Friday, 31 August 2007

Reputation risk and SIV sponsors

This bridge is well known: it's in Newcastle, and if it fell down, it would have a reputational impact on the city. What you build reflects on you: well, if it's beautiful; badly if it's ugly and it fails.

This brings us nicely to structured investment vehicles or SIVs. (This or this are not too bad if you're not up on SIVs and SIV-lites, although take them with a pinch of salt: by 'highly rated' they do not of course mean 'highly likely to return principal'.) Barclays is in the spotlight again after restructuring a number of SIVs it was involved with. While some of the comment has been positive, one cannot help but wondering if what they have build is reflecting entirely positively on them.

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