An interesting report from the NY Times about a Treasury-backed proposal to create a $75B super-SIV: http://www.nytimes.com/2007/10/14/business/14bank.html
It raises a couple of questions though 1) Clearly the subprime crisis is not over yet. So what explains the surging stock market? Is it simply a case of speculators moving from the debt markets into equities and driving prices up? 2) How exactly is this super-fund supposed to help anything? Individual SIVs can't find buyers for their commercial paper, but a huge consolidated SIV can? Is there an implicit Treasury guarantee? ------------------------------snip Several of the world's biggest banks are in talks to put up about $75 billion in a backup fund that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that threatens the broader economy. Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days. -raghu.
