Talk:Structured investment vehicle

message: 2016-07-22: Saw the first sentence with the statement that SIVs are defined as having lower leverage (10-15) compared to banks (30 -50).
I am quite sure that this statement was introduced by a former SIV manager, because it only makes sense in a very narrow manner and would be recognized at once by knowledgable peopleas as very ironical. Of course there were banks with 30 -50 times leverage (but not all). However, a SIV functions due to high leverage which is possible as they are not affected by bank capital and liquidity rules. Therefore the original statement was highly misleading as it suggested that SIVs were safer as banks. That's a ton of rubbish.
CK  — Preceding unsigned comment added by 160.85.104.70 (talk) 09:41, 22 July 2016 (UTC)
thread_title: Untitled

message: My understanding is that it is like borrowing money in the short term to fund lending money in the long term.
In general, though not always, it is cheaper to borrow money in the short term because the people who are lending you money do not have their capital tied up for so long. This is why you will often get a better rate on your savings if you invest in a notice account (eg. where you have to give 90 days notice before withdrawing any money).
So if our SIV was Bart Simpson, he might borrow some money, say $100 from Marge and promise to pay her back in one year. Marge might charge him 5%. To make a bit of money, Bart goes to Homer and says he will lend him $100, repayable in three years, providing Homer pays him 6%.
So after one year, Bart has borrowed $100 at a cost of $5 but lent it back out for a benefit of $6 so after one year, Bart has made a profit of $1.
However, at that year, he has to repay the original $100 to Marge. So, he might then go to Barney and borrow some more money. If we assume the price of borrowing stayed the same then Barney would lend him another $100 for 5%. He could then use the $100 be borrowed from Barney to repay Marge, with Homer still owing him the original $100 - ie. Bart is acting like a financial middle man, or a Bank.
So after two years, Bart has paid a total of $10 out in interest and received $12 from Homer, a profit of $2. But what if, in year three, people were more keen to hold on to their money? Bart still needs to repay Barney but Apu will charge him 6.5% (because he is concerned that Some of his clients (of whom Bart is one) may struggle to pay him back the loaned amount) for the year. Bart is only going to receive $6 from Homer but has to pay Apu $6.50 so, unusually for such a canny lad, he will make a loss of $0.50. So, at the end of three years, Homer repays Bart the $100, which Bart then returns to Apu. Bart made a $1 profit in each of the first two years but a loss of $(0.50) in the third year. Therefore, in total, Bart made $1.50 because, for the large part, it was cheaper to borrow money for one year than to borrow money for three years.
Has that made it better or worse?Tmischler 10:43, 14 September 2007 (UTC)
thread_title: Untitled

message: I had a feeling these two have now merged into one (under the name whistlejacket) although I may be mistaken.  Can anyone confirm/refute this? CreditQuant 19:52, 7 March 2007 (UTC)
thread_title: Whistlejacket and White Pine

message: this overview is really nice, and whoever wrote it deserves a pat on the back
two comments after short maturity....replace all that with just short term bonds or IOUs that were given the highest possible credit rating, AAA/AAa....the details about CP, MTNs etc should be further down
A SIV may be thought of as a very simple high quality, virtual bank. Instead of gathering deposits from the public, it borrows cash from the money market by selling short maturity (often less than a year) instruments called commercial paper  (CP), medium term notes (MTNs) and public bonds to professional investors. SIVs had the highest ratings of AAA/Aaa enabling them to borrow at interest rates close to the LIBOR, the rate at which banks lend to each other. The gathered funds are then used to purchase long term (longer than a year) bonds  with credit ratings of between AAA and BBB. These assets earned higher interest rates, typically 0.25% higher than the cost of funding. The difference in interest rates represents the profit that the SIV pays to the capital note holders part of which return is shared with the investment manager.  —Preceding unsigned comment added by Cinnamon colbert (talk • contribs) 00:12, 29 October 2010 (UTC)
thread_title: now very nice

message: sorryCinnamon colbert 13:51, 18 August 2007 (UTC)
thread_title: stil incomprehensible

message: Could someone put a "this is a current event" thingy on the Subprime crisis bit - I don't know how you do it.  CreditQuant 09:25, 13 September 2007 (UTC)
thread_title: Current event

message: Could someone explain how an SIV is different from a hedge fund or other vehicles from investment management firms? The leverage cited here seems significantly beyond what typically exists in HFs -- more akin to what we saw in LTCM, no? 
Hedge funds are generally low rated due to their nature of investing in equity (containing a low rating) and bond instruments (higher rating) (leverage is created through both cash and derivatives).  SIVs should have higher quality allowing higher leverage as they are borrowing to invest in AAA rated bonds.  Unforetunately the ratings agencies have done a terrible job at rating my structure because they overlooked the fact I can change the investment as I need to as long as the invetsment is within a certain class of assets regardless of the rating.--198.240.130.75 (talk) 16:29, 14 December 2007 (UTC)
thread_title: Comparison/contrast to other investment vehicles?

message: I think it would be useful, if anyone can do it, to provide an understanding of how SIVs are used to transfer liability from the sponsor's balance sheets. Nereus1 18:24, 19 October 2007 (UTC)
thread_title: Off Balance Sheet

message: What happens if the SIV can't refinance its short term debt?  Do they go bankrupt? Does their commercial paper get sold at firesale prices?  Do the owners of the short term debt (like Fidelity's Money Market Funds) get the commercial paper?? 66.31.61.240 14:10, 22 October 2007 (UTC)
thread_title: SIV Failure

message: hello,
i have been suddenly reading about the SIV instruments in the press recently.  the press articles (WSJ, NYT, et al.) are obviously written by journalists who either (1) know the topic too well to write clearly about it to an educated layman or more likely (2) don't have a clue about the vehicle and are only pulling buzz words here and there, i thought i'd come to wikipedia for a cogent entry.   alas, the wikipedia article is just as jumbled.  the main article page clearly needs flagging as incoherent...work-in-progress...first draft...something to indicate that it's not up to typical wikipedia standards.
regards.  —Preceding unsigned comment added by 68.173.7.103 (talk) 03:15, 31 October 2007 (UTC)
thread_title:  incomprehensible jumbled presentation of topic 

message: Someone finally explained SIV's in a comprehensible manner. Thank you.
However, can anyone help me understand the relationship between mortgage back securities and SIV's.  Am I right in thinking that SIV's merely can invest in MBS among others?
67.53.237.105 03:18, 31 October 2007 (UTC)
thread_title:  finally 

message: Hu12 accuses me of being a disruptive editor for linking the site www.siv0.com. Hu12 seems to want to limit extrernal links on this article to one (Moody's). First, I deny being a disruptive editor. I am contributing to the article, and I do link to the site I mentioned under external links. Most wikipedia articles have several external links, and frankly, I find them helpful Who is Hu12? 
Do not let him block me. I am not being disruptive, and in fact, I would say Hu12 is being overbearing and way out of line. This is wikipedia, not Hu12-ipedia. Let's take a look at the disruptive editing policy:
"This guideline concerns gross, obvious and repeated violations of fundamental policies, not subtle questions about which reasonable people may disagree."
I would say this is a subtle issue. Many, many Wikipedia articles have several external links. Why does Hu12 decide that this article only has one?
More from the policy:
"Is tendentious: continues editing an article or group of articles in pursuit of a certain point for an extended time despite opposition from one or more other editors. 
Cannot satisfy Wikipedia:Verifiability; fails to cite sources, cites unencyclopedic sources, misrepresents reliable sources, or manufactures original research. 
Rejects community input: resists moderation and/or requests for comment, continuing to edit in pursuit of a certain point despite an opposing consensus from impartial editors and/or administrators. 
In addition, such editors may:
Campaign to drive away productive contributors: act in spite of policies and guidelines such as Wikipedia:Civility,Wikipedia:No personal attacks, Wikipedia:Ownership of articles, engage in sockpuppetry/meatpuppetry, etc. on a low level that might not exhaust the general community's patience, but that operates toward an end of exhausting the patience of productive rules-abiding editors on certain articles."
I do none of the above. I have been "warned" twice by Hu12. I reject his authority on this issue. I am not trying to make any particular point. I am just part of those monitoring the subprime issue, and specifically the role of sivs. I do not reject comments, as I have seen none other than Hu12's. I do not campaign to have others removed from the article.
Hu12, mellow out, or I will report you to the administrators. --Wyattmj (talk) 01:35, 11 March 2008 (UTC)
thread_title:  disruptive edits 

message: The clarity of the 'Structure' and 'Problems' sections is compromised by grammatical clumsiness and consequent syntactical inconsistency. 
It seems that someone tried to replace the present tense with the past tense (so as to emphasise that SIVs are no longer in existence), but left their job incomplete.
I would edit the article; but since I know relatively little about SIVs, I fear that my changes may distort the intended meaning of some of the sentences in question.
Despite this quibble, however, I should say that I've learned a lot about SIVs from the article as it stands.  Thank you!
the verb in the 1st sentance (was) seems out of place with the rest of the paragraph; I think it shold be present tense (the fact that none are currently operating is not relevant - one could start tomorrow, if interest rates chagned)Cinnamon colbert (talk) 00:14, 29 October 2010 (UTC)
thread_title:  Poor grammar can impede understanding 

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