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Finance - Investments Sub-forum: Non-Actuarial Personal Finance/Investing

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  #1  
Old 11-19-2008, 08:59 AM
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Mary Pat Campbell
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Default "Do Sold-Off Corporate Loans Do Worse?"

From today's WSJ, page C2:
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Corporate bank loans sliced and sold to outside buyers perform far less well than loans kept by the lender, according to a new study that could have an impact on coming reform of U.S. financial markets.

The study by Anurag Gupta of Case Western Reserve University and Antje Berndt of Carnegie Mellon University concludes that syndicated loans underperform nonsyndicated issues by 8% to 14% in trading in the secondary markets.

The findings, set to be presented Wednesday to Federal Reserve officials, show that either banks and Wall Street firms "are using inside information and selling off only the bad loans" or that the loan-syndication process diminishes the ability to monitor loan quality, Dr. Gupta said.
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Old 11-19-2008, 09:06 AM
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Carol Marler
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banking, credit modeling, loan regulation, mispricing

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