The chairman of Citigroup is thought to be resigning on Sunday. There are further rumors, click on the post for the full story on Yahoo news, that there are 80 billion of SIV, or Structured Investment Vehicles, that have been held off balance sheet, and the SEC is investigating whether the accounting has been done right. This could all hit the fan on Monday.
The Observer has to be somewhat humbled to realize that he previously wondered why a simple mortgage moratorium could not be called like they did in the 1930's---and the answer is that the mortgages are all sold and they are packaged in a million pieces into various investment vehicles. So---when the mortgage holder wants to renegotiate the mortgage, which one of the holders of the mortgage does one talk to?
And now that the packaged products have been trashed in the marketplace, and the revaluation has threatened the banks, how would a holder of a mortgage particle be motivated to take further losses?
The back to back events at Merrill Lynch and Citigroup are pretty stunning. Stay tuned for the news on Monday.
Saturday, November 03, 2007
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