Brains like a SIV

8 November 2007 By Antony Currie Follow @AntonyMCurrie

The belief that the fund s just a way to bail rivals out of a mess seems to have made many reluctant to support it. But a firesale of SIV assets could dump some $150bn of bank debt on the market. That would be painful for everyone.

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JPMorgan's chief executive, Jamie Dimon, told Bloomberg that he expects MLEC, otherwise known as the SuperSIV, could be up and running by the end of the year.

MLEC was orchestrated by the US Treasury to buy topquality assets held by structured investment vehicles struggling to roll over their shortterm funding. JPMorgan, Bank of America and Citigroup – which runs seven SIVs with some $80bn in assets – are the cosponsors of the plan. Wachovia has joined them, but few other institutions have expressed support.

Before the summer's liquidity crunch hit the SIVs, they had roughly $400bn in assets between them. That has since fallen to $320bn as assets have either been sold, or have matured and not been replaced.

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