SIVs Appear To Be DEAD! HEEEELLLOO!!!

Posted 2008-04-04 23:32
by Karl Denninger

SCORE ONE FOR THE GOOD GUYS!

To those of you who say that PETITIONS DON'T WORK and BLOGGING DOESN'T WORK and NOBODY LISTENS.

It appears that the FASB has removed the concept of QSPEs, which is the enabling "piece" to make off-balance-sheet securitizations possible, from the FASB set of regulations, specifically, FAS 140.

This appears to have happened TODAY.

As such it appears that all financial institutions will have to reclaim all SIVs back onto their balance sheets no later than the start of 2009.

This is a watershed event, in that these vehicles, when they are reclaimed onto bank balance sheets, is likely to lead to the P/Es of these firms skyrocketing north, and consequently, a far more realistic view of both share price AND capitalization.

In short Investment Banks have ~6 months to get their act together and their capital up, and then they are going to have to start integrating these vehicles back onto their consolidated financial statements.

I'm impressed.

Beware - the XLF and BIX are not cheap or even reasonably priced with this change coming down the tube.

The next step of rationalization of the share prices of Investment Banks is about to begin.

Discuss this entry (registration required to post)

Main Navigation

Full-Text Search & Archives

Archive Access

Blogtalk 3:30 CT Mondays

Items To Look At

Discuss The Capital Markets along with daily technical analysis with our Gold Donor program.

Where We Are, Where We're Heading (2012) - The annual 2012 Ticker

Links and Blogroll

Our policy on reciprocal links: Send us an email with your information and why you think your blog or news site would make a good addition - in most cases reciprocal link requests will be granted.

Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Looking for "The Best of Market Ticker"? Check out Ticker Classics.

Visit the forum to discuss this and other investing-related topics; see the FAQ on the forum for information about Gold Donor status including access to our technical analysis video server.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

Market Ticker content may be reproduced or excerpted online provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media.