*CORRECTION: During this interview, Allan Sloan incorrectly identifies an SIV as a “strategic investment vehicle.” An SIV actually stands for a “structured investment vehicle.”

TEXT OF INTERVIEW

Scott Jagow: The country’s big banks have made some rather unwise investments lately. And now, they’re getting rescued. With the Treasury Department’s help, the banks have scraped together a fund to cover their assets in these SIVs.

Fortune Magazine’s Allan Sloan is here. Allan, first of all, what is an SIV?

Allan Sloan: SIV stands for “strategic investment vehicle,”* and it’s pronounced “siv,” and we’ll make the appropriate puns later. But these are things that a variety of banks had off their balance sheets, where they basically borrowed short-term money and bought various mortgage-type securities. Unfortunately, they started to have a problem, because the things they bought aren’t worth what they paid for them. And now, if you’ll forgive my pun, the SIV has begun to leak.

Jagow: So if I’m an investor in bank stocks, how much should I be worried about this?

Sloan: Well, if you’re investing in anything other than a small local bank, you really had better know what exposure a bank has to SIVs and some of this other stuff that’s kicking around. And if you don’t know what exposure it has — well, Scott, maybe you ought not own it. I think in the coward’s route — I did not know what was in this bank I owned, I realized I was never going to find out. And I just sold it, and it’s gone. If you’re gonna own stock in a bank as a retail investor, you really oughta know what’s going on in it.

Jagow: Now, the Treasury Department and the big banks have come up with this plan to rescue the banks from this situation. What do you think about what they’re doing?

Sloan: Well, I don’t think very much. And we can even start with the name. People call it the “super fund.” And where I come from — you know, in New Jersey — super fund is something that has waste on it that the government’s supposed to clean up. I can’t believe they’re using that term! But why is it that if somebody like Citigroup makes a mistake and gets caught in a bad position, people run to its defense and say, “Well, it shouldn’t have to sell its assets below their real value.” Whereas if Scott Jagow or Allan Sloan buys a house with 100 percent financing, and it turns out we’re gonna sell the house it’s worth less than we borrowed, we don’t get to say, “Well, we don’t think this price is appropriate, even though the mortgage is due and our debt is rolling over.” I mean, this is crazy.

Jagow: Well, that was a good Monday rant, Allan. Thanks as always for joining us.

Sloan: Scott, it was my pleasure.