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Post by jeffolie on Aug 28, 2007 12:18:07 GMT -6
State Street faces exposure to conduits: All Reuters newsNEW YORK (Reuters) - Institutional money manager State Street Corp faces $22 billion exposure to asset-backed commercial paper conduits, the off-balance sheet vehicles that have caused problems for rivals in recent weeks, British newspaper The Times reported. The Boston-based bank has credit lines to at least six conduits, which account for 17 percent of its total assets, the paper said, citing regulatory filings. The conduits are packages of retail and commercial loans financed by short-term debt raised in the commercial paper market, the report said. Investors have increasingly worried about the conduits amid fears that banks will have to fund the debt from their own balance sheets if these vehicles cannot sell on their maturing paper, the report said. State Street's percentage makes it the most highly exposed bank to conduits among its European and American peers, the report added. news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20070828&id=7383369What the heck are conduits? Near as I can tell from reading, they are off the balance sheet accumilations of commercial paper backed by mortgage and credit card debts. New accounting rules have not directly addressed 'conduits' but are addressing off the balance affiliations. They really should not be off the balance sheets IMHO. This trick was used extensively by Enron which collapsed when it could no longer sell its commercial paper. State Street will probably be in big trouble because the market for this type of commercial paper has seized, froze, become out of favor.
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Post by unlawflcombatnt on Aug 28, 2007 13:58:05 GMT -6
What the heck are conduits? Jeff, I was going to ask you that question, until I got to the end. I don't see why any U.S. organization or firm is allowed to keep anything "off the balance sheets." Especially a bank. Are they going to expect a Federal bail-out for their "off-the-balance-sheet" losses? Not "IMHO" either. Certainly a great example for a financial institution to follow.
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Post by beachbumbob on Aug 29, 2007 5:11:43 GMT -6
kinda like SPE's???
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