Excuse me. But if the loan is worth less than par after issuance of the proceeds then you do mark to market. Wake up fellah. These funding commitments for projects where the outcome is uncertain will almost certainly require writedowns of principal. The big concern is funding commitments for projects that SFI would probably like to back out of if they could just as Wachovia and Citigroup are now playing a real game of hardball on their previous agreements to provide M&A financing on private equity transactions.
Mark to market is simply adjusting a loan to fair market value. I guarantee these banks who have to look at SFI's present circumstances are going to be adjusting all sorts of values for their own internal purposes. They are not going to rely on SFI's valuations in many instances when it comes to determining their willingness to refinance debt.
Why SFI is down again. Goldman Sachs expressed concerns about specialty finance being able to obtain capital.
You all are on the wrong side of history. All major investment banks are contracting because there are fewer opportunities to invest in a highly leveraged environment. Firms like SFI are too levered and banks are going to de-lever by reducing available lending limits and in SFI's case I just don't know how they are going to refi the Fremont General debt given that SFI was unable to raise the level of capital promised to the banks when the Fremont deal was done last year.
The changing market circumstances are not SFI's fault. SFI simply paid too much for Fremont and literally bought it within days of Fremont becoming distressed. In retrospect, Fremont should have gone BK and SFI should have tried to buy out of BK for a lot lower price.
Ferdie and Waldo should give it a rest. They are observers, rarely right and without any courage. I bet they are both still working for a paycheck so they aren't as smart as they think theu are either.
Apparently accounting isn't your strong suit. Your idea about "if the loan is worth less than par" is quite quaint. These aren't CDO's, they are whole loans. You take reserves against whole loans, not mark to market.
If their loan assets are worth less, then their loan liabilities are logically worth less too.
Just think what you could do if you channeled your energy in a positive direction. Global warming would ebb and the energy crisis might abate. Alas, the global warming from your hot air about SFI makes Al Gore cringe.
ferdi, you continue to refer to a required refi from the banks to pay for Freemont. If you will simply listen to the last conference call, you can discover that SFI has at least three different alternatives for securing capital to pay off their obligations. While I appreciate your comments when factual, your continued efforts to cast doubt and gloom over SFI's prospects with the use opinion not facts is not appreciated.