Small Texas Firm Picks Off JPM, BAC, and RBS

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You've got to hand it to the guys at Austin-based Amherst Holdings, they've got some serious moxy. Over the past year, Amherst sold credit protection to JPM on some Lehman-issued subprime MBS and later encouraged the servicer, Aurora Loan Services, to buy the outstanding loans. This made the CDS it sold to JPM completely worthless (BAC and RBS also bought protection on the bonds, but through other counterparties). Far from admitting any impropriety, Amherst contends that it was simply in the right place at the right time.

Amherst says it didn't do anything improper, but took advantage of an opportunity when it emerged. A lawyer reviewed and blessed the strategy for the firm, according to people familiar with the matter.
Privately held Amherst says it acted in good faith trying to limit losses for clients, who had sold credit-default swaps on the securities. "We wouldn't jeopardize our business and reputation by entering into an opportunistic trade knowing what the outcome would be," said Amherst's chief executive, Sean Dobson.

A Daring Trade Has Wall Street Seething‎ [WSJ]


Layoffs/Hiring Watch '12: RBS

The bad news is that 600 of the Queen's corgis are being let go. The good news, while it probably comes as little solace to those who will no longer receive birthday chickens, is that 300 or so new ones will be hired in their place. State-backed lender Royal Bank of Scotland is making more than 600 staff redundant as a result of legislation due to come into force at the end of the year, bringing total staff reductions at the bank since its 2008 bailout to around 36,000. RBS, 82 percent owned by the government, said the jobs would go as a result of new UK rules requiring retail financial products such as savings and investment vehicles to be sold by more highly qualified staff and charged a fee. "As a response to this we will be reducing the number of roles by 618 across the UK and creating 351 new roles," an RBS spokesman said on Tuesday. "Having to cut jobs is the most difficult part of our work to rebuild RBS and repay taxpayers for their support. We continue to make efficiencies across our business to deliver greater value toour customers and shareholders," the spokesman added. RBS Job Loss Hits 36,000 [Reuters]