GLG News by Asset Backed Securities Experts

Joseph SmithPresident and CEODefault Mitigation Management

What will the FED do next, what is left for them?

March 18, 2008

Analysis of:Fed Aggressive on Financial Front | money.aol.com

The Fed does not know what to do after they reduce interest tomorrow. This follows on the tail of the bailout of Bear Sterns in a sweet heart deal with JP Morgan/ Chase, and the opening of the FED window to non-depositories. The next issue and crisis is going to be the dollar value and its impact on the economy. Gas is going to continue up as will most other costs that are fuel dependent. What will be the impact as a G-7 goes off the dollar and say to the EURO?

John SalomoneManaging DirectorStructured Finance International, LLC

Still Room for (ATM) Cash Flow Buyers

March 17, 2008

Analysis of:ATMs and a changing biz model | www.greensheet.com

Right if you seek only Equity Returns from an ATM Portfolio, but timing is ripe for Fixed Income investors. All the warnings and diligence advice is right on the button, but if you are looking to replace minimal returns on a portion of your fixed income portfolio, a properly structured ATM buy can produce premium returns. Buying ATM's and their cash flow, just like all business transactions, reveal their true worth on the buy side of the transaction. A properly structured set of purchase terms manages and boxes the risks and ensures a proper return. ATM's for fixed income investors may just be the right time in the right place.

Joseph SmithPresident and CEODefault Mitigation Management

That did not take long - Bear Sterns use of FED bailout

March 14, 2008

Analysis of:Bear Credit Woes Send Stocks Lower | money.aol.com

1. Market reacts to Bear liquidity and FED temporary bailout plan by dropping over 200 points. 2. Will market continue to yo-yo as these events happen. 3. Will FED change plan if Bear fails?

Joseph SmithPresident and CEODefault Mitigation Management

When will they learn?

March 12, 2008

Analysis of:Stock Futures Pare Early Gains | money.aol.com

How afraid is the FED of where the economy is going that has caused them to promote such a drastic step as opening up funds to non depository banks? 1. The Fed lending at Par for devalued assets to Non Banks. 2. Will more money be made available when the markets continues down? 3. How will write offs upon liquidation of the underlying asset be addressed, during the 28 days or before it is repledged to the next 28 day period? 

Joseph SmithPresident and CEODefault Mitigation Management

Fed Rate Cut Expected - Is that a good idea?

January 30, 2008

Analysis of:Fed Rate Cut Expected | news.aol.com

While many companies and investors are planning on what to do with cheaper money due to the rate cuts, one of the implications has been that a rate cut will help re-start the mortgage industry engine. Yes, originators will get some new refi's completed and earn some fee income, and there will be a few borrowers who were not in the market before that get in to it now. There will even be some purchases of some of the mortgage inventory. Due to tightening credit standards and qualification criteria, the number of new loans will be minimal and the refi's will be to the best credit worthy borrowers. Truthfully, the rate cuts of last week and this week will actually hurt the mortgage industry due to adverse selection in exisitng mortgage pools with subsequent accelerated write-downs.

Joseph SmithPresident and CEODefault Mitigation Management

How the current rate cuts and other stats will impact the market

January 24, 2008

Analysis of:Stocks Seek to Extend gains | money.aol.com

The reduction in interest rates is going to have a negative impact on the existing mortgage portfolios due to adverse selection. The decrease in those seeking unemployment benefits is very misleading. The stimulus package is not going to help those in real trouble and will pay some bills for most.

Joseph SmithPresident and CEODefault Mitigation Management

BOA and Operational Risk

January 15, 2008

Analysis of:Countrywide rescue: $4 billion | money.cnn.com

Over valued versus the risk of litigation, talent flight, legislative constraints, portfolio loss and about every other imaginable variable. Overvalued servicing rights with disappointed servicing investors. Average industry systems, nothing great. Short staffed already. More leaving. Mozillio defineltly a liability and not an asset.

Joseph SmithPresident and CEODefault Mitigation Management

B of A acquires a stomach ache

January 15, 2008

Analysis of:Countrywide rescue: $4 billion | money.cnn.com

While on paper the acquisition versus the valuation of loan servicing looks good, the reality is a whole mess of operational and regulatory risk. The Countrywide CIO was just announced leaving for FIS (Fidelity) and the state of the art systems was one of the selling points in the acquisition. An asset sale will probably be the answer.

Maureen BoltonPrincipalGlobal Capital Access

Like any proud shopper, Temasek is happy to have recognised a bargain in Merrill

January 7, 2008

Analysis of:Temasek Supports Merrill Despite Sub-Prime Losses | www.bankingtimes.co.uk

This article summarises Temasek's recent equity investment in Merrill, including the price paid and future intentions.  Temasek appears to be more than satisfied with its investment and is inclined toward similar investments (financial institutions undervalued due to over-estimates of subprime/CDO related losses) in the near future.

Joseph SmithPresident and CEODefault Mitigation Management

Risk - Reward investments/endeavors require active investors

December 31, 2007

Analysis of:Hedge funds assess exposure to banks | www.ft.com

While it is true that investors risk money on potential returns and soundness of the underlying assets, it is also true that both the packager and the investor have analytical staff whose job it is to understand the investment. The underlying collateral of mortgages does have the value of the stream of mortgagors' payments; the key is that the stream be maximized to create the fullest return. Once the value of the stream is established then the pool will have worth and a basis for a market value. Instead of sitting back and bemoaning the investment banks who merely provided an investment option with very clear indications of the types of loans in the prospectus. Belittle the society that endorses short cuts to sound business.

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