Toxic Assets

RECENT NEWS
Reuters  Nov 3  Comment 
The U.S. Treasury Department on Tuesday announced two more funds have met requirements to get government financing that that will let them begin purchases of banks' so-called toxic assets.
Financial Times  Oct 18  Comment 
US banks such as Citigroup and JPMorgan Chase have earned billions of dollars from their “toxic” portfolios in the past three months as a rally in some of these distressed assets enabled them to book accounting gains or sell them
Reuters  Oct 5  Comment 
The U.S. Treasury Department will announce on Monday that three more funds have met requirements to get government financing that will let them begin purchases of banks' so-called toxic assets.
The Straits Times  Sep 30  Comment 
WASHINGTON - THE US Treasury said Wednesday it had closed deals with two large fund managers that raised US$1 billion (S$1.4 billion) for a program to buy up 'toxic assets' in the banking system. The Public-Private Investment Funds program...
Contrarian Profits  Sep 29  Comment 
Pop quiz: what happened a year ago today? Here’s a hint: The House put the kibosh on the first rendition of The Emergency Economic Stabilization Act of 2008 — Former Treasury Sec’y Hank Paulson’s three-page request for a $700...
Financial Times  Sep 21  Comment 
Bank of America agreed to pay $425m to federal regulators to extricate itself from an agreement struck last December to protect the bank against $118bn worth of toxic assets, most of which came from Merrill Lynch.
Sydney Morning Herald  Sep 17  Comment 
Barclays has been accused of 'banking by sleight of hand' after creating a company to take over its most toxic assets and ring-fence future losses.
www.thedailytradingrisk.blogspot.com  Sep 15  Comment 
*And the US taxpayer is guaranteeing low interest loans. Some people will say, "but they are providing a valuable and much needed service." Oh yeah? Then why is my country bankrupt? AND WHERE THE HELL IS MY LOW INTEREST LOAN? Wilbur Ross Sees...
New York Times  Aug 26  Comment 
The investment bank Natixis said that its partially state-owned parent company would guarantee about $50 billion in toxic assets on its books.
Financial Times  Aug 25  Comment 
French investment bank thrown a lifeline by parent company BPCE that could help it avoid government aid and pave the way for restructuring
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Toxic assets are assets for which the market has significantly plummeted. Toxic assets value is so uncertain that there is no functioning market for them (i.e., they're illiquid), and what market there is provides bids much lower than the holder is asking. A prime example is real estate that's value has declined well below the value of the mortgage.

Sale under these conditions (i.e., at a low bid in an illiquid market) would form a comparison point for mark-to-market writedowns of similar assets, which in turn could cause breech of regulatory requirements or loan covenents. Hence, the toxicity part of toxic assets is in part derived from the secondary effects of selling them.

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