His wife, Christy Mack, started her own business in 2009, called Waterfall TALF Opportunity, which has apparently netted the Macks some pocket change. Continue reading »
TALF
It took a year and billions in government bailout bucks, but the monster known as the mortgage-backed securities market is twitching.
Developers Diversified Realty Corp. sold its 2009-DDR1 (Frankenbond) today, $400 million worth of the very paper that helped sink the economy. The five-year bonds are backed by 28 malls in 19 states.
Will the world again be ravaged by MBS monsters stalking financial centers around the world? Not if they need federal financing. Frankenbond is the first CMBS deal eligible for TALF money, and the program expires tomorrow.
Maybe the guys at Moody’s are finally getting it. Apparently somewhat lost on the Moody’s clan during the past 6 or so years when getting a rating was about as tough as waking up, was the clear arb at the top of the capital structure. Between the two masters of mean reversion analysis, Moody’s had more stringent conditions than S&P to achieve a AAA rating for ABS securities. When there was plenty of appetite for sub-AAAs, Moody’s didn’t seem to care one bit about the arb. It has taken the government’s requirement of only one AAA rating for TALF eligibility to snap Moody’s out of this haze and now, naturally, they are complaining about it.
The need to have a AAA rating to be eligible “for government programs raises the specter of rating shopping,” Andrew Kimball, head of the global structured finance business at Moody’s Investors Service, said during the company’s investor day today. “Those programs don’t differentiate on the quality of the rating. Rating shopping becomes a problem.”
The irony in his statement is delicious. No doubt Ben Bernanke will soon be listening to the debate on why its unfair to treat two completely worthless ratings differently.
Fed’s TALF Fuels Rating ‘Shopping,’ Moody’s Says [Bloomberg]
Tyler Durden over at Zero Hedge points out the (not so) subtle campaign by Bloomberg to bash the TALF. Heads I win. Tails they lose. Thanks TALF!
Collection of anti-TALF banners after the jump.
Bloomberg’s Vendetta With Geithner/TALF Continues [Zero Hedge]
You will be happy to know that some people are out there right now, tirelessly fighting for your rights. That is, the rights of the little guy. That is, the rights of the mutual fund investor. I mean, the rights of mutual fund managers. You get the idea.
The funds argue the leverage provided through TALF carries no risk to the borrower because it’s done through what are known as non-recourse loans, which they assert should not be considered a form of leverage.
If they get their way, it would enable mutual funds — and thus individual investors — to have a bigger role in buying up assets, which could help kick-start a program that thus far has been slow to catch on.
Why, after all, shouldn’t mutual funds be able to participate in wholesale manipulation and bailout sleight of hand with the same ease and slime greased grace as other massive institutions? Sure, sure, the leverage issue. But it’s not REAL leverage, is it? I mean, it’s not like there’s actually any real risk to the borrower? What do you mean “shut the hell up?” No one is listening. Look, I just mean that there are a ton of fees to earn… that is… opportunities for individual investors to benefit.
Mutual Mission [The New York Post]
Demonizing sources of capital has consequences. The same is true of creating a market environment that is so unpredictable and subject to the slings and arrows of populist ire that no one wants to dip a toe in. Consider the current TALF situation:
“I can do very well for my clients without venturing into federal waters which are inhabited by sharks,” said David Kotok, the chairman of Cumberland Advisors Inc. in Vineland, New Jersey, who manages about $1 billion. “We are leery of doing anything with the federal government.”
While Wall Street has been slow to take up the cautionary baton, pulling the rug out over and over again has some effect, after all.
Fed Struggling to Win TALF Investors Wary of ‘Sharks’ [Bloomberg]
