Securitization

Fannie Mae today announced that effective immediately it is realigning its organizational structure.

KfW executives Detlef Leinberger and Peter Fleischer have been suspended on full salary following the German state bank's transfer of €350 million ($511 million) last week in a failed swap deal with Lehman Brothers.

Last Friday, Canada's Supreme Court dismissed last-ditch attempt to restructure country's $32 billion ABCP market.

It has become apparent that CMBS servicers and trustees need to clarify the issuer's ability to use the liquidity facility in examining swap counterparty failures, Barclays Capital said in a report released today.

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

U.S. Treasury Secretary Henry Paulson announced that both Fannie Mae and Freddie Mac will increase their purchases of MBS to “carry out their mission to support the mortgage market."

The Lehman Group Holding Co.'s Chapter 11 filing was followed by its London-based European holding subsidiary being placed in administration. Pricewaterhouse Coopers was appointed administrator to manage the wind-up.

In the emerging market space, Bank of America's purchase of Merrill Lynch resonates far and wide. While the commercial bank has been a non-entity in the business since 2003, Merrill has been an active player at least through last year.

At Information Management Network's first Cross Atlantic ABCP Summit held earlier this month, market panelists remained optimistic that, once the dust settles, investors will come back to the European ABCP market in greater numbers.

Sept. 15 was a day of reckoning for Wall Street as the market said goodbye to two U.S. financial institutions, 158-year old Lehman Brothers, whose parts will be wrapped into Barclays Capital, and 94-year old Merrill Lynch, which will now exist under the Bank of America umbrella.

The Commercial Mortgage Securities Association (CMSA) gathered in New York last week amidst a firestorm of financial distress and a radical shift on Wall Street.

Lehman Brothers, Merrill Lynch and American International Group (AIG) have at least one thing in common: They owned depositories but were not overseen by the Federal Reserve Board.

Cataclysmic changes occurred in the financial landscape last week. Lehman Brothers failed to find a buyer and declared Chapter 11, Merrill Lynch was bought for $50 billion by Bank of America in a total stock transaction and American International Group (AIG) was taken over by the Fed in an $85 billion bailout.

The case of Lehman Brothers proves that the bar for banks has just been raised. Until last week, financial institutions of such size were seen as being in the too-big-to-fail category.

The mood in the ABS market was understandably gloomy last week, as traders expressed disbelief and apprehension about the sector, not to mention the financial industry as a whole.

Assured Guaranty announced that it has given a waiver to WL Ross & Co. to purchase up to $5 million additional common shares in open market transactions.

In another casualty of the Lehman Brothers failure, Fitch Ratings downgraded and placed on rating watch negative the servicer ratings of Capstone Mortgage Services, a subsidiary of Lehman Brothers Holdings and the U.K. servicer to the Eurosail, Preferred Residential, Southern Pacific, MARS 4, EMF-UK 2008-1 and Mortgage Funding 2008-1 transactions.

Freddie Mac reported 30-year fixed mortgage rates averaged 5.78% this week, down 15 basis points from the last survey.

Lloyds TSB confirmed today that it has offered to buy HBOS in the wake of the downgrade actions seen yesterday. Both Standard & Poor’s and Fitch Ratings took ratings action on various HBOS entities.

Housing starts declined a larger-than-expected 6.2% to a seasonally adjusted 895,000. This is the lowest level the data has been in 17 years. The consensus call was for a 1.6% decline.