypo Real Estate (HRE), Pfandbriefe tied to the bank continue to suffer from disruptive pricing, Dresdner Kleinwort analysts said. The increase was to >50 billion ($68.4 billion) from >35 billion.

Gordian Knot has put up a good fight, weathering blow after blow amid the financial crisis. Its SIV, however, has finally had to call it a day, thus becoming the last independent SIV to go into receivership.

Monolines said they are still hopeful that they can find a niche in Europe via the municipal bond market, said speakers at the monoline panel at Information Management Network's second annual European CLOs, Structured Credit Products, and Credit Derivatives Summit.

Given the way the securitization market has dissolved over the past 14 months, the industry needs to make a case for why securitization is needed, said a senior official of Britain's Financial Services Authority (FSA) at Information Management Network's second annual European CLOs, Structured Credit Products, and Credit Derivatives Summit held in London last week.

Speakers on the opening panel at Information Management Network's second annual European CLOs, Structured Credit Products, and Credit Derivatives Summit said that the medium- to long-term outlook for the securitization market is positive, although it will be a bumpy ride along the way.