banval

Cuomo Takes Action Against Citigroup, as ABCP Buyers Wait in Vain

In Canada, what happened was much closer to fraud than anything in the US. Deutsche Bank and DBRS invented the leveraged super senior trade which was based on credit derivatives and rated for the Canadian Conduit market. Because it was worth much less than 100% day 1, the investors were ripped off from the start. They relied on an explicit liquidity put to prevent them from losing their money, however, if they had looked closely at the language they would have realized that Deutsche never had to deliver on it. It was based on technical wording that required the entire Canadian Banking system to be failing before the liquidity put was triggered. At least all the SIV/CDO/ARS paper in the US was worth par when it was sold, and they may have had varying degrees of liquidity protection, but the US agencies never rated that component. Without DBRS, Deutsche could never have crushed the Canadian pension the way it did..those Canadian pensioners now own $12billion of worthless paper....