Mortgage asset superfund pushed by Citigroup Inc., J.P. Morgan Chase & Co., and Bank of America Corp. only shifts the pain to next year with higher intensity
Kirt Meham
Oct. 17, 2007

Citigroup Inc., J.P. Morgan Chase & Co. and Bank of America Corp., are working on forming a mega investment pool to acquire mortgage assets. They have set a target of $80 billion and are trying to woo the smaller banks into the scheme.

The problem with their plan is that it will just shift the trouble to next and so on throughout years. It is similar to taking another loan to avoid default on an existing loan.

Wachovia joined this plan yesterday. The smaller banks are forced to join the planned mega fund also. The Treasury department supports the plan. The biggest question remains, what will be the intensity of pain for these big financial institutions when the pain comes back next year?

It is aimed at removing a well spread jam in the market for the short-term debt of investment vehicles that hold mortgage-related assets. Those assets have declined sharply in value amid a credit crunch touched off by a downturn in the value of subprime mortgages, or home loans to borrowers with weak credit.

The fundamentals have not changed. The plans spreads the trouble to next several years but unfortunately the jamming is not over yet. It continues to grow and unfold as the financial meltdown proceeds slowly like the lava flow in a volcano.

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Mortgage asset superfund pushed by Citigroup Inc., J.P. Morgan Chase & Co., and Bank of America Corp. only shifts the pain to next year with higher intensity
Kirt Meham
The fundamentals have not changed. The plans spreads the trouble to next several years but unfortunately the jamming is not over yet. It continues to grow and unfold as the financial meltdown proceeds slowly like the lava flow in a volcano.
READ MORE>>

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