{"id":15814,"date":"2011-07-27T21:54:35","date_gmt":"2011-07-28T01:54:35","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=15814"},"modified":"2011-07-27T21:54:35","modified_gmt":"2011-07-28T01:54:35","slug":"july-27-2011","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=15814","title":{"rendered":"July 27, 2011"},"content":{"rendered":"

The Bank of America takes wealth destruction seriously<\/a>:<\/p>\n

Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can\u2019t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.<\/p>\n

The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Fannie Mae are conducting or considering their own programs.
…<\/b>
The lender will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. Uses for the land include development, open space and urban farming, according to the statement<\/p><\/blockquote>\n

Speaking of wealth destruction, S&P downgraded Greece<\/a>:<\/p>\n

Greece will partially default on its debt once European officials push through a plan that will see bondholders foot part of the bill of a second bailout agreed to last week in Brussels, Standard & Poor\u2019s said.<\/p>\n

The rating company also cut its ranking for Greece to CC, two steps above default, from CCC, according to a statement published in London today. The outlook on the debt is negative.<\/p>\n

\u201cThe proposed restructuring of Greek government debt would amount to a selective default under our rating methodology,\u201d S&P said. \u201cWe view the proposed restructuring as a \u2018distressed exchange\u2019 because, based on public statements by European policy makers, it is likely to result in losses for commercial creditors.\u201d<\/p><\/blockquote>\n

But stupid people can relax – the authorities are taking steps to ensure that nobody will ever lose money in the PPN market<\/a>:<\/p>\n

These are a way for banks to get cheap funding by packaging an unsecured debt security with an equity\/credit\/commodity\/whatever derivative and selling it to customers who don\u2019t have ISDAs or otherwise aren\u2019t down with OTC derivatives. They\u2019re called \u201cprincipal protected\u201d because even if the linked index goes down, you still get all your money back (albeit at zero yield). But that only happens if the issuer doesn\u2019t go bankrupt \u2013 if they go bankrupt, you\u2019re hosed just like other noteholders.<\/p>\n

Which, duh, or so we thought. The notes after all said that they were Lehman\u2019s unsecured obligations and that \u201can investment in the Notes will be subject to the credit risk of Lehman Brothers Holdings Inc, and the actual and perceived creditworthiness of Lehman Brothers Holdings Inc. may affect the market value of the Notes.\u201d But that wasn\u2019t enough for these plaintiffs, or for the judge, who is going to let the structured notes claims go to trial:
…<\/b>
So the advice to structured notes desks is (1) put everything on the first page and (2) don\u2019t assume that your customers are \u201ccareful and intelligent readers.\u201d<\/p><\/blockquote>\n

Canadians, on the other hand, are indeed “careful and intelligent readers.”. I proved this on January 5<\/a>:<\/p>\n

\"\"<\/a>
Click for Big<\/i><\/div>\n

In the States, though the SEC must be vigilant<\/a>:<\/p>\n

Among other things, the staff observed that broker-dealers might have:<\/p>\n