White Meat Dark Meat
One of the two guys who taught me the venture business was Bliss McCrum. He is the king of the cliche. One of my favorites of his was "they get the white meat and we get the dark meat". You see that all the time in the investment business. When there is something good mixed in with something bad, you always look to split them up.
I thought of Bliss and his cliche this morning when I saw this news from FGIC
Financial Guaranty Insurance Co., a major bond
insurer, has notified the New York State Insurance Department that it
will request to be split into two companies, according to a person
familiar with the matter.One of the firms would likely retain much of the
business of insuring structured finance bonds such as those backed by
mortgages, which have come under severe pressure due to the housing
market slowdown, according to the person.The other company would likely retain most of the municipal bond insurance business, which is stronger, the person said.
This certainly seems like a good idea and puts a firewall between the problems in the mortgage business and the muni bond business which has historically had very low default rates and has traditionally been a safe haven.
Comments (Archived):
the problem is that we need the structured finance market to reopen, otherwise credit problems will continue to worsen. it will spread into auto loans, credit cards, commercial loans, etc. there is a lot of talk that things should get better in the 2nd of half of 08, when in reality, it can continue into 2009.the fed really can’t help much here. while its true that without intervention many of our banks would not be insolvent, the short term fiscal policy is a practice of feel good economics. the rate cuts are supposed to help us long term, however– it might actually cause more damage. lets not forget that most of the money is created outside of the banking system.
*would be insolvent, rather
additionally, credit, not money
In China, the dark meat is the desirable meat whereas nobody (but wacky foreigners like me) wants the white meat. Good metaphor for the differences in VC/PE in Asia?
I like the dark meat tooFred
yeah, cause chinese know in the same weight of two pieces, white meat contains glycogen, which’s equal to sugar while dark meat is dark cause it contains myoglobin, which is protein.indeed, I couldn’t understand why we yell out for white meat, ’cause we don’t stupid enough?
I love seeing the VC cliche return here. Is it 2004?
Yikes! This is a can of worms that I suspect will only benefit the lawyers (and perhaps a few public officials with big(ger) aspirations — then again, maybe not).There’s a term for this kind of “scheme:” fraudulent conveyance. It tends to be illegal.