More good news for the banking system.
I do not want to see how they scramble this time. From the mitch report.
Tuesday, February 26, 2008 blogurl = "http://globaleconomicanalysis.blogspot.com/2008/02/citigroup-vies-raise-question-of.html"
Citigroup VIEs Raise Question Of Solvency
Bloomberg is reporting Goldman, Lehman May Discover They Haven't Dodged Credit Crisis.
Even Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. may find they haven't dodged the credit crisis.
The new source of potential losses: so-called variable interest entities that allow financial firms to keep assets such as subprime-mortgage securities off their balance sheets. VIEs may contribute to another $88 billion in losses for banks roiled by the collapse of the housing market, according to bond research firm CreditSights Inc. Goldman, which hasn't had any of the industry's $163 billion in writedowns, said last month it may incur as much as $11.1 billion of losses from the instruments.
VIEs, known as special purpose vehicles before Enron Corp.'s collapse in 2001, finance themselves by selling short- term debt backed by securities, some of which are insured against default.
Now that Ambac Financial Group Inc. and other guarantors have started to lose their AAA financial strength ratings, Wall Street firms may be forced to return those assets to their books, recording the declining value as losses.