ZURICH Reuters- Whether a $75 billion fund to rescue the battered mortgage-backed securities market takes off or not, its sponsor U.S. Treasury Secretary Henry Paulson seems to be losing the argumentover its merits, strategists and economists said.
The fund, announced last week by Citigroup, Bank of America and JP Morgan with Paulson’s support, aims to prevent structured investment vehicles (SIVs) from making panic sales of bonds linked to U.S. subprime mortgages.
Many of the SIVs — off-balance sheet vehicles holding some $370 billion in assets that rely on short-term financing to make a return — are struggling to stay afloat as investors shy away from buying their commercial paper.
The plan has faced a rising tide of criticism, not least from former Federal Reserve Chairman Alan Greenspan, who said last Friday the superfund may do more harm than good.
