Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us
Nye Lavalle


September 6, 2007 -- Wall Street's regulatory watchdog is starting to scrutinize the short-term debt markets, which have faced criticism for their lack of transparency and could potentially become the next shoe to drop in the current credit crunch.

Erik Sirri, director of market regulation for the Securities and Exchange Commission, told the House Financial Services Committee yesterday that the agency was monitoring whether a failure of a large asset-backed commercial paper program could pose a threat to the market.

Sirri said the commercial paper programs of Wall Street's biggest commercial and investment banks are carried off the banks' balance sheets for accounting purposes, and thus are often poorly disclosed.

Asset-backed commercial paper is a form of short-term debt created when banks purchase asset-backed securities with the proceeds from short-term commercial paper sales - corporate IOUs due in 270 days or less. The banks seek to make money by capturing the difference in spread between interest earned and interest paid out.

However, purchasers of this form of debt are refusing to buy more paper from banks or finance companies seen as having exposure to subprime assets.

Several well-known - and formerly highly rated - asset-backed commercial paper programs have hit dire straits recently, with London-based Cheyne Finance being forced to wind down just two weeks after its triple-A ratings were affirmed.

What's worse from a regulatory standpoint is that Citigroup, according to The Wall Street Journal, represents 25 percent of this now troubled market, with around $100 billion under management. So if losses mount, the world's largest bank would have to recognize the losses on its balance sheet.

For its part, Citi argues all is well.

"Citi's [commercial paper programs] remain robust and their asset portfolios are performing well," Citi's London-based co-heads, Paul Stephens and Richard Burrows, recently wrote.
Quote 0 0
Write a reply...