Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Neil Barofsky's TARP Report on Bailout Losses Comment

Politics / Credit Crisis 2009 Nov 13, 2009 - 07:38 AM GMT

By: Janet_Tavakoli

Politics

Best Financial Markets Analysis ArticleMy comments on the upcoming TARP report will echo my February 4, 2009 comments. TARP’s inspector general Neil Barofsky already anticipates losses. Unfortunately, the losses are right on schedule.




Let’s hope that Barofsky did not rely upon Blackrock for uncovering problems. Blackrock was involved in disturbing activity as a CDO manager. Among other things, Blackrock Financial Management was CDO manager in some horrific 2007 vintage CDOs such as Pacific Pinnacle CDO ($1 billion; closed 1/1/07; Event of Default 2/4/08); Pinnacle Point Funding ($2B closed 6/7/07; acceleration 12/13/07); Tenorite CDO I ($1 B closed 5/11/07; liquidation 2/7/08); or Tourmaline CDO III ($1.5 billion closed 4/5/07; Event of Default 3/31/08).

Blackrock is evaluating Fannie Mae and Freddie Mac. It is also managing Maiden Lane [the stuffee for Bear Stearns’s assets via JPMorgan Chase, and the underlying positions of AIG’s credit default swaps that included Goldman’s trades and Goldman’s CDOs, (via SocGen, Calyon, etc.) along with many problematic Merrill deals] and was awarded no-bid government contracts to manage other TARP-related entities. Blackrock is too close to the problem to be objective, and no bid contracts were inappropriate. Given its track record, it seems to me that, Blackrock has an incentive to cover-up problems.

In the secondary trading market, CDOs such as the Goldman Abacus deal reported on yesterday by Bloomberg’s Jody Shenn are called WTF deals. I call Blackrock’s no-bid awards CYA contracts.

From above interview:
Janet Tavakoli, president of Tavakoli Structured Finance, talks with Bloomberg's Pimm Fox about proposals to deal with troubled assets on the balance sheets of U.S. banks that are clogging the U.S. financial system.

Janet Tavakoli is for proposals that require private equity investors to put up 20% of their own money. The U.S. Treasury will put up 80% with the following terms: it gets paid back first, receives interest on its investment, and gets a share of the profits. This is a way of ensuring market pricing and allowing the banks to delever while the Treasury (the only source of a large enough balance sheet) levers up with the protection of a 20% cushion and mark-to-market pricing.]

Among other reasons to urge mark-to-market accounting, there is a multiplier effect of losses (for some securitizations) because” total loss” tranches were transferred to other securitizations (especially synthetically), so that some CDOs and CDO-squareds are largely worthless. No one can tell which securitizations have this problem without analyzing each one. The Treasury will buy a pig in a poke. This is not a matter of opinion or “different views” it is a matter of fact.

By Janet Tavakoli

web site: www.tavakolistructuredfinance.com

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago's Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in