Merrill Lynch öffnet ein Hornissennest durch Rückzahlung (mTuL)

DT , Samstag, 02.02.2008, 15:22 (vor 6567 Tagen)

eines fast wertlos (91% Verlust) gewordenen CDOs an die Stadt Springfield/Massachussetts.

Hunderte von anderen Städten rund um den Globus können jetzt Merrill Lynch verklagen und ebenfalls ihr Geld zurückfordern. Bei Springfield war es eine relativ kleine, 2stellige Millionensumme, aber andere Beträge sind viel höher.

Man lese den angehängten Artikel von Mish's Blog, vor allem den Teil, der das Vehikel "Norma" mit 1.5 Mrd USD betrifft. Dort wurde ein unter Anklage stehender bekannter Pennystock-Schieber (sozusagen so ein Bernd Förtsch) eingesetzt, um diese SIVs abzusetzen.

http://globaleconomicanalysis.blogspot.com/2008/02/merrill-lynch-opens-legal-hornets-ne...

Hier ein kleiner Ausschnitt daraus. Happy reading für einen Sonntag nachmittag:

Gruß DT

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The Wall Street Journal on December 27 headlined “Wall Street Wizardry Amplified Credit Crisis.” Reporters Carrick Mollenkamp and Serena Ng dive into how Merrill Lynch created a so-called mezzanine CDO (made up of middle-rated bonds) named “Norma,” recruited a Long Island penny-stock impresario to run it, and in its small way helped to undermine the global financial system. It’s one of the best explanatory pieces yet on how these financial instruments that were supposed to spread risk concentrated it instead.

As the Journal says:

But Norma and similar CDOs added potentially fatal new twists to the model. Rather than diversifying their investments, they bet heavily on securities that had one thing in common: They were among the most vulnerable to a rise in defaults on so-called subprime mortgage loans, typically made to borrowers with poor or patchy credit histories. While this boosted returns, it also increased the chances that losses would hit investors severely.

Why would anyone buy it? To get a higher rate for a bond with the same safety rating as corporate or Treasury bonds. Why would rating agencies (e.g. Standard & Poor’s, Moody’s) rate them so highly? Well, not to be too cynical, but the companies seeking the ratings pay the bills.

Tangled hairball. House of cards. Call it what you will, it was spit out or stacked up by the shamans on Wall Street, who used this financial voodoo to earn huge fees from underwriting these securities.

That’s how the $1.5 billion Norma CDO came about.

A key to the Journal story’s success is that it scored an interview with Corey Ribotsky, the Long Island-based penny-stock broker, whom Merrill set up as a “CDO manager” to recruit investors and administer Norma. Ribotsky hooked up with Merrill at a Long Island club after meeting a criminal defense lawyer who introduced him to a Merrill bond salesman.

Why was Merrill Lynch essentially setting up businesses for such outside CDO managers—and why Ribotsky, who’s being sued by three separate companies for manipulating their stocks? The Journal doesn’t answer this directly, and there may be another story there. Still, his quotes are priceless:

“It sounded interesting and that’s how we ventured into it,” Mr. Ribotksy says.

Well, there you go.

The Journal reveals that Norma was comprised of derivatives and securities that Merrill itself had underwritten:

Such cross-selling benefited banks, because it helped support the flow of new CDOs and underwriting fees. In fact, the bulk of the middle-rated pieces of CDOs underwritten by Merrill were purchased by other CDOs that the investment bank arranged, according to people familiar with the matter. Each CDO sold some of its riskier slices to the next CDO, which then sold its own slices to the next deal, and so on.

That circular cross-selling also multiplied the impact of housing defaults. The Journal cites a UBS study saying banks sold CDOs made up of derivatives worth three times more than the value of the underlying, asset-backed securities.

The banks are getting stuck with billions of dollars in losses in large part because they kept the “safest” parts of the CDOs on their books, since their low yields attracted few buyers. Since they concentrated CDOs in areas that have been slammed—like BBB-rated subprime securities—their values have taken huge hits. The Journal says mezzanine CDOs could account for up to three-quarters of the losses of the biggest banks like Citigroup and Merrill.

While the best mortgage-crisis stories may be yet to come, this one certainly helps untangle that hairball a bit.

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