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Saturday, October 13, 2007

SIV Bailout: NY Times on Proposed M-LEC

by Calculated Risk on 10/13/2007 04:31:00 PM

From the NY Times: Banks May Pool Billions to Avert Securities Sell-off

... Citigroup, Bank of America and JPMorgan Chase, along with several other financial institutions, have been meeting to come up with a plan to create a fund that could prevent a sharp sell-off in securities owned by bank-affiliated investment vehicles. The meetings, which began three weeks ago, have been orchestrated by senior officials at the Treasury Department, and the discussions have intensified in the last few days.

A broad framework for an agreement could be reached as early as tomorrow ... but many important details still need to be hammered out. Another round of discussions is taking place this weekend, and it still possible that the parties will not reach agreement.
See the article for a few more details. Here is the Reuters take: Treasury officials seek to help battered SIVs
One plan that was discussed at the meeting involved setting up a "super fund" where "each SIV in the market could pledge up to one-third of its assets and get financing," the source said.
The WSJ reported on this last night: Big Banks Push $100 Billion Plan To Avert Crunch
If the banks agree, the plan could be announced as early as Monday, people familiar with the matter said. Citigroup announces third-quarter earnings Monday. The tentative name for the fund is Master-Liquidity Enhancement Conduit, or M-LEC.