Now before we get into what they are doing, ask yourself briefly why they would be doing it. Cargill already has a piece of the all-too-lucrative farm dole scam but with banks suddenly "encouraged" to dump problem assets, someone's got to pick them up and you bet your high fructose ass Cargill is up for the job.
The Cargill name goes way back in the Ninth Federal Reserve District (that's Minneapolis and beyond) and though you may not hear their name often (perhaps you've seen the TV spots?), they have their fingers in everything from your gasoline to your food supply.
The government has already decided 15% food in your gas is totally OK though any carmaker or conscientious car owner would tell you that 15% corn running through that beautiful engine will inevitably wear her out much faster than plain old gasoline but Cargill seemed unimpressed by this new government rule (the previous allowance of ethanol in gasoline was 10%). We already know a Republican house is going to mean more cornfield protection money if anything (case in point, Iowa's Chuck Grassley) so it is likely Cargill does too, why act overexcited in public?
Anyway. About those assets. Cargill will take them tyvm:
Cargill Inc., the nation’s largest closely held company, raised $373 million through its CarVal Investors unit to buy debt assets that banks divest in the face of new regulations.
CVI Credit Value Fund LP plans to acquire home loans, consumer debt and mortgage-backed securities, according to Timothy Clark, a senior partner at Minnetonka, Minnesota-based CarVal. It also may buy liquidation claims held by banks, brokerages and other creditors in the bankruptcy proceedings of companies such as Lehman Brothers Holdings Inc. and Nortel Networks Corp.
Formed in 1987 to complement Minneapolis-based Cargill’s proprietary financial trading, CarVal became a big acquirer of assets from failed savings and loans auctioned off by the Resolution Trust Corp. in the early 1990s, according to Clark. The firm, one of at least six in the U.S. to start credit- related funds since June, sees a fresh opportunity as banks and other financial institutions work out their “debt hangover” from soured loans and distressed securities, he said.
“The asset purge is beginning from major financial institutions and we are focused on the resulting orphaned assets,” Clark said in an e-mail. “Consumer assets are starting to be priced attractively,” he said, referring to credit-card receivables and retail auto loans.
Hell yeah! Capitalize, motherfuckers.
But please, PLEASE no double dipping.
Blame the government, they created the monster and they sure aren't going to try to dismantle it now. For the federal government, Cargill gobbling up crap assets from banks is actually a win-win: they don't have to regulate that side of Cargill's affairs and they no longer have to worry about the banks being sickly, insolvent and crying for another bailout.
At least they are transparent about what they are trying to do and how governments are allowing them to do it:
In an August speech, Cargill CEO Greg Page posed the question, “So, isn’t Cargill exploiting the food situation to make money?” Here is how he responded:Filling us with their mutant chemicals is an excellent way to make more money. So is buying up crap assets. More power to them, I guess, we allow it to happen.
“I would give you four pieces of information about why our earnings have gone up dramatically.
1. The demand for food has gone up. The demand for our facilities has gone up, and we are running virtually all of our facilities worldwide at total capacity. As we utilize our capacity more effectively, clearly we do better.
2. Fertilizer prices rose, and we are owners of a large fertilizer company. That has been the single largest factor in Cargill’s earnings.
3. The volatility in the grain industry — much of it created by governments — was an opportunity for a trading company like Cargill to make money.
4. Finally, in this era of high prices, Cargill over the last two years has invested $15.5 billion additional dollars into the world food system. Some was to carry all these high-priced inventories. We also wanted to be sure that we were there for farmers who needed the working capital to operate in this much more expensive environment. Clearly, our owners expected some return on that $15.5 billion. Cargill had an opportunity to make more money in this environment, and I think that is something that we need to be very forthright about.”
OK, Mr. Page, that’s all very interesting. The question was, “So, isn’t Cargill exploiting the food situation to make money?” It sounds like your answer is, “yes.”