Word: bankes
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...much of the public reaction to the Treasury Department's plan to dislodge risky loans and poorly performing bonds from banks has been positive. After the plan was announced two weeks ago, the stock market produced one of its biggest rallies in months. At its core, the plan promises to offer cheap loans to investors to purchase bank loans on which borrowers are behind or at risk of default. The plan would put needed cash into the hands of the banks. And on the surface it looks like it could produce sizeable returns for investors, as well as a smaller...
...compensate them for the risk that a mortgage will end up delinquent or in foreclosure. A price of $0.26 implies that investor are looking to get paid at least 40% to take on the risk of an existing mortgage loans these days. (Read "Why Berlin Says U.S. 'Bad Bank' Plan...
...loss could potentially be much bigger. Current rules require banks to hold assets that trade on their books at the value they would fetch if a bank had to sell them to another investor. Loans typically don't trade, so the rule typically only applies to stocks or bonds a bank might happen...
...loans start trading more regularly because of the government's PPIP program, the banks would have submit those loans to so-called mark-to-market rules. That means the banks would have to take a write-down not just on the mortgage loans they sell, and get cash for, but on all of the mortgage loans on their books. Banks hold about $3.5 trillion in mortgage loans. So having to mark all those loans down $0.21, not just the ones that are sold, would be disastrous. (Read "Geitherner's Bank Plan: Only a Partial Solution...
After a year-long stint at a European investment bank and another at Enron, Iris M. Mack signed on to be a quantitative analyst for Harvard Management Company in early 2002, hoping, she says, to find job security and distance from the risky trading and accounting practices that forced her last employer into bankruptcy in the company charged with managing Harvard’s endowment...