The Hype Award goes to FT's Henny Sender

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Here is a beatific warning of the hype style business reporting, astonishingly sufficiency reaching from the FT. In an article called Reckless banks ease to pay Henny Sender writes:

Two past righteousness opinions rebuking the banks offer a pane into the disposition practices that fuelled the boom and the tactics that banks resorted to in a tardy endeavor to revilement their losses. These cases highlight meet how reckless the banks hit been and how that recklessness haw become backwards to area them and their lowermost lines.

She discusses digit cases, digit of which has to do with Tousa, a Florida homebuilder. Citi indeed was reckless in its disposition practices with this firm. Tousas playing was on the brink when Citi long it a give that allowed it to refinance an earlier give utilised for some highly leveraged acquisitions.

But as business reporters often do, she starts with a valid point, but then moves on to a housing that is actually unrelated (bunching it every into digit anti-banking rant). Her ordinal warning deals with Charter Communications and JPMorgan. And thats where the system completely breaks down.

The ordinal housing involves Charter Communications, the fourth largest telegram company in the US, and digit of the most hotly oppose battles to confirm an effective organisation in the consequence of a Chapter 11 filing. The determine rejected the banks verify that their loans were impaired, and said the banks were retentive up the companys beginning from insolvency protection meet to modify the cost of their loans and earn more interest. The adverse ruling could take the banks of $1bn in set savings, a attorney for the banks said. The banks in this housing were led by JPMorgan whose spokesman declined to comment.

What Ms. Sender either doesnt want to discuss or is simply clueless most is that Charter give was always solid. There was absolutely null reckless most disposition to Charter there has been and ease is plentitude of quality news for the grownup loan. The Charter housing involves an intercreditor dispute. When a company files for bankruptcy, grownup lenders generally hit a say in the restructuring of the firm. In Charters housing the management sought to file and structure without involving the grownup lenders. The concern then restructured the subordinated debt and simply reinstated its existing grownup loans. These loans module rest in locate as they hit been preceding to filing. There is feat to be no principal loss for lenders.

What the lenders wanted was to structure the grownup loans in order to improve the coupon. As generally happens with covenant violations or other credit agreement triggers, the lenders can near the company to renegotiate the terms. For some think the determine in the housing sided with the company, refusing to allow the grownup lenders to the negotiating table. That effectuation they are stuck with the example baritone coupon.

But the Charter housing has null to do with reckless lending. Charter, in spite of being quite leveraged was (and ease remains) a prudent exposure for the lenders. Attempting to increase the welfare rate on this give in a insolvency scenario is exactly what banks are questionable to do. The fact that JPMorgan was unsuccessful in doing so speaks more to the changing nature of Chapter 11 than to some recklessness on behalf of lenders. Just to round things off, Ms. Sender ends the news by bringing up the Enron housing from artefact backwards without some clarity on how it relates to "reckless lending".

In the environment where it is fashionable to bash banks, rather than focus on nonpartizan journalism and independent research, nobody seems to question or vary Ms. Senders story. Misinformation that stokes anger continues to delude writing after all. FTs Henny Sender module therefore receive the Sober Look hype award. Congratulations.





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