What is it about banks that they find it impossible to write in English? Here’s
a crucial part of the letter
Bear Stearns sent to investors yesterday:
On June 26th, Bear Stearns committed $1.6 billion in a collateralized repo
line to the High-Grade Fund. At this time, approximately $1.4 billion remains
outstanding on this line and we continue to believe there are sufficient assets
available in the High-Grade Fund to fully collateralize the repo facility.
On reading this, you might think that so far Bear Stearns has only actually
spent $200 million of the $1.6 billion which it said it was willing to spend.
It committed $1.6 billion, and there’s still $1.4 billion remaining, right?
Think again. Here’s Bloomberg’s Yalman
Onaran:
The second fund still has "sufficient assets" to cover the $1.4
billion it owes Bear Stearns, which as a creditor gets paid back first, according
to the letter, obtained yesterday by Bloomberg News from a person involved
in the matter.
Back in June, I pleaded
for more transparency from Bear Stearns on this matter. In fact, Bear just seems
to be getting increasingly obfuscatory: not only was the letter not released
to the press (it had to be forwarded on from its recipients), but it was also
worded in such a way as to make it very difficult to understand.
I can guarantee you that within Bear Stearns, people don’t talk about "fully
collateralizing the repo facility". They speak English there: they wonder
if the hedge fund is good for the $1.4 billion lent to it by Bear Stearns. But
the minute they have to communicate with the outside world, they fall back onto
gobbledegook. For no reason whatsoever.