Author Archives: Ann Rutledge

“This isn’t right. It isn’t even wrong.” – Wolfgang Pauli

By Ann Rutledge | Published: August 13, 2010

Wolfgang Pauli is the source of this excellent quip. More famously, he is responsible for the Pauli exclusion principle, which asserts that no two electrons can exist in the same quantum state. Were he alive today, maybe Dr. Pauli could help us straighten ourselves out of the financial system crisis by demanding the same high ... Read more

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Which Direction for Banking Reform?

By Ann Rutledge | Published: January 27, 2010

Naked Capitalism’s Yves Smith makes a compelling case for the need for structural reform. She is spot-on about the significance of disintermediation for the banking industry and the need to decouple risk. Her lament—”I see perilous little grappling with the problem that [Bank of England's Mervyn] King flagged, that of industry structure”—really resonates with me. ... Read more

Posted in Bailout, Banks, Credit Crisis, Structured Finance/Securitization | Leave a comment

Capital, Not Toasters, Dr. Krugman

By Ann Rutledge | Published: April 13, 2009

It wasn’t Dr. Krugman’s hate-mail treatment of securitization that made my brain go tilt. (I say this even though we concur with Barry Ritholz’s reasoning in his blog article, “Paul Krugman is Wrong About Securitization.” ) What really got to me was the reference to toaster giveaways. Toasters! Sylvain paid $5 for ours — used ... Read more

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Introducing The Spectrum’s New Guest Blogger, Al Martinez

By Ann Rutledge | Published: February 25, 2009

September 30, 2005, my birthday night. I was in London, teaching securitization, missing Sylvain, browsing the news on the internet… Geena Davis assumed office as president of the United States Tuesday, and that’s all right with me. I’ve had it with testosterone-fueled leaders who know how to pull a trigger or drop a bomb but ... Read more

Posted in Credit Spectrum | Tagged | 1 Comment

Why DIPs Can’t Afford to Take a Bath on Company Risk

By Ann Rutledge | Published: January 27, 2009

An article by Anousha Sakoui and Nicole Bullock in Financial Times entitled “Liquidation risk grows as DIP finance dries up” is one more piece of evidence that hybrid systems don’t work. I’m referring here to the two corporate bankruptcy systems the U.S. has put in place: one designed to help companies get back on their ... Read more

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Dangerous Myths about SROs — Part 1

By Ann Rutledge | Published: January 5, 2009

In her article on the RGE Monitor Web site, R&R’s Ann Rutledge discusses two myths that she sees offered as fact in a recent position paper by the Financial Economists Roundtable, “Reforming the Role of the Statistical Ratings Organizations in the Securitization Process.” Myth 1: The notion that SROs ever evaluated collateral. “Even the SROs ... Read more

Posted in Ann Rutledge, Bailout, Banks, Capital Structure, CRAs, Financial System, Valuation | Tagged , | Leave a comment

Rethinking Our Inheritance

By Ann Rutledge | Published: December 15, 2008

Recently the Financial Economists Roundtable (FER) posted a summary of their thinking in July 2008 on Reforming the Role of Statistical Rating Organizations [SROs] in the Securitization Process. The FER is a group of senior financial economists who advance the study of finance and frame current policy debates. I read their statement in the Dec. ... Read more

Posted in Ann Rutledge, CRAs, Financial Education, Sylvain Raynes, Valuation | Tagged , , , | Leave a comment

Fair Market Value and the Question of Symmetry

By Ann Rutledge | Published: October 22, 2008

The concept of fair market value is as old as the 1587 edition of Blacks Law Dictionary. It is exactly the same in the Merriam-Webster dictionary (1901):…A price at which buyers and sellers with a reasonable knowledge of pertinent facts and not acting under any compulsion are willing to do business. Fair enough, but surely ... Read more

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Time to Start Focusing on Value

By Ann Rutledge | Published: October 6, 2008

It is now clear that for years we have been putting our money where our mouth isn’t. Non-recourse, off-balance sheet finance, a.k.a. securitization/structured finance, is about the value of a pool of loans where the risks are redistributed inside a structure. What are the loans worth? And what are securities worth that are backed by ... Read more

Posted in Bailout, Credit Crisis, Structured Finance/Securitization | Leave a comment

Reflecting on basic principles in a time of turmoil…

By Ann Rutledge | Published: September 23, 2008

I am reminded of the first paragraph in the CFA manual under the header, Ethics in the Investment Profession— Ethical practices by investment professionals benefit all market participants and stakeholders, and lead to increased investor confidence in global capital markets. Clients are reassured that the investment professionals they hire have the clients’ best interest in ... Read more

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