by Tanta on 10/15/2007 08:44:00 AM

Yves at naked capitalism has a post up this morning on the Citicorp-Related Asset Conduit Kerfuffle (MLEC), which I recommend.

There's also this charming bit from this morning's New York Times:

The problems raised alarms immediately in Washington, because commercial paper is a critical financial pillar for the economy, helping to provide money for home loans, credit cards and airplane leases. At the Treasury, Robert Steel, deputy under secretary for domestic finance, and Anthony Ryan, assistant secretary for financial markets, called top executives from about 30 banks to a meeting in Washington after realizing that the banks were not talking to one another about the crisis, people familiar with the talks said.

As a long-time observer of the banking industry, allow me to observe that one of our major problems has always been that we don't talk to anybody except each other. Trust a reporter to publish talking points about "pillars of the economy" and the Treasury just doin' a little healthy fostering of interbank communication skills.

From where I sit, it seems like a lot of investors no longer want to be the bagholder of the "pillars" of this economy, thanks. And Citicorp doesn't want to honor the guarantees it made to those SIVs in the first place, either. So instead of letting Citi take the consequences of having provided financial backstops to these things, the Treasury department thinks its a good idea to just "square" them (hey! it worked so well with CDOs!).