Geithner Tempts Investors With Loans, 25% Returns
By James Sterngold, March 24th
The U.S. government’s plan to rid banks of toxic assets may attract investors with financing that helps generate returns as high as 25 percent, fund managers and analysts said. “This makes the U.S. government a hedge-fund manager,” said Tanya Styblo Beder, chairman of risk-management adviser SBCC Group in New York. “Investors in hedge funds do so voluntarily, after performing due diligence on the skills of the manager. But taxpayers aren’t doing this voluntarily.” “The logjam in the markets is phenomenal,” she said. “The illiquidity is breathtaking and this is a non-temporary phenomenon. Big measures are necessary, but you have to look at all these issues. Hasty implementation may have huge unintended consequences.” Beder said she also worried about a program that had private investors putting up capital with the government because it left no one clearly in charge.
To TALF, or not to TALF
The long-awaited Federal Reserve program aimed at
thawing the frozen credit markets got underway this week.
Will it work?
By David Ellis, March 18, 2009
The Fed is hoping that TALF will push banks and other finance companies to keep making new loans…Many believe that the participation of private investors, such as hedge funds, private equity firms and mutual funds, could very well determine the success or failure of the program. There has been widespread speculation that investor interest may be relatively robust, but there are stumbling blocks…Tanya Beder, chairman of advisory firm SBCC Group, which focuses on the financial services industry, said there is still a lack of certainty about the value of the assets backing the securities that buyers are expected to purchase.
"There is a terrific degree of uncertainty surrounding cash flows and what instruments are worth right now," said Beder.
Top officials have also warned in recent months that there is a risk that Fed could accept securities that have been overvalued.
BUSTED
by Edmund L. Andrews
Unfortunately, and contrary to what investors had come to believe, shifting the risk from one spot to another didn’t mean it had disappeared. “It’s the law of conservation of misery,” said Tanya Beder, head of SBCC Group, a consulting firm that specializes in securitization. “You can move the misery around, but it never goes away.”
Congress To Examine Mark-to-Market Modification on Thursday
The House Financial Services Committee will hold a much-anticipated hearing on Thursday that examines mark to-market accounting. Speakers will include:
James Kroeker, acting chief accountant for the Securities and Exchange Commission
Robert Herz, chairman of the Financial Accounting Standards Board
Kevin Bailey, deputy comptroller for regulatory policy in the Office of the Comptroller of the Currency
Tanya Beder, chairman of SBCC Group;
Accounting rule a 'hot potato' in Congress
Colin Barr, March 12, 2009
Regulators should expand the toolbox banks can use to place a value on hard-to-sell assets, market experts told a congressional panel Thursday. But some legislators said they want more sweeping action now.... Critics, including two prominent former regulators who testified Thursday, say the fair value rules have worsened the financial crisis by forcing companies to recognize steep paper losses on bonds that in many cases are still paying interest and principal. Beder is among those who believe the rules must be made more robust.
SEC Accountant Testifies Thu To House Panel On Mark-To-Market
By Sarah N. Lynch
WASHINGTON (Dow Jones)— “We cannot allow for fantasy accounting that wishes away bad assets by merely concealing them. As a result, we will seek at this hearing to engage in a constructive, thoughtful conversation with a diverse range of viewpoints aimed at identifying fair-minded, incremental, and achievable fixes to this problem." … Following testimony from the SEC, OCC and FASB, lawmakers will also hear from industry members including Tanya Beder, Chairman, SBCC Group
More writedowns ahead?
Apr. 7 - Risk management group SBCC says writedowns at banks from the subprime crisis could total $500 billion dollars, double what has already been reported. Tanya Beder, speaking at the 2008 Reuters Hedge Fund and Private Equity Summit in New York on Monday, says the fallout from the mortgage meltdown may become more clear after September when more subprime mortgages will reset to higher interest rates.
Speaker:
Tanya Beder
Chairman, SBCC Group
“Perfect Storms” – Beautiful & True Lies In Risk Management
Tanya Beder, a celebrity derivatives and risk professional, once observed that financial markets represent “the Great Risk Hunt”. This is a party game that many can play. There is the hunt where traders, corporations and investors comb markets in search of that elusive treasure, the next lucrative profit opportunity. Then there is the hunt for risk, where risk managers identify and measure the risks of trading, trying to profit from the opportunity along the way. Finally, there is the hunt for knowledge. This particular quest usually follows some unexpected and (inevitably) large loss, as analysts examine the entrails to understand “what happened”.
DealZone April 7th, 2008
Hedge funds are ready to set records this year, but not necessarily the good kind. The bubble has popped and there is going to be a lot of pain. There will be a massive reassessment of where money should go. Many investors including Tanya Beder, Chairman of SBCC Group, expect the $1.8 trillion industry’s estimated 10,000 funds to be winnowed down by a few thousand in a few years.
Serious Play: How the World's Best Companies Simulate to Innovate
By Michael Schrage
Beder and other sophisticated modelers warn in particular against letting models become a substitution for the marketplace. The result is a “mark to model” pathology: the firm believes that as long as the model is behaving according to its Dealers thing they are marking their positions to market when all they are really doing is marking them to the assumptions built into the model. “At least six disparate models are used to price many common derivatives”. Beder has observed. “Given the same raw data input a wide variance of results exists when mark‐to‐market is calculated.”
The Monster That Ate Wall Street
How 'credit default swaps'—an insurance against bad loans—turned from a smart bet into a killer.
Matthew Philips | NEWSWEEK
Published Sep 27, 2008
From the magazine issue dated Oct 6, 2008
The Tale of the Beast
Credit default swaps have evolved-and-become more toxic-since their creation.
1994 -1997: First CDS deals done by JP Morgan, Swiss Bank Corp., and Bankers Trust.
1999: Commercial Banks and insurance companies are now able to trade CDS contracts.
2003: First credit derivative index is created, standardizing a major aspect of the market.
2004 - 2008: CDS deals used to hedge mortgage-backed securities; market peaks at $62 trillion.
2008: AIG nears default on $14 billion of CDS policies and is bailed out by the government.
Source; SBCC Group
HEARD ON THE STREET SEPTEMBER 22, 2008
Hedge Funds May Endure Frayed Ties
By LIAM DENNING
The strange relationship between hedge funds and the banks that provide prime-broker services is taking another twist… Relationships may become warier. Prime brokers will think twice about lending against some complex securities. Tanya Beder, head of risk-advisory firm SBCC Group, sees a return, at least short term, to a more "plain vanilla" business.
INVESTING August 14, 2008,
The Future of Investing: A 2020 Vision
What will the world of stocks, bonds, and funds look like in the next decade? BusinessWeek asked experts for their predictions
by Ricky McRoskey
With the recent upheavals in equity and fixed income markets, the financial industry is left to ponder: What change is next? What will the financial world look like in 2020? … BusinessWeek asked financial professionals and academics their thoughts on what the financial landscape will look like in the year 2020. The experts foresee a world where "A lot of the frameworks and walls built because of the old financial world we grew up in will come down," says Tanya Styblo Beder, chairman of the SBCC Group and a member of the board of directors at the International Association of Financial Engineers….There will be greater trading transparency…but actively managed funds won't disappear because there will always be a need for packaged financial products, says SBCC's Beder, since "a lot of people can't access the full range of products in a market."
Florida Hires Hedge Fund Expert to Help in Probe
Mon Feb 25, 2008 5:28pm EST
BOSTON, Feb 25 (Reuters) - Florida has hired two experts, including one with a long track record in hedge funds, to examine how a local government investment pool was nearly wiped out late last year, state legislators said on Monday.
Tanya Styblo Beder... will investigate the Florida Local Government Investment Pool to make sure the fund is not vulnerable to another run, said Marco Rubio, speaker of Florida's House of Representatives.
Late last year, the fund lost more than $10 billion as news circulated that it owned risky securities that had been downgraded in the wake of losses on mortgage market securities and amid worries about broader housing market losses.
Florida House picks 2 to evaluate pool
Posted: February 25, 2008, 3:57 PM EST
The Florida House of Representatives hired risk management consultant SBCC Group and Tew Cardenas, a law firm with expertise in financial transactions, to evaluate the Florida State Board of Administration’s Local Government Investment Pool, said Jill Chamberlin, communications director of Florida House Speaker Marco Rubio. State Rep. Carl Domino, a longtime investment manager, will lead the House review, which is designed to determine if new legislation “is needed to support best investment practices,” according to a statement from Mr. Rubio.
Equity Analysts Facing New Quant Challenge
May 31, 2007- Dane Hamilton
NEW YORK (Reuters) - …At an increasing number of Wall Street investment banks, hedge funds and elsewhere, computers are churning out investment analyses culled from enormous pools of data.
"Given the same set of factors, it will always produce the same result," said quant industry veteran Tanya Beder of quantitative analysis. "Its signals are pure and systematic."
Beder, who built the quant trading division of top-performing hedge fund Caxton Associates LLC and was chief executive of Citigroup's Tribeca Global Management in 2006, estimates that quantitative analysis and trading "drives one-third of the market" on any given day....
Hedge funds, which are often early adopters of new investment methods, are spurring the development of quantitative strategies, which trade using mathematical, or algorithmic, models. Many such strategies were spawned at the internal trading desks at banks, notably Goldman Sachs.
February 12, 2008
...a new fund-of-funds manager Lasair Capital will invest in hedge funds,
infrastructure and timber securities for institutional investors…GE Asset
Management reportedly is backing Lasair Capital. GE Asset’s former CEO, John
Myers, is advising the new firm, along with Tanya Styblo Beder, Chairman of SBCC...
Excerpts From “One-on-One” Featured Interview:
FEN: How do you define risk?
Beder: Risk is what a rational investor should seek at the right price. Good risk selection follows a few tenets. The first tenet is that you must properly define the risk in order to limit the probability of surprises. The second is that you size it properly. The third is that you are compensated for it properly. Some people think that risk should be eliminated. I disagree. Risk should not be hunted down and exterminated. Instead, an investor should take risks he or she can afford at the right price.
FEN: Are there particular events or controversies that changed the way you think about risk?
Beder: I have a lot of religion that one size doesn’t fit all. I spent 13 years of my life as a consultant, cleaning up financial train wrecks. These include what happened with the derivatives and structured securities losses at many Wall Street firms during the Fed rate hikes in 1994, working through the Orange County disaster, working through the downfall of the Asian currencies in 1997 and 1998, and the operational risk failures that have plagued many financial firms.
All of these events were quite different but they were all important in terms of learning about risk management. One key lesson is that managers should not feel they can sleep at night just because someone calculated some risk numbers. Understanding what the numbers do—and what the numbers do not do—is critical in avoiding surprises.
Blank Cheques and Balances
Sep 28th 2006 | NEW YORK
From The Economist Print Edition
Lenders to hedge funds need to think harder about the risks
Both tasks are tricky. For one, hedge funds routinely use several prime brokers—and each broker sees only the securities he lends against. Hedge funds also increasingly invest in esoteric derivatives that are often illiquid and difficult to value. Moreover, the “quality” of collateral is not static. It deteriorates—and lending must be reduced—if, say, a trade or strategy is popular with other investors (a “crowded trade”); liquidating such trades in times of market stress is exceedingly difficult.
This means, says Tanya Beder, an investment-management expert who resigned as the head of one of Citigroup's in-house hedge funds two weeks ago, that big prime brokers can benefit from “informational economies of scale”: they see more data and so can better discern market trends. Still, the sophisticated computer models that banks use to crunch data have limits; a model is only as good as the inputs it gets.
Banks Fumble At Operating Hedge Funds
Eager Foray Turns Into Billions Lost, Marred Client Ties
By GREGORY ZUCKERMAN and JENNY STRASBURG
May 31, 2008; Page B1But on the heels of a run of recent embarrassments for banks that operate their own hedge funds, or buy stakes in funds, the foray is raising questions.”There's a luxury that exists for the funds to take concentrated risk because they don't usually have the same capital at stake as someone who starts a hedge fund," said. Tanya Beder, chairman of SBCC Group, who advises hedge funds…
BondsTied to Mortgages Have Hope
By LARRY LIGHT
May 10, 2008; Page B1Maybe there's away to thrive in the howling wasteland that is the home-loan market. Bonds backed by mortgages look like a buying opportunity, assuming a new spate of defaults doesn't send their prices tumbling again.
What this means is that mortgage bonds are still cheap, with many selling below face value -- and that investors, now less scared by them, no longer need large yield premiums as an enticement to buy."We seem to be headed back to the spreads we used to see," says Tanya Beder, who heads New York financial advisory firm SBCC Group.
HedgeFunds Mature From Risque to Respectable
By Mark Gilbert
June 10, 2005 -- Now that they have passed the $1 trillion mark, hedge funds are ossifying. They are becoming boring. Dull. Respectable, even. “Institutions,while they accounted for only 20 percent of hedge fund investors in 2000, will represent 80 percent of the market in 2010,'' said Tanya Styblo-Beder, chief executive officer of New York-based Tribeca, “Institutional investors will want to see the scale and robustness and transparency and disclosure that they require.''
