Deflate the Balance Sheet

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Vice President: "Ok, Todd? These investors won't buy these loans, and they are just stinking up our balance sheet. Fuld told me it's my ass if I don't get them gone."
Managing Director: "Sorry, I wasn't listening. Margaret Brennan is on CNBC."
Vice President: "Brennan? No, she's not distracting. Louisa Bojesen is where it's at."
- long pause-
Managing Director: "You know, I just saw a memo that they are looking for Vice Presidents in the Houston office."
Vice President: "Uh... well... so about these loans. Investors won't buy them. It's the debt from First Data, Countrywide bank lines, and all this other toxic LBO crap- er... I mean high yield instruments..."
Managing Director: "So you did get the memo."
Vice President: "Yes... high yield instruments from the top of the bubble. I mean, even at 80 cents I can't dump it. No one will return my calls. I don't know what to do."
Managing Director: "You can't sell them to investors?"
Vice President: "That's what I just said."
Managing Director: "So, sell them to investors."
Vice President: "Ok, I feel like I'm in an Abbott and Costello routine here."
Managing Director: "Look, which training class were you in? If you can't sell them as loans then repackage them."
Vice President: "As, high yield debt instruments?"
Managing Director: "No, no, no. That's 'back in the day.' What do we do with it today?"
Vice President: "Uh...."
Managing Director: "Tranches? Bundling?"
Vice President: "A... CDO?"
Managing Director: "CLO. It's different. Hasn't tanked as bad as the CDO market yet."
Vice President: "So I should blend a bunch of the toxic stuff with a bunch of other stuff and then...?"
Managing Director: "Sell it in a private placement to avoid mark-to-market issues."
Vice President: "Wow!"
Managing Director: "Give it a good name. Something patriotic."
Vice President: "Will do!"
Managing Director: "If none of that works, call some of the private equity guys. Tell them that you are desperate to sell for balance sheet purposes and that it's a real value buy. Keep pointing out that you really need their help. They think they are big, long-term players and they can't do any real leverage deals anymore anyway so they have tons of dry powder. You might not even need the CLO, now that I think about it. Try the CLO first though. Then at least we can keep an equity interest. Oh, and run down to Starbucks and get me my usual."
Loan Prices Reach Highest in Six Weeks, Backlog Falls [Bloomberg]

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