ABS Conference Quiet as Market Coma Continues

HOLLYWOOD, Fla. — Attendees of the ABS East conference usually have little time to admire the scenery of the posh resort that plays host to thousands of investment bankers, investors, and other secondary market participants. Rushing from meeting to meeting, the conference could just as well be held in an airport or mall parking lot.

But there was nothing usual about this year’s conference.

Some conference attendees actually spent time by the pool relaxing. One attendee spent more than an hour in the hotel lobby reading a novel, rarely taking his head out of the book to look around. One speaker spent the better part of two sessions playing with a Rubik’s Cube from an exhibit booth. Another attendee had to leave the conference early so he could fly home and lay off a handful of his staff.

Attendance at the conference was down from previous years, due in large part, to the lack of activity in the securitization marketplace. Auto loan securitizations, however, are still being issued. Auto ABS has accounted for more than 25% of all ABS issuance in 2008, up from 11% last year, according to JPMorgan Chase & Co. In fact, outside of a small $48 million pool of mortgages that were securitized, a $376 million deal issued by AmeriCredit Corp. was the only ABS deal issued in October.

Many conversations at the conference usually included some form of “as well as can be expected,” or “still hangin’ in there,” or “Do you know anyone who is hiring?”

Conference attendees avoided speculating about a market rebound, having expected a recovery at several points in 2008, only to watch the “knife drop farther,” as one attendee put it.

In some ways, attendees remained stunned at the course of events in 2008. The conference’s keynote address was made by Edward DeMarco, deputy director and chief operating officer of the Federal Housing Finance Agency, the newly created regulator of the government-sponsored enterprises, a major player in the secondary market. Following his 30-minute presentation, not a single question was asked by any of the 300 to 400 people in attendance.

While the securitization market is currently in a coma and the short-term outlook is bleak, at least one speaker was willing to make a prediction.

Providing there is a “return to more traditional underwriting standards,” said Michael Krimminger, a special adviser to Federal Deposit Insurance Corp. Chairwoman Sheila Bair, “the securitization market will come back.”

—Michael Gibb