freakdog

Large OTC Markets + Excessive Leverage + FVA = Systemic Risk

I think we need to stuff the ballot boxes of the American Dialect Society to make "bankster" the word of the year for 2009.

Citigroup: Hoping for a Thaw

OK, got it. Citigroup borrows money from the Fed window to lend to a group of LBO artists in order for them to purchase their own bad debts back from Citigroup (who also is throwing in a free PUT option on the asset so that Citigroup doesn't have to hold the asset on their books and write it down this quarter). This way they get to write down the debt at a later point when it goes bad, artificially inflating revenue for this quarter's earnings. It looks like another form of an off-books vehicle that caused all this mess in the first place. This is moving the chairs from the deck of the Titanic to the top of the iceberg with which it's going to collide. And then they'll rearrange them next quarter. And win the Nobel prize in economics.

Citigroup: Hoping for a Thaw

You should mention the pertinent factor that Citigroup is fronting the money for these entities to purchase this debt, plus they are indemnifying the purchasers on the first 20% of loss. Sounds like financial engineering to me.