Week InReview
Friday | Oct 25, 2019
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The collateralized loan obligation, or CLO, is one of those funky creations of Wall Street wizardry that have been around for decades. Just like its close cousin, the much-castigated collateralized debt obligation, it’s a tool used to package a bunch of high-risk debt together
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mortgage bonds for CDOs, corporate loans for CLOs
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so they can be easily sold to investors hungry for juicy returns. But, unlike the CDO, the
CLO
made it through the financial crisis largely unscathed and has
boomed
in the decade since. (Bloomberg Law | Oct 23)
The central bank’s short-term debt holdings soar as it tries to head off liquidity crunch. The Federal Reserve could soon own 12 per cent of the market for U.S. Treasury bills, according to Oxford Economics, as it attempts to see off a repeat of the cash crunch that sent short-term lending rates spiraling in September. (Financial Times | Oct 23)
See also:
Fed to increase repo market interventions again ahead of month-end
(Financial Times)
The dominant U.S. exchange groups are fighting to expand their market data businesses but face a stand-off with the securities regulator over fees. The New York Stock Exchange, Nasdaq, CBOE Global Markets and others increasingly earn money by offering data rather than simply facilitating securities trading. They do, however, face pressure from the Securities and Exchange Commission, which threatens to curtail their ambition to sell data. (Financial Times | Oct 21)
A divisive debate on Wall Street: Will companies’ higher debt loads cause big losses when the economy turns? Or have low interest rates made the borrowing more manageable? (The Wall Street Journal | Oct 20)
Very high and rising levels of corporate debt in the major economies have been troubling central banks and regulators for several years, but until now there has been little willingness to take direct policy measures to reduce the associated financial risks. Last week, however, the IMF is
sued a strong warning that action is “urgently” needed to head off the danger of a financial meltdown in the corporate sector, which could potentially spread into the banking and shadow banking sectors. (Financial Times - opinion | Oct 20)
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FHFA's Calabria sees wiping out investors if GSEs go insolvent
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(Oct 24) — Fannie Mae and Freddie Mac’s regulator said shareholders of either of the mortgage giants should see their stakes wiped out if the company were to become insolvent.
- “It’s spelled out in the statute, so it’s generally when, if they become insolvent,” Federal Housing Finance Agency Director Mark Calabria said Thursday in response to a question at an event sponsored by the Atlantic.
- Calabria said he was frustrated in the wake of the 2008 financial crisis that a number of institutions, such as Fannie, Freddie and American International Group Inc., were bailed out and not allowed to fail.
- “There was a mechanism in law that would have very cleanly wiped out the shareholders, you wouldn’t have had 10 years of litigation,” Calabria said.
- “It’s the law, I believe we should stick with the law,” he said.
- EARLIER: Fannie regulator willing to wipe out shareholders if needed
Source: Bloomberg Government
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3rd-party vendors a weak link in firms' security efforts
Incidents involving third-party vendors, along with hacking and phishing, are the top sources of data exposure incidents reported by law firms to state agencies, a Law.com investigation found. Lost or stolen devices ranked second among security incidents, followed by insider wrongdoing.
Chinese malware creates "magic password" for MSSQL servers
Microsoft SQL server databases can be altered by Chinese malware to create a "magic password" that lets hackers access any account and hides the hacker activity in connection logs. The malware, called skip-2.0, works with only versions 11 and 12.
Russian cyberattack unit ‘masqueraded’ as Iranian hackers
A Russian cyber espionage unit has hacked Iranian hackers to lead attacks in more than 35 countries, a joint U.K. and U.S. investigation has revealed. The so-called Turla group, which has been linked with Russian intelligence, allegedly hijacked the tools of Oilrig, a group widely linked to the Iranian government, according to a two-year probe by the U.K.’s National Cyber Security Centre in collaboration with the U.S.’s National Security Agency.
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Meet the Buffett bot: quant fund tries to crack the ‘value’ code
In a small basement office near Portman Square in London, wedged between the Grazing Goat pub and the Red Sun Chinese restaurant, a handful of eggheads are attempting to code a robotic Warren Buffett. The small team at start-up Havelock London has an ambitious mission: to mesh computer science with the Sage of Omaha’s “value investing” principles.
36,000 uses of dirty words have Senate taking soap to comments
Lawmakers are giving a – insert cussword here – about the language people are using in public comments to federal agencies. After finding more than 36,000 examples of f**k and s**t just on the Federal Communications Commission’s Electronic Comment Filing System, a Senate subcommittee advised it and other agencies to clean up at least some of comedian George Carlin’s famous seven dirty words.
Here’s what it’s like traveling on the world’s first 20-hour flight
I’ve just endured the world’s newest longest flight, a 16,200 kilometer (10,100 mile), nonstop ultra-marathon from New York to Sydney. It took about 19 and a half hours, and was almost as demanding as that sounds.
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