Structured Investment Vehicle. SIV rhymes with HIV except this virus is financial not biological.
You have probably never heard about SIV's before this year but you can expect to hear a lot more about them since they are now at the heart of the question: who will get stuck paying for all the bad mortgages that were collateralized into CDO's.
The first time I had ever heard about off balance sheet investments was when experts tried to explain why Enron imploded. Now we have our largest banks using SIV's and the Department of the Treasury is trying to help them with a super-SIV fund.
Call me old fashion but if my bank has invested millions if not billions of dollars in something in order to make a profit, that thing ought to be on their accounting books. There ought to be a formal record of that investment. The concept of an "off balance sheet" investment should be anathema to a bank.
Then you have the whole mortgage-to-security process that involved SIV's and enabled the cheap money for the housing boom. Seeing the bond rating agencies now restate "AAA" CDO's as, oops!, junk bonds only re-enforces the obvious - the whole process involved a lot of risk. The kind of risk banks should not have been party to.
