On Wed, 12/17/08, Anonymous Anonymous wrote:
From: Anonymous Anonymous
Subject: Solving the CAD ABCP issues
To:
mccalj@parl.gc.caCc:
jflaherty@fin.gc.caDate: Wednesday, December 17, 2008, 7:46 AM
Honourable John McCallum,
I sent the attached below to the treasury. I know you have been an outspoken supporter of the Montreal Accord settlement and having treasury support it financially.
I urge you to reconsider your position. Many of us working at the banks (who YOU will be bailing out if you support the Montreal Accord), raised our voices in concern over the Canadian conduit business. It was a travesty that foreign banks were allowed to take advantage of the Caisse and PSP so easily and willfully.
However, they should not be rewarded for their misdeeds. They cleverly colluded together to avoid meeting their obligations under the liquidity provisions embedded in the assets that they then created and sold to the conduits. Because these assets are Russian dolled away from the end-conduit investors, the details of these liquidity provisions are unknown to the investors.
These liquidity provisions should generally require the foreign banks to BUY BACK ALL THE ASSETS. Thats' right, $32billion put back to the foreign banks overnight. Problem solved!
The current settlement rewards these fiends by allowing them to continue to hide and eliminate these liquidity provisions, make accrual book loans into the collateral, and all the while protecting their historic profits, and even booking new restructuring profits.
The best solution is for the Canadian government to do due diligence these assets, put them back to the Banks, and lend money to the banks to support the assets. Not continue to support the greatest fraud in Canadian history.
On Mon, 12/15/08, Anonymous Anonymous <lssabcp@yahoo.com> wrote:
From: Anonymous Anonymous
Subject: Solving the CAD ABCP issues
To:
jflaherty@fin.gc.caDate: Monday, December 15, 2008, 12:08 AM
Honourable James M. Flaherty,
I am a former CDO practitioner who had worked at 2 of the foreign banks that created the "Leveraged Super Senior" assets that were sold to the Canadian Conduits. These were hugely profitable transactions for these firms as a result of the investors (conduits as a proxy for their lenders) did not fairly value the assets sold to them. These assets were inappropriate for any other investor because they had a market value trigger embedded in them that only DBRS of all rating agencies would rate. Don't be fooled. If Canada is going to back this rescue, it should know that it was well known internally at these firms that the non-bank Canadian Conduits were behaving foolishly.
You might be lulled into thinking that these banks provided liquidity and would support the "par" market for these assets. You would be wrong. These banks conspired to limit the application of their liquidity backstops. This is similar to the Auction Rate market in the US, where investors thought the banks who made the assets would buy them back. There was no explicit provision in the auction in the market for liquidity as in the US conduit market or the CAD conduit market. However the explicit CAD conduit liquidity language was caveated by the definition of a "MARKET DISRUPTION". IT is this definition that has let DB and the original asset sellers off the hook. They are relying on their interpretation this language which is well disguised out for them. The old language defined a Market Disruption as ALL conduits failing, including the bank sponsored ones. DB in particular quickly realized this was an impossibility unless the CAD banking system collapsed. SO DB KNEW IT WAS SELLING THESE ASSETS WITHOUT ANY LIQUIDITY BACKSTOP, BUT ALLOWING THE INVESTORS TO ASSUME THEIR WAS.
DBRS realized its stupidity and changed the MARKET DISRUPTION requirements to be defined as 2 Conduits failing. DB and the original manufacturers of assets promptly pulled out of the market. Others including Merrill, Barclays, and HSBC, entered with the knew language. THE ASSETS MADE IN 2006 BY THESE BANKS SHOULD BY ANY LEGAL INTERPRETATION BE BOUGHT BACK AT PAR BY THESE BANKS. The rush to put a standstill on these conduits gave them an out.
BEFORE YOU LEND TO THE RESTRUCTURING, PLEASE INVESTIGATE THESE ASSETS AND MAKE YOUR OWN DECISION AS TO WHETHER THE FOREIGN BANKS SHOULD BE BUYING BACK THESE ASSETS AT PAR, AS IN THE US AUCTION MARKET.
This was a scam, and the banks knew it. By allowing them to make loans to the re-structuring and change the terms, you are allowing them new windfalls. I know, for example, that DB is booking EURO 125,000,000 of profit from the re-structuring.
here is a historical summary form an objective 3rd party:
http://www.pimco.com/LeftNav/Global+Mar ... 5-2007.htm