Punk Ziegel & Co Says Super SIV Fund May "Defraud Investors"

Banking, finance, and taxes

Published: November 26, 2007 10:06 am

Citigroup (C), JPMorgan (JPM), and Bank of America (BAC) want to raise a fund worth $80 billion to make short-term loans to SIVs that do not currently have a market for many of the securities which they own. Since Citi is affiliated with some of these SIVs, some critics have called the move a "bail out".

But, the long knives are out now, the criticism of the fund is turning nasty. Bloomberg writes that "analysts including Richard Bove of Punk Ziegel & Co. have criticized the proposal because it may saddle new participants with losses created by their bigger rivals."

“Why should we put something on our balance sheet that is going to result in further writedowns?” is how most contributors will respond, Bove said in an interview. “The job of the Treasury isn’t to go out and defraud investors.”

That’s right, Why be nice about it?

Douglas A. McIntyre

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