Recovery for SIVs unlikely

[flashl]

LAS VEGAS (Reuters) - The troubled market for so-called structured investment vehicles (SIVs) is effectively dead and likely to stay that way given new international rules for matching banks' reserves to their risks, panelists at a bond industry conference said on Tuesday.

The new Basel II international accord, to be applied to U.S. banks with total assets of $250 billion or more, is likely to make investing through off-balance sheet SIVs less attractive for banks, which are the main sponsors of such vehicles, speakers at the American Securitization Forum conference in Las Vegas said.

SIVs are specialized funds that raise cash by issuing short-term debt and invest the proceeds in longer-dated and higher-yielding assets, including U.S. mortgages. The funds pocket the difference between what they make on their investments and the interest they pay out to investors.

The vehicles have been unable to fund themselves normally for many months amid the U.S. credit crisis and the market value of their investment portfolios has plummeted, prompting ratings downgrades and mass restructuring efforts.

Reuters

It's interesting to observe ruling making for 'our' banks coming from outside the U.S.

And, the spate of choruses singing ‘we need regulations’ will be a show worth watching.

[whistle]

1. That means the Fed and Bush should be stopped by congress from pouring

...additional tens of billions of dollars into the faith based hedge funds and SIVs salvation rat hole which is doing nothing but bailing out Bush's closed rich friends and adding to the Federal debt. The focus must be on enacting emergency legislation that will prevent millions homeowners from losing their homes and save local chartered banks from going under in this giant financial swindle.