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Structured Finance Lesson No. 1: You're Fired
Thacher Proffitt, a 159-year-old New York law firm that specializes in structured finance, put out a "media alert" this week trumpeting the third edition of its reference book, "Common Terms in Structured Finance."
The book promises an "A-Z terminology of the structured finance industry. Need the definition of FIN46? Or Structured Investment Vehicle? Or S.I.V.-Lite? It's all here."
Among the terms often used in reference to structured finance these days, there is one that's not in the book: "Meltdown."
Broadly speaking, structured finance refers to a method of transferring risk, by the pooling of assets, from mortgages to credit cards. There's a nifty Portfolio.com graphic primer on one of these vehicles, collateralized debt obligations, here.
As the graphic illustrates, this market is in serious trouble. Hence, another increasingly common term among the people working in the industry: "Layoff."
Thacher Proffitt has notified 24 associates in its real estate and structured finance groups that they will most certainly be laid off in January.
The news was first reported on the AbovetheLaw.com blog, and a Nov. 27 post quoted a statement that the firm had "taken the painful step" of all but giving the associates their pink slips.
The statement also said first-year associates in the real estate and structured finance groups were being offered buyouts with four-month severance packages.
The firm hasn't lowered the boom, at least as of this morning. "We haven't made any decisions. We are going to see what January and February brings," says Paul D. Tvetenstrand, Thacher Proffitt's managing partner.
"We've given them warning," Tvetenstrand added. "And we've had quite a lot of response from the outside world, looking for good associates. Some of them will leave, I imagine."
The reference book, by the way, is available as a hard copy or as a download on the firm's website.
Good news for those associates about to be shown the door: It's free.
by Karen Donovan
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