|
It is amazing that this stuff is headline material. Fact is indeed stranger
than fiction.
Ratings
Agencies Sold AAA status to the highest bidder
The U.S. Securities and Exchange Commission may recommend this week that
Moody's Investors Service, Standard & Poor's and Fitch Ratings be prohibited
from advising investment banks on how to earn top rankings for asset- backed
securities, according to people familiar with the matter.
SEC staff may also propose at a June 11 meeting in Washington that the companies
disclose all the data that goes into a rating so competitors can grade bonds
even if they weren't compensated by the underwriter, said the people, who
declined to be identified because the rules aren't final. Moody's, S&P
and Fitch help design securities backed by a stream of payments, making it
impossible for them to be impartial raters, a May 2007 study by academics Joseph
Mason and Joshua
Rosner concluded.
It
is much too early to invest in land. I will get an update to the Lennar report
out this week. This refers to the
JVs that I busted Lennar under reporting, and eventually selling off
to CALPERS, who obviously does not read my blog. Some should offer those
guys a gift subscription, it would have saved them a BILLION dollars!
A partnership that involves the nation's largest pension fund and owns 15,000
acres of land outside of Los Angeles has filed for bankruptcy-court protection,
representing one of the biggest land deals to sour amid the housing bust.
The Chapter 11 filing by LandSource Communities Development LLC late Sunday
is a potentially costly and embarrassing blow for the venture's main investor,
the California Public Employees' Retirement System, known as Calpers.
The bankruptcy filing in federal court in Delaware means Calpers could lose
much of its $970 million investment in the venture, which it made through
an investment vehicle in February 2007, only months before land values plunged.
At the time, the venture's assets were appraised at about $2.6 billion. Earlier
this year, the value had shrunk to $1.8 billion....
The 2007 deal allowed home builder Lennar Corp.
and Cerberus Capital Management's LNR Property Inc. to reduce their ownership
in much of the land to 16% each from a 50-50 split. Lennar and LNR also each
received $660 million from the deal.
The Calpers investment vehicle, MW Housing Partners, took a 68% stake. MW
Housing involves MacFarlane and Weyerhaeuser Realty Investors, a unit of
timber titan Weyerhaeuser Co.
The equity holders say they aren't responsible for paying back the nearly
$1.2 billion of syndicated debt that was bought by more than 100 banks and
institutional investors.
"Lennar and the other owners are not responsible for, nor a guarantor of,
any of LandSource's debt," the Miami-based home builder said in a statement...
Lehman
Brothers is awash in liquidity and does not need capital again, as it raises
$5 billion , the 4th trip to the capital markets and the Fed for money,
amounting to over $11 billion total over a 4 month period. Well, if this
is what they need when there is no liquidity issue, just imagine how much
money they would suck up if they ACTUALLY HAD A PROBLEM.
I would also like to note that they are reportedly about to announce $2 billion
in losses. I made it very clear that they took a significant economic loss
last quarter, and this quarter would be much harder to hide the losses (even
though it didn't appear that they did a very good job last quarter either,
but the Street seems to have fell for it).
Lehman
Brothers Holdings Inc. is close to raising more than $5 billion of
fresh capital from an array of investors including the New Jersey Division
of Investment, according to a person familiar with the matter.
The move comes as the firm is set to report a second-quarter loss of more
than $2 billion, this person said. Until recently, most analysts who follow
Lehman have been predicting a loss of about $300 million.
On Sunday afternoon, the firm was still pulling together final details of
the capital raising, which could be announced Monday or Tuesday. Additional
capital raisings are sure to follow for other banks.
|