"'Most airplane financing companies will be forced to take significant cuts in their lease rates and note payments just to keep the planes flying. But United’s troubles could be so deep because its financial arrangements are so complicated, a restructuring would be impossible.'”
Why is that?
Could it be that United’s balance sheet was a favorite Grand Experiment by the off-balance sheet financiers, who sucked every member of the Hillbilly Family into the UAL Vortex by offloading this risk, and swapping it to this party, who in turn stripped it and sold it to the other party, who turn around and hedged it to that party, who arranged a Bermuda corporation to transfer risk to a counterparty, who in turn bought puts on GE stock, which was purchased by a HedgeHog, who in turn countered the trade by buying AIG options, hedged by credit swaps on JPM, who in turn transferred half of it to MER, who marked it up and sold it back to UAL?
Even unrelated companies like DIS were sucked in, stuck with $114 million in aircraft lease investments which management “is now monitoring”.
UAL’s unsecured debt is now trading at 12 cents on the dollar.
This is a look at the credit monster that Mr. Greenspan proudly points to when he addresses congress. We should be outraged and calling for his head but no one is paying attention or they don't care. Here is the whole article if you are interested. The writer is a bit too edgy for most people, but he is generally on target.
Richard W.
I too dislike bankruptcy, but this new bill is nothing but a save the credit card companies butt. I have been burned by bankruptcys and learned to be tighter in my credit policies, but the cc just keep expanding their lending to more and less credit worthy people. The new law appears to me to be a way of having the courts collect for them, by forcing people into chapter 13.