Big banks banding to save SIVs

An announcement as early as today could be forthcoming from a group of banks that have been in talks to create a large investment fund to prevent severe losses in various mortgage and other markets. This is at the behest of the Treasury Department. Banks involved include Citigroup, Bank of America and JP Morgan Chase. According to the New York Times, the idea "echoes the 1998 bailout of the hedge fund Long Term Capital Management." Back then, banks banded to prevent the fund from collapsing. The main issue seems to be short-term structured investment vehicles, basically higher-yielding commercial paper backed by mortgage-related debt among other things. This will surely revive the moral hazard debate.    

For more:
- here's the New York Times article

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