More Details on Superfund (BAC, C, JPM)

By Douglas A. McIntyre Updated Apr 3, 12:50PM EDT · Published Oct 15, 9:04AM EDT

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More details are out on this huge superfund we covered over the weekend to take advantage of over-sold (or now illiquid) asset-backed securities and loans. The name of the structure is a master conduit to enhance liquidity ("M-LEC") in the market for asset-backed commercial paper and medium-term notes issued by structured investment vehicles ("SIVs"). Some would refer to this is a stabilizing fund or a bailout fund, and others might consider it more of a vulture fund.

Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), and several other financial institutions reached an agreement in principle to create a single master liquidity enhancement conduit ("M-LEC"). Access to such liquidity is intended to allow participating sellers to meet pending redemptions and facilitate asset-backed commercial paper rollovers. That sounds like a bailout.

The press release says this M-LEC could be operational within 90-days. The Department of Treasury facilitated the discussions among the consortium of banks and investment managers. It almost sounds like the government is forcing the lenders to band together to keep the liquidity flowing, but you have to wonder if some further incentives were made. Imagine what the conspiracy theorists will be talking about.

The first vulture fund for an IPO was filed back in August, although it was not related to this superfund.

Jon C. Ogg
October 15, 2007

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.