6.875%: LIBOR Tags All Time High

From The Big Picture :

"The money markets have completely broken down, with no trading taking place at all. There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending."

-Christoph Rieger, a fixed- income strategist, Dresdner Kleinwort.

The London interbank offered rate reached an all time high yesterday on the failure of the bailout plan, and the market sell off. For those of you new to the site, this interest rate is frequently used by banks to lend money to each other. When this spikes, it means that credit is very tight.

What did the Fixed Income Markets see that the Equity markets completely missed? Was it availability of credit, the dollar, or unrealized risk?

Most likely, all of the above.

Note that the line below is where LIBOR first started breaking out -- late 2005. For those of you who believe that markets are future discounting mechanisms, what did that tell you?

Sure, markets remained irrational for quite a while, but there was no escaping the inevitable . . .

LIBOR 5 year Chart

Chart via Bloomberg
TED Spread Chart since 1984

via Bill Laggner Bearing Asset.com
Excerpt :

"The cost of borrowing in dollars overnight surged the most on record after the U.S. Congress rejected a $700 billion bank rescue plan, heightening concern more institutions will fail.

The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said. The euro interbank offered rate, or Euribor, for one-month loans climbed to record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, advanced to a record. Rates in Asia also rose...

Credit markets have seized up, tipping lenders toward insolvency and forcing U.S. and European governments to rescue five banks in the past two days, including Dexia SA, the world's biggest lender to local governments, and Wachovia Corp. Money- market rates climbed even after the Federal Reserve yesterday more than doubled the size of its dollar-swap line with foreign central banks to $620 billion. Banks borrowed dollars from the ECB at almost six times the Fed's benchmark interest rate today."

Source :

Libor Surges Most on Record After U.S. Congress Rejects Bailout
Gavin Finch and David Yong
Bloomberg, Sept. 30 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=alszNo3N0CHo&

Related Posts :

1. Dollar Rally Could be Short Lived
2. TED Spread: Back in "Credit Hell"

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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Lehman Sells Neuberger Berman For $2.5 billion (LEH)

By John Carney, ClusterStock.Com, Sep 29, 08 12:03 PM.

Lehman has agreed to sell its Neuberger Berman money management unit to private-equity firms Bain Capital and Hellman & Friedman for $2.15 billion. That's quite a discount from a few months ago, when people were estimating that Neuberger could garner as much as $7 billion. The money-management unit is typically described as Lehman's "crown jewel." (Insert totally expected "getting kicked in family jewels" joke here.)

Update:

DealBook has some details :

• The sale includes a fixed-income business and some alternative asset holdings but not Lehman’s holdings in various hedge funds.
  
  
• Unsurprisingly, these two private equity firm's aren't buying Lehman’s own private equity businesses. UPDATE :
  Sources close to the deal say that the DealBook version of this is not entirely accurate. Some of the private equity operations of Lehman are in fact going with the new Neuberger entity.
  
  
• The company will operate as a new independent firm, Neuberger Investment Management, with $230 billion in assets under management.
  
  
• "George Walker, Lehman’s global head of investment management, will head the newly independent company, while Joseph Amato will continue to lead Neuberger Berman itself," DealBook writes.

The Wall Street Journal says the process was delay because of "protracted negotiations with Neuberger's money managers." They're consent to the deal was essential, since many could just leave the firm and take their clients with them. Dealing with those wealthy and relatively autonomous money managers is described as "herding cats."

Related Posts :

Lehman (LEH) May Sell Neuberger In Emergency Cash Raising Move

Please Note!
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Roubini: Risk of Financial Armageddon As High As Ever

By Henry Blodget, ClusterStock.Com, Sep 29, 08 2:55 PM.

Even before the House blocked the Bailout, Nouriel "Dr. Doom" Roubini pronounced it worthless. The risk of a complete systemic meltdown is as high as ever, says Nouriel. So perhaps we should be encouraged that the market basically yawned when the Bill was blocked.

It is obvious that the current financial crisis is becoming more severe in spite of the Treasury rescue plan (or maybe because of it as this plan it totally flawed). The severe strains in financial markets (money markets, credit markets, stock markets, CDS and derivative markets) are becoming more severe rather than less severe in spite of the nuclear option (after the Fannie and Freddie $200 billion bazooka bailout failed to restore confidence) of a $700 billion package: interbank spreads are widening (TED spread, swap spreads, Libo-OIS spread) and are at level never seen before; credit spreads (such as junk bond yield spreads relative to Treasuries are widening to new peaks; short-term Treasury yields are going back to near zero levels as there is flight to safety; CDS spread for financial institutions are rising to extreme levels (Morgan Stanley ones at 1200 last week) as the ban on shorting of financial stock has moved the pressures on financial firms to the CDS market; and stock markets around the world have reacted very negatively to this rescue package (US market are down about 3% this morning at their opening).

Let me explain now in more detail why we are now back to the risk of a total systemic financial meltdown…

Want to ruin what's left of your already clobbered afternoon? Read on >

Related Posts :

1. Fed Pumps Further $630 Billion Into Financial System
2. Dollar Goes Down Along with Bailout Plan
3. House Rejects $700 Bn Financial Bailout

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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Fed Pumps Further $630 Billion Into Financial System

According to Bloomberg, September 29, The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

Banks and brokers have slowed lending as they struggle to restore their capital after $586 billion in credit losses and writedowns since the mortgage crisis began a year ago. The bankruptcy of Lehman Brothers Holdings Inc. also sparked fears among banks they wouldn't be repaid by counterparties, driving up the cost of short-term loans between banks.

According to Federal Reserve Bank on September 26,To assist in the expansion of these operations, the Federal Open Market Committee has authorized a $10 billion increase in its temporary swap facility with the ECB and a $3 billion increase in its facility with the Swiss National Bank. These expanded facilities will now support the provision of U.S. dollar liquidity in amounts of up to $120 billion by the ECB and up to $30 billion by the Swiss National Bank.

In sum, these changes represent a $13 billion addition to the $277 billion previously authorized temporary reciprocal currency arrangements with other central banks. In addition to the swap lines with ECB and the Swiss National Bank, temporary swap lines previously have been authorized with: the Bank of Japan ($60 billion), the Bank of England ($40 billion), the Reserve Bank of Australia ($10 billion), the Bank of Canada ($10 billion), the Bank of Sweden ($10 billion), the National Bank of Denmark ($5 billion), and the Bank of Norway ($5 billion).

These arrangements have been authorized through January 30, 2009.

Source : Jesse's Café Américain

Related Posts :

1. Dollar Goes Down Along with Bailout Plan
2. House Rejects $700 Bn Financial Bailout

Please Note!
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Dollar Goes Down Along with Bailout Plan

By Kathy Lien, An SA Author.


The rejection of the $700B bailout plan by the House of Representatives came completely out of the left field, driving a knife through both US equities and the US dollar. For the Bush Administration, it certainly feels like they are moving one step forward and taking two steps back, but the severity of the financial crisis makes it absolutely necessary for Washington to put economics ahead of politics.

Although traders were initially dissatisfied with Congress’ approval of Paulson’s plan, they were counting on a bailout. The combination of a huge liquidity injection by the Federal Reserve today and the hope that the bailout plan would move forward kept stocks from falling further. However those efforts and the sleepless weekend of debates turned out to be futile after the House rejected the bailout bill.

In fairness, there was no was guarantee that Paulson’s plan would have helped average Americans, but at least it could have brought some stability to the financial markets. Unfortunately it is now back to the drawing board for Paulson, who has to meet with Bush, Bernanke and Congress to discuss their next steps.

Volatility in the financial markets benefits no one, especially as more than $1 Trillion in market value has been wiped out from US stocks today. The VIX, which measures equity market volatility, shot to the highest level in 6 years while gold prices jumped 3.8 percent. LIBOR rates have also skyrocketed while the TED spread continued to widen, indicating that as a result of the House’s rejection of the bill, investors both domestically and internationally have become more risk averse. Those who are willing to part with their cash are demanding a high premium.

Dow 10,000 Could Mean 100 USD/JPY

dow092908 The Dow Jones Industrial Average closed down more than 770 points while the S&P500 dropped more than 8 percent. This is the largest single day drop in the Dow ever, and the largest percentage decline in the S&P500 in 20 years.
We have long argued that if the Dow hit 10,000, USD/JPY could fall to 100. That correlation remains intact today as the plunge in US equities drags USD/JPY towards 104.00. In the September 19th edition of the Daily Currency Focus, we argued that the US dollar could fall by another 5 percent. At that time, USD/JPY was trading at 107.40, and to many people a 5 percent move lower, which is the equivalent of 530 pips, seemed like a farfetched possibility. However, since then the dollar has already fallen close more than 300 pips, making a move towards 102 within reach.

With the US stock market plunging and the US government looking to raise the national debt, in addition to hammering out the bailout plan, the Bush Administration will have to work extra hard to reassure foreign investors.

Gold Becomes a Hedge for Inflation and the US Economy

Now more than ever, the US needs to rely on foreign funding. If Central Banks and Sovereign Wealth Funds around the world start to lose confidence in the US financial markets or the US government, we could be looking at a complete freeze in lending that expands beyond the banking sector.

According to an article in the Wall Street Journal, central banks are already loading up on gold as European central banks cut their sales to the lowest level in almost 10 years. Gold prices are up more than $35 an ounce today as a hedge for inflation and a hedge for the US economy. Everyone is starting to realize that commodities are the only assets that have no counterparty or credit risk. Gold prices first jumped on inflation fears after the Federal Reserve’s liquidity injections this morning. Having more than doubled swap limits from $290B to $620B, the Fed is trying to tell the market that it is serious about providing liquidity, and given today’s sharp volatility, it will continue to do aggressively in the coming days.

TARP Drama Gets More Dramatic - Time to Play Defensive

For everyone from traders, investors and banks to the average American, the latest development in the TARP soap opera means one thing – which is that it is time to become more defensive. The Treasury has failed to restore confidence in the financial markets and it could be some time before there is stabilization.

This is the new age of conservatism, which means tighter terms for loans on credit cards, cars and homes as well as more penny pinching by US consumers. Expect this to lead to more layoffs and less expansion efforts by US companies. In fact, the longer the US government takes to agree on a plan, the greater the recessionary risks.

Looking ahead, we still expect more weakness for the US dollar, particularly against the Japanese Yen. House prices, Consumer confidence and Chicago PMI are due for release on Tuesday.


Related Posts :

House Rejects $700 Bn Financial Bailout

Please Note!
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You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

House Rejects $700 Bn Financial Bailout

Click to Enlarge

From Bloomberg :

The House rejected the legislation yesterday in a 228 to 205 vote, sending the Dow Jones Industrial Average tumbling 778 points for its biggest point drop ever and erasing more than $1 trillion in market value. The Standard & Poor's 500 Index fell 8.4 percent, the most since Oct. 26, 1987.

Click to Enlarge

Livechart by http://www.eSignal.com

To pick up the 12 votes needed to pass the bill in the House, the bill will need some cosmetic changes, lawmakers and political analysts say. Ninety-five Democrats joined the 133 Republicans who voted against the bill. Both sides are looking for changes.

House Republican conservatives are likely to keep pressing for a mandatory insurance program they initially proposed for mortgage-backed securities. They may also try to force the Securities and Exchange Commission to suspend mark-to-market accounting and require bank regulators to assess the real value of the troubled assets, lawmakers say.

Either measure could drive away Democratic votes.

House Republicans are also lobbying the White House to get the Federal Deposit Insurance Corp. to play a greater role in shoring up the financial system, said a House Republican aide.

Under the plan, the FDIC would issue lenders certificates they could use as capital, which the banks would have to pay back with interest. The proposal would give the FDIC more say in how the institutions are run. Democrats may balk at that.

``We can certainly work,'' said Dodd. Senators, he said, will ``hopefully come back Wednesday and get a different result.'' The measure is expected to get far more support in the Senate than it did in the House.

Source : Bloomberg


Related Posts :

1. Warren Buffett Reveals Bailout's Dirty Little Secret
2. Buffett On The Bailout: The CNBC Interview
3. A Defense of the Paulson Plan
4. The Theory behind the Rescue Plan

Please Note!
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What Lehman's Collapse Would Have Wrought

From The Big Picture

Today's must read MSM article is a page 1 article in WSJ on the impact of Lehman's collapse on the global financial markets:

"Two weeks ago, Wall Street titans and the government's most powerful economic stewards made a fateful choice: Rather than propping up another failing financial institution, they let 158-year-old Lehman Brothers Holdings Inc. collapse.

Now, the consequences of that decision look more dire than almost anyone imagined.

Lehman's bankruptcy filing in the early hours of Monday, Sept. 15, sparked a chain reaction that sent credit markets into disarray. It accelerated the downward spiral of giant U.S. insurer American International Group Inc. and precipitated losses for everyone from Norwegian pensioners to investors in the Reserve Primary Fund, a U.S. money-market mutual fund that was supposed to be as safe as cash. Within days, the chaos enveloped even Wall Street pillars Goldman Sachs Group Inc. and Morgan Stanley. Alarmed U.S. officials rushed to unveil a more systemic solution to the crisis, leading to Sunday's agreement with congressional leaders on a $700 billion financial-markets bailout plan.

The genesis and aftermath of Lehman's downfall illustrate the difficult position policy makers are in as they grapple with a deepening financial crisis. They don't want to be seen as too willing to step in and save financial institutions that got into trouble by taking big risks. But in an age where markets, banks and investors are linked through a web of complex and opaque financial relationships, the pain of letting a large institution go has proved almost overwhelming."

Fascinating stuff . . .


Source:
Lehman's Demise Triggered Cash Crunch Around Globe
Decision to Let Firm Fail Marked a Turning Point in Crisis
CARRICK MOLLENKAMP and MARK WHITEHOUSE in London, JON HILSENRATH in Washington and IANTHE JEANNE DUGAN in New York
WSJ, SEPTEMBER 29, 2008
http://online.wsj.com/article/SB122266132599384845.html

Related Posts :

1. Are the Credit Markets Still Healthy?
2. Hedge Funds Battle To Save Billions From Lehman (LEH) Bankruptcy
3. Lehman(LEH) Becomes A Penny Stock

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

Money Flow Reversals: One Reason This Market Has Been So Tricky

From Traderfeed.blogspot.com

Readers of this blog know that I keep tabs on an indicator called "money flow", which measures the dollars moving into and out of individual stocks. Each trade is tracked for whether it occurs on an uptick or downtick. If the former, the dollar price of the transaction times the volume is added to a daily cumulative total. If the latter, the dollar price of the transaction times the volume is subtracted from the cumulative total. The final figure at the end of each day reflects the dollar volume (or "money flow") that has moved into the stock (if the total is positive) or out of it (if the total is negative). My research takes the 30 Dow Jones Industrial stocks and calculates the money flow each day for each one and then sums the daily figures to provide a money flow measure for the entire index.

I just took the figures from 2008 and examined all two-day occasions in which net money flows across the thirty Dow stocks were positive (N = 44). Two days later, the Dow Jones Industrial Average (DIA) was down by an average of -.69% (14 up, 30 down). Across all other occasions, the Dow averaged a two-day loss of -.01% (64 up, 74 down).

So far this year, bouts of buying have been met with significant selling in the short term. That has made trading this market quite tricky, particularly if you're trying to identify and follow trends. With Friday's money flow numbers solidly positive, sustained buying on Monday on the heels of any rescue plan news would once again set up a positive two-day money flow period. The market's ability to follow up on any such strength will provide us with useful information about whether bulls find much rescue in the plan.

Related Posts :

Calm Before the Storm...

Please Note!
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Wachovia…gone

From The Bank Implode-O-Meter

I didn’t even get a chance to write a post about WaMu being the largest bank failure in history. Continental Illinois, during the S&L crisis, had held the record for 14 years until last Friday, when the FDIC took out WaMu and forced a sale to JP Morgan. Continental had $30-$40 billion of assets when it failed. WaMu had $310 billion of assets as of June 30th. But WaMu only held the record for a single business day.

Wachovia, with $812 billion of assets on the balance sheet, blows WaMu out of the water. Today the FDIC seized the bank and forced a sale to Citigroup. (Not all of those are banking assets, but you get the point that Wachovia is massive.)

Citigroup will acquire the banking operations of the Wachovia Corporation, the Federal Deposit Insurance Corporation said Monday morning, the latest bank to fall victim to the distressed mortgage market.

Citigroup will pay $1 a share [in Citigroup stock], or about $2.2 billion, according to people briefed on the deal.

The F.D.I.C. said that the agency would absorb losses from Wachovia above $42 billion and that it would receive $12 billion in preferred stock and warrants from Citigroup in return for assuming that risk.

“Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc. on an open-bank basis with assistance from the F.D.I.C.”

Under the deal, Citigroup will acquire most of Wachovia’s assets and liabilities, including $400 billion in deposits and will assume senior and subordinated debt of Wachovia, the F.D.I.C. said. Wachovia Corporation will continue to own the retail brokerage firm AG Edwards and the money management arm Evergreen.

“There will be no interruption in services and bank customers should expect business as usual,” the F.D.I.C. chairman, Sheila C. Bair, said.

Points to FDIC for saving taxpayer dollars on this and the WaMu deal. In the case of Wachovia, FDIC will be sharing losses with Citigroup, which agrees to absorb the first $42b of losses on Wachovia’s loan portfolio. WaMu’s failure apparently won’t cost FDIC anything. Some think the deal put in place to protect FDIC was borderline illegal.

Ever larger banks are failing as the confidence crisis grows larger. Citigroup will try to raise $10b of capital by selling stock today, which it will need to repair its own balance sheet. Only a few months ago, Citigroup was thought to be in deep trouble. Now it looks relatively strong compared to WaMu and Wachovia.

The hope now must be that Treasury will pump capital back onto Citigroup’s balance sheet, buying back Wachovia’s (and Citi’s) toxic loans at above-market values.

Related Posts :

1. Calm Before the Storm...
2. Citigrop Grabs Wachovia On The Cheap

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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Calm Before the Storm...

From Econompicdata.blogspot.com

The new bailout package does remove some of the stigma associated with selling securities to the taxpayer (bailed out companies will still have a tough time hiring new talent after they use the bailout, but it encourages current management to do so) AND I was wrong that prices paid by the taxpayer will be remotely near intrinsic valuations - click here for more details. Additionally, it does mention helping homeowners and perhaps the most important change, it includes a clause that allows the Fed to pay interest on reserves (which should open up the floodgates for further Fed liquidity - for the why, go here).

However, it does have many additional holes (per Professor Roubini via Naked Capitalism):

1. The plan is inefficient (i.e., it doesn't discriminate between who ought to be saved or not, and in fact rewards those who created dud assets)
2. It runs counter to the best models of how to deal with this sort of problem
3. It does not punish current shareholders or management

In other words, we have not learned from policy mistakes made in the past as this bailout seems to help out those that are in the worst shape, the most. Per the NY Times:

The Asian crisis teaches us that it is imperative that U.S. policy makers tell us which financial institutions will survive; and which not. This could possibly involve blanket government guarantees to unfreeze money markets. Until this uncertainty is resolved, financial institutions will be reluctant to deal with each other.

In other words, beware any post-bailout optimism (although futures are currently not optimistic in the least down 200+ pre-open... per Financial Ninja):

Out of 42 systematic banking crises across 37 countries, despite the implementation of a wide range of policies, all resulted in the re-allocation of wealth AWAY from taxpayers and towards debtors (banks). None avoided recessions and all recessions were SEVERE.

Source: Table 3 IMF Report (Table 3)

Related Posts :

Subprime, Alt-A Delinquencies Rise

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Subprime, Alt-A Delinquencies Rise

From Creditwritedowns.com

Clayton Homes, now owned by Berkshire Hathaway and called Clayton Holdings, has warned that Subprime and Alt-A delinquencies in the U.S. are still rising. This suggests that the fundamental problem underlying the banking crisis has not been addressed.

At its core, the credit crisis is the result of excessive lending against inflated residential property assets. Banks have been forced to write down over $500 billion in order to reflect losses on this lending. However, as recently as July, Jamie Dimon of JPMorgan Chase warned that residential mortgage losses were seeping into higher quality credits (see story here).

Now Housing Wire is reporting that Clayton confirms this continued deterioration in delinquencies and eventual mortgage-related losses in the U.S.

Performance in recent vintages of both subprime and Alt-A mortgages continued to deteriorate during August, according to data released recently by Clayton Holdings, Inc. The company’s monthly InFront report noted that 60+ day delinquencies for both Alt-A and subprime mortgages had increased, while cure rates had decreased; interestingly, however, roll rates — which measure the percentage of loans that worsened in delinquency status — decreased in most areas.

For 2006 subprime first liens, the 60+ day delinquency percentage reached 40.24 percent, a jump of 5.49 percent from the prior month; for 2007 vintage loans, 30.82 percent were 60 or more days delinquent, up 6.05 percent. Relative to other comparable vintages, both the 2006 and 2007 subprime vintages continue to perform significantly worse than other recent peers.

Alt-A loans fared comparitively worse, with 2006 vintage first liens recording 60+ day delinquencies of 25.26 percent, up 9.44 percent from the prior month; the 2007 vintage saw delinquencies rise a whopping 16.43 percent to 22.65 percent, Clayton said.

Related Posts :

1. Are the Credit Markets Still Healthy?
2. TED Spread: Back in "Credit Hell".

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

Citigrop Grabs Wachovia On The Cheap

From Creditwritedowns.com

Wachovia Corporation has agreed to be bought out by Citigroup in a deal supported by the U.S. government. Exact terms of the deal are still forthcoming, but this could be seen as a best case scenario for a bank which was increasingly under stress due to the global credit crisis.

In 2006 Wachovia's shares changed hands for nearly $60. On Friday they were trading hands for $10 a share, a loss of more than 80% in two short years. As with the WaMu-JP Morgan deal, the U.S. government is looking to recapitalize the banking sector by allowing shares in distressed financial institutions to fall to near zero and then arranging a buyout by a bigger, better capitalized bank. In my opinion, these are sweetheart deals for the likes of JPMorgan and Citigroup.

However, this may be one of the last such of these types of deals as the largest institutions, Citigroup, JP Morgan Chase and Bank of America have become absolutely gigantic institutions.

Wachovia, the fourth-largest US bank, is being bought by larger rival Citigroup in a rescue deal backed by US authorities.

Wachovia customers were told the action would provide "full protection for all their deposits", and that the bank would continue to operate as normal.

Under the deal, Citigroup will absorb up to $42bn (£23bn) of Wachovia losses.

US authorities said the decision to back the sale had been made "under extraordinary circumstances".

The comment came from the Federal Deposit Insurance Corporation (FDIC), the government body that guarantees the safety of banking deposits.

"This action was necessary to maintain confidence in the banking industry given current financial market conditions," said FDIC chairman Sheila Bair.

Mortgage debt

Citigroup is taking on $312bn of Wachovia loans.

Any debts on these loans above the $42bn Citigroup will absorb will be taken on by the FDIC in return for $12bn in Citigroup stock and other share options.

Wachovia is just the latest bank that has needed to be rescued as a result of high levels of bad mortgage debt and the wider turmoil in the global financial sector.

Analysts said much of its problems were caused by its 2006 purchase of mortgage lender Golden West for $25bn at the height of the then US housing boom.

Rose Grant, of Eastern Investment Advisors, said it seemed a good deal for Citigroup.

"One thing that Citigroup has been wanting to do for a while is to expand its retail operations because they are in very limited areas so this would basically allow them to do that," she said.
-BBC News

Related Posts :

1. Meredith Whitney: Bailout Won't Do Jack, Cutting Estimates
2. A New Hundreds of Billions Dollar of Debt Coming Due
3. 50 SPX Stocks Down > 50%

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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Gold and silver dealer reports an ‘unprecedented’ shortage of metals

By David Clerkin, Markets Correspondent,
The Sunday Business Post Online, September 28, 2008

A surge for demand in gold and silver has resulted in an unprecedented shortage of the metals for retail investors in recent days, according to Gold and Silver Investments, a Dublin-based firm that allows retail investors to speculate on movements in the value of precious metals.

Gold and Silver Investments director Mark O’Byrne said the supply of gold and silver available for small retail investors suffered a dramatic deterioration within hours on Friday, as wholesalers reported that government mints and refiners, the primary suppliers of the metals, had stopped offering new supplies.

‘‘It’s absolutely unprecedented,” said O’Byrne, who said the shortages were likely to drive up the costs of gold and silver in the secondary market.

‘‘This did not happen even in the 1930s and the 1970s, and will result in markedly higher prices in the coming months.”

According to O’Byrne, gold and silver were now only easily accessible in the primary market, which consisted of central banks and other major traders of the precious metals.

However, he said that minimum transaction sizes in this market were out of reach for most retail investors - at approximately $350,000 for gold and $135,000 for silver.


Source : The Sunday Business Post Online

Related Posts :

1. Dollar Rally Could be Short Lived
2. Seven Stocks That Went Up, Despite Market Drop
3. Gold Stock's Profit and Margin Charts
4. Three Reasons Why Gold Will Move Higher

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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Are the Credit Markets Still Healthy?

By Felix Salmon, An SA Author.

Robert Higgs has a long list of healthy-credit-market datapoints to support his contention that any talk of a frozen market is "hyperbole".

Commercial and industrial loans of all commercial banks, which are reported monthly, have grown rapidly. The most recent report, for August 2008, shows outstanding loans of $1,514 billion, an all-time high. This loan volume is 15.5 percent greater than it was a year earlier, and 30.8 percent greater than it was two years earlier. Frozen credit?
Consumer loans at all commercial banks, which are reported monthly, have also grown rapidly. The most recent report, for August 2008, shows outstanding loans of $845 billion, an all-time high. This loan volume is 9.2 percent greater than it was a year earlier, and 16.5 percent greater than it was two years earlier. Frozen credit?
Even real estate loans at all commercial banks, which are reported monthly, grew rapidly until very recently. The most recent report, for August 2008, shows outstanding loans of $3,642 billion, only slightly below the all-time high (in May 2008). This loan volume is 4.1 percent greater than it was a year earlier, and 15.5 percent greater than it was two years earlier. Frozen credit?
Lest one suspect that I have cherry-picked my examples, consider finally the amount of all bank credit at all commercial banks, which is reported weekly. For the most recent week reported, the one that ended on September 9, this credit amounted to $9,406 billion, which is only slightly less than the all-time peak of $9,485 reached in the week that ended on March 26, 2008. For the past six months, total commercial bank credit has remained on a high plateau, well above the levels reached in previous years, when everybody seemed to think that credit was ample.

I would make a few points in response to these intriguing numbers.

Firstly, they're year-on-year numbers, which don't give much of an impression of what's happened over the past six months.

Secondly, remember that most of these loans were extended at very low interest rates. As a result, they don't get paid down very fast. So even if you're only lending a little, if it's on top of a stock of existing loans which is basically staying steady, then your total loans outstanding will generally rise.

Thirdly, if banks are deleveraging, the direct bilateral loans to their relationship customers are the last things they're going to want to cut. The first thing you do is try to sell off assets without damaging relationships. Most banks own a lot of debt securities, for instance: they'll sell those before cutting back on their own lending, which is their most profitable business.

Finally, and most importantly, remember that bond issuance has crashed this year. The number to look at isn't total lending, from banks: it's total borrowing. And that's gone down substantially: disintermediation preceded deleveraging.

What we've seen is that a lot of companies who would normally have issued bonds or other securities in the debt markets have chosen instead to tap their lines of credit and relationships with banks. So bank lending might well have gone up, even as the total supply of credit has gone down. That doesn't mean credit markets aren't in crisis: quite the opposite.

(Via Tabarrok, who adds interesting points of his own.)

Related Posts :

TED Spread: Back in "Credit Hell".

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Dollar Rally Could be Short Lived

By Kathy Lien, An SA Author.

It is now confirmed that the US housing and labor market is in serious trouble. New home sales broke below the 500k make or break mark for the first time in 17 years. The last time we saw new home sales at these levels was during Bush Senior’s Administration. Jobless claims also climbed to 493k, the highest since 2001. To add salt to the wound, durable goods orders dropped 4.5 percent last month.

However these depression like numbers failed to put a dent into the US dollar as investors hold their breath for the approval of Paulson’s Troubled Asset Relief Program. With Congress going on recess at the end of next week, something needs to happen over the next few days. The euphoria in the markets could be short lived since the stock and currency markets have been very fickle.

Gold prices are higher and everyone is hungry for US Treasuries, driving the TED spread and the LIBOR/OIS spread near historic highs. This tells us one thing - which is that lending between banks have frozen and big investors are still risk averse. Therefore I would not trust the USD/JPY and carry trade rally.

Paulson’s Plan Could be a Lose-Lose for the US Dollar

Paulson’s plan is ultimately a lose-lose situation for the US dollar. If it is approved, it would cause a destruction of the US balance sheet by increasing the nation’s debt ceiling by 6.6 percent to $11.315 trillion. If it is not approved or if Paulson and Bernanke only get a trimmed down version of the plan, they would have to go back to the drawing board to come up with other solutions to unclog the mess. If we end up being between rescue plans, the uncertainty would weigh on the US dollar. Therefore I still believe that the US dollar could fall another 5 percent over the next few months.

Related Posts :

Warren Buffett Reveals Bailout's Dirty Little Secret

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Warren Buffett Reveals Bailout's Dirty Little Secret

By Henry Blodget, ClusterStock.Com, Sep 24, 08 1:08 PM.

The critical part of the bailout is the price the government pays for the trash assets it buys from banks. In short, if the government pays too much, the taxpayers will get hosed.

So it is interesting to note the difference between the price the government is proposing to pay and the price one of the world's smartest investors--Warren Buffett--would be willing to pay. To wit:

Bernanke and Paulson want to pay a phantom "hold-to-maturity" price that is above the prices at which the banks are currently valuing their trash assets. The logic is that the banks' carrying value is somehow artificially depressed by a lack of liquidity. (This logic is weak: If anything, the banks are trying to conceal how badly off they are by overstating the value of the assets).

Warren Buffett, meanwhile, thinks the appropriate price would be the "market value," which he believes is below the price at which the banks are currently carrying their trash:

[If] they do [the bailout] right, I think they'll make a lot of money.... They shouldn't buy these debt instruments at what the institutions paid. They shouldn't buy them at what they're carrying, what the carrying value is, necessarily. They should buy them at the kind of prices that are available in the market. People who are buying these instruments in the market are expecting to make 15 to 20 percent on those instruments. If the government makes anything over its cost of borrowing, this deal will come out with a profit. And I would bet it will come out with a profit, actually...

You can be pretty fanciful in marking positions in Wall Street, particularly when things aren't trading. The one thing you want to make sure, when the Treasury is buying things, is the marks they have don't make any difference. Like I said, it wouldn't be a bad idea, if you're buying ten billion of a security and you're the Treasury, to have them sell five-hundred million, or something like that into the market, so you find out what the real market price is and then buy the other 9-1/2 billion at that price. I really think, I really think the Treasury will make -- I think they'll pay back the 700 billion and make a considerable amount of money, if they approach it in that manner.

Read that again. Warren Buffett is not talking about paying any theoretical "hold-to-maturity" price. He's not even talking about the "don't-give-your-shareholders-all-the-bad-news-yet" carrying price (the "fanciful" ones he describes above). He's talking about the market price. And, unlike Bernanke, he's not suggesting that market price is somehow artificially depressed by a lack of liquidity. On the contrary, he's saying the market price is the market price because that's the price intelligent investors need to pay to offset their risk. The goverment should not pay one cent more than the market price.

Why aren't Bernanke and Paulson suggesting that the government pay a "market price." Because they know the banks will continue to insist that this price is too low and won't play ball. Fine. The answer is NOT to pay them to help the country--especially since they are a primary reason the company has gotten into this mess.

The answer is either to let them crash and burn and come begging for a bailout--at which point you nuke their shareholders completely AND/OR put a time-limit on the bailout offer, so they have to weigh their own self-interest vs. possible self-destruction. And in any case, you take equity, too, so you don't get screwed while their shareholders zoom.

Remember: You don't need to save all the banks to save the country. You only need to save some.

Related Posts :

Buffett On The Bailout: The CNBC Interview

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Buffett On The Bailout: The CNBC Interview

By Henry Blodget, ClusterStock.Com, Sep 24, 08 12:23 PM

CNBC had another awesome interview with Warren Buffett this morning. In addition to featuring the usual wisdom of one of the most charming men alive, it was also the first interview in a while in which Warren might have been talking up his book (The pitch: I love the bailout, we need the bailout, and I sure hope the government goes through with the bailout or I'm going to lose my shirt in Goldman Sachs).

Here's the transcript, courtesy CNBC:

BECKY QUICK: We know you get all kinds of deals, all kinds of people who come knocking asking you to jump in. You've said no to everything to this point. Why is this the right deal at the right time?

WARREN BUFFETT: Well, I can't tell you it's exactly the right time. I don't try to time things, but I do try to price things. And I've got a formula that says bet on brains, and bet of them when it's the right type of deal. And in this case, there's no better firm on Wall Street. We've done business with them for years, with Goldman, and the price was right, the terms were right, the people were right. I decided to write a check.

BECKY: Does the backdrop of the Federal government potentially getting involved with a massive bailout plan for Wall Street, does that have anything to do with this deal?

BUFFETT: Well, I would say this. If I didn't think the government was going to act, I would not be doing anything this week. I might be trying to undo things this week. I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly. It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal.

BECKY: Why would that be a mistake? Because the institutions would collapse, or because you could get a better price?

CNBC.COM POLL: BUFFETT'S BET, A BOOST OF CONFIDENCE?

BUFFETT: Well, there's just no telling what would happen. Last week we were at the brink of something that would have made anything that's happened in financial history look pale. We were very, very close to a system that was totally dysfunctional and would have not only gummed up the financial markets, but gummed up the economy in a way that would take us years and years to repair. We've got enough problems to deal with anyway. I'm not saying the Paulson plan eliminates those problems. But it was absolutely, and is absolutely necessary, in my view, to really avoid going over the precipice.

CARL QUINTANILLA: Warren, we can almost hear you measuring your words as you speak, because what we're talking about has such gravity. There are people out there who either don't, or are unwilling, to acknowledge what exactly, how serious the situation was last week. And I'm hearing you say is that, was it the most frightening experience you've had in your lifetime, in terms of evaluating where this economy stands?

BUFFETT: Yeah, well, both the economy and the financial markets, but there're so intertwined that what happens, they're joined at the hip. And it doesn't pay to get into horror stories in terms of naming institutions or anything. But I will tell you that the market could not have, in my view, could not have taken another week like what was developing last week. And setting forth the Paulson plan, it was the last thing, I think, that Hank Paulson wanted to do. there's no Plan B for this.

BECKY: Warren, you mentioned that Wall Street could not have taken another week like that. But what does that mean to the American taxpayer who's sitting at home saying, 'Why is this my problem?'

BUFFETT: Yeah, well, it's everybody's problem. Unfortunately, the economy is a little like a bathtub. You can't have cold water in the front and hot water in the back. And what was happening on Wall Street was going to immerse that bathtub very, very quickly in terms of business. Look, right now business is having trouble throughout the economy. But a collapse of the kind of institutions that were threatened last week, and their inability to fund, would have caused industry and retail and everything else to grind to something close to a halt. It was, and still is, a very, very dangerous situation. No plan is going to be perfect, but thanks heavens that Paulson had the imagination to step up with something that is of the scope that can really do something about it. And what he did with the money market funds, that was not an idea that I had, but as soon as I heard about it, that was an important stroke. Because the money, pulling out of the money market funds and going to Treasuries, and driving Treasury yields down to zero. That -- a few more days of that and people would have been reading about lots and lots of troubles.

JOE KERNEN: People listen, Warren, when you speak. And I don't know if you watched the hearings yesterday ...

BUFFETT: I got to watch some of them.

JOE: But when the more dire it looked, in terms of communicating, with some of these Senators, the three-month or one-month bill, again, started acting similar to what was happening on Thursday. Now we averted that disaster on Thursday, but it's already been three or four days. It's almost as if these guys already forgot about the position that we were in. Do you think that accounted -- we're still susceptible to that happening again if it looked like they're not going to go through with this?

BUFFETT: No, it would get worse. Last week will look like Nirvana (laughs) if they don't do something. I think they will. I understand where they're very mad about what's happened in the past, but this isn't the time to vent your spleen about that. This is the time to do something that gets this country back on the right track. What you have, Joe, you have all the major institutions in the world trying to deleverage. And we want them to deleverage, but they're trying to deleverage at the same time. Well, if huge institutions are trying to deleverage, you need someone in the world that's willing to leverage up. And there's no one that can leverage up except the United States government. And what they're talking about is leveraging up to the tune of 700 billion, to in effect, offset the deleveraging that's going on through all the financial institutions. And I might add, if they do it right, and I think they will do it reasonably right, they won't do it perfectly right, I think they'll make a lot of money. Because if they don't -- they shouldn't buy these debt instruments at what the institutions paid. They shouldn't buy them at what they're carrying, what the carrying value is, necessarily. They should buy them at the kind of prices that are available in the market. People who are buying these instruments in the market are expecting to make 15 to 20 percent on those instruments. If the government makes anything over its cost of borrowing, this deal will come out with a profit. And I would bet it will come out with a profit, actually.

BECKY: Are you buying instruments like these in the market?

BUFFETT: Well, I don't want to leverage up. No one wants to leverage up in this thing. So, if I could buy a hundred billion of these kinds of instruments at today's prices, and borrow non-recourse 90 billion, which I can't, but if I could do that, I would do that with the expectation of significant profit.

JOE: But the government can do that. You can't. And that's why the private sector can't, even you, can't save the system.

BUFFETT: I can't come close to it. But they have the ability to borrow. They can borrow much cheaper than I can borrow. They can borrow unlimited. They don't have covenants. They don't have -- I mean, they are in the ideal position. So, for example, if I were hiring advisers, as I talked about doing to buy these things, I would tell those advisers, 'Look it! People are buying these instruments to make 15 percent. So if you're going to charge me any fees, I'm going to defer those fees until I get rid of these instruments later on. If I don't make at least ten percent on my assets, you know, your fee goes down the drain. Because it should be a lead-pipe cinch to make 10 percent at the kind of prices that exist now. I wouldn't try to write that into the legislation. I don't think you should -- I think they should punish, in many cases, the people -- I would think they might insist on the directors of the institutions that participate in this program waiving all director's fees for a couple of years. They should, maybe, eliminate bonues. They may wish to do some of those things. I don't think you should try to write it into the instrument, though. I think that gets so damn complicated and ties people's hands. But if I were administering the program, I think I'd be fairly tough about some of those things, and I'd make sure that the advisers earned me a return that was well above my cost of borrowing before they got paid a dime.

BECKY: Would you administer the program?

JOE: Yeah, can you be on the oversight board? (Buffett laughs.) Can you be on the oversight board?

BUFFETT: I'd love to administer (laughs). I'd love to administer it for nothing, but I would really love to administer and get some kind of an override in terms of the profits, which is naturally the way Wall Street thinks. No, it's not my game to do that, but I will tell you that the buyers of the instruments these days are going to do better than the sellers. And the big buyer, if they -- they shouldn't pay any attention to the cost of these instruments to the selling institutions. They shouldn't pay any attention to the carrying value. In fact, one thing you might do, is if someone wants to sell a hundred billion of these instruments to the Treasury, let them sell two or three billion in the market and then have the Treasury match that, for what they pay. You don't want the Treasury to be a patsy. But I'll tell you, with Hank Paulson on top of it, you couldn't have any better guy to do that. The important thing is that if this program extends into the next administration is to have somebody in the next administration that has similar market savvy.

Related Posts :

Goldman and Buffett: Salvation or Desperation?

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Goldman and Buffett: Salvation or Desperation?

9/23/2008
by John Rubino, DollarCollapse Blog.


If the Fed can’t save us, maybe Warren Buffett can. That seems to be what U.S. markets are hoping in Tuesday after-hours trading, as they rally on the announcement that Goldman Sachs has attracted $5 billion from Buffett’s Berkshire Hathaway. The deal comes just in time, since investors seem to have finally figured out that the government isn’t omnipotent. Despite the mother of all bailout programs, the Dow declined more on September 22nd and 23rd than in any other two-day period since 2002. Goldman, meanwhile, is a logical candidate for a market-saving deal, since it’s the last investment bank standing and has a cool name. Buffett might reasonably see it as a platform for building a legitimate business.

But a closer look at the deal paints a different picture, of a desperate investment bank giving away the store to an investor who is now in a position to demand a sweet deal from guys who not so long ago considered him a dinosaur. Consider:

• Goldman recently announced plans to convert its structure from investment bank (lightly regulated and able to operate, in effect, as a giant hedge fund, leveraging itself to the hilt and making aggressive, sometimes wildly unethical bets) to commercial bank, more tightly regulated and less able to use leverage to goose returns. In other words, to make money it now has to find investments that pay more than its cost of funds.

• In return for his $5 billion, Buffett gets preferred stock that yields 10% a year, plus warrants enabling him to buy $5 billion of Goldman common stock at $115 per share anytime in the next five years. The stock was $135 in Tuesday evening trading.

A bank operates by borrowing low and lending high. So if Goldman’s cost of funds is 10% plus potentially massive stock dilution, and home mortgages, car loans and business loans all yield considerably less than 10%, how does it turn a profit on that cash? Clearly it can’t. This deal isn’t about getting money to operate a profitable business. It’s about keeping Goldman's stock from declining further (it’s down over 100 points in the past year) and maybe enabling it to raise cheaper capital from other sources later. But as far as this $10 billion goes, whatever it earns will flow not to Goldman’s current stockholders, but to Warren Buffett. The old guy wins again.

Related Posts :

1. Berkshire to GS: "I Got $5 Billion, but Its Gonna Cost Ya"
2. Warren Buffett Invests Billions in Goldman Sachs

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A Defense of the Paulson Plan

By Greg Mankiw's Blog

The Treasury proposal to rescue the financial system has gotten a lot of grief lately, especially from the community of economics professors. A smart friend, who knows more about this topic than I do, emails me his response to the critics:

Academic economists don't like the Treasury plan, but nearly all of the Wall Street economists are for it. You don't have to be all that cynical to say that the Wall Street economists are talking their book. But I'd like to think that there is at least in part a sense in which they are more attuned to the reality of the situation in credit markets -- that last week we were a day or two away from a breakdown of the financial system.

Here are three common critiques from the academics and journalists and what they are missing:

1. "Treasury must overpay for this to work because otherwise you are not injecting new capital, only adding liquidity."

Treasury is talking with the experts you would expect -- prominent academics who have designed auctions. It's complex because there are so many different MBS, but Treasury is committed to get the market price as best as it can. It will not intentionally overpay. But the assertion that the plan will not boost capital is wrong. If Treasury gets the asset prices exactly right next week when the reverse auction starts, those prices will be higher than the prices that would have obtained before the program was announced. That difference means that by paying the correct price next week we will be injecting capital relative to the situation ex-ante. Treasury does not need to overpay. And the taxpayer can still see gains -- say if the announcement and enactment removes some uncertainty about the economy and asset performance, but not all. Then prices could rise further over time. But the main point is that it is not necessary to overpay to add capital. I think Krugman is a leading purveyor of the "they must be intending to overpay" assertion.

2. "Taxpayers will be better off if Treasury gets warrants."

This is essentially the assertion made in David Leonhart's column in the NY Times on Wednesday. And it again illustrates that we would all be better off if high schools taught the Modigliani-Miller theorem. MM implies that the price of the asset (again,assuming the auction gets it right) will adjust to offset the value of any warrants Treasury receives. In this case of a reverse auction, imagine that the price is set at $10. If Treasury instead demands a warrant for future gains of some sort, then the price will rise in the expected amount of the warrant -- say that's $2. Then the price Treasury pays for the asset will be $12. Some people might prefer to get $12 in cash and give up a warrant worth $2 in expected value. Fine, that's a choice to be made. But the assertion that somehow warrants are needed is simply wrong.

3."The plan should be to inject capital instead."

This is the Luigi Zingales criticism. Again, that's a fine plan and might be a good idea. But that's a complement to an asset purchase plan, not a substitute -- and it's one allowed by the Treasury proposal and indeed envisaged in some cases. But that will take much longer to implement than an asset purchase. That's why it's a complement not a substitute -- Treasury needs to act now. The particular ideas from Zingales et al that there should be a forcible capital injection are pure ivory tower, unfettered by the practicalities of legality, enactment, or implementation.

Related Posts :

The Theory behind the Rescue Plan

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The Theory behind the Rescue Plan

By Greg Mankiw's Blog

Here is the key passage from President Bush's speech last night:

as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. Yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages. The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that happens, money will flow back to the Treasury as these assets are sold. And we expect that much, if not all, of the tax dollars we invest will be paid back.

In other words, the premise appears to be that the market is irrationally pessimistic. That might be so. Nonetheless, one has to be at least a bit skeptical about the idea that government policymakers gambling with other people's money are better at judging the value of complex financial instruments than are private investors gambling with their own.

Related Posts :

1. Sorry, RTC History Suggests Stock Market Not At Bottom
2. $5 Trillion Cash Pool Needed to Stop Rout, Ohmae Says
3. Bottom Line on Paulson-Bernanke Bailout Plan

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Durable Goods Orders Drop 4.5%

By Spencer
Angry Bear Blog : Advance Durable Goods Orders

The advance durable goods numbers are not reassuring. The unsmoothed total orders were down 4.5%. Although the monthly data is very noisy, the smoothed data is also showing weakness as the apparent rebound over the previous two months disappeared. Clearly, the data peaked last year and is trending down with no signs of a trend reversal.

Click to Enlarge

Much the weakness is in aircraft, but this is bad news for exports, the only source of growth in the last quarter.

Click to Enlarge

But the most worrisome data is the weakness in capital goods orders where the smoothed year over year change is -4.9%. Capital goods shipments fell 2.5%, a very bad indicator for third quarter GDP growth.

Click to Enlarge

GE confirmed this poor data this morning when it revises its earnings guidance down.


Related Posts :

Although Harder to File... Bankruptcies are on the Rise

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Although Harder to File... Bankruptcies are on the Rise

President Bush stated the Bankruptcy Abuse Prevention and Consumer Protection Act (effective October 17, 2005):

Will also allow us to clamp down on bankruptcy mills that make their money by advising abusers on how to game the system.

Ahhh... the eternal hope of small government when things were going well. I guess levering a firm out the ass isn't "gaming" the system when former co-workers will bail you out, but I digress...

Click to Enlarge

Among its many changes to consumer bankruptcy law, BAPCPA enacted a "means test", which was intended to make it more difficult for a significant number of financially distressed individual debtors whose debts are primarily consumer debts to qualify for relief under Chapter 7 of the Bankruptcy Code.

Well, at least when the consequences of our levered economy come crashing down, U.S. taxpayers that financed the bailout will have similar support... or not.

Source : Econompicdata Blog

Related Posts :

Please Note!
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More Stocks You Can't Short

The SEC allowed the exchanges to add stocks to the No-Short List. Here's what the NYSE has added:

1. GLG GLG Partners, Inc.
2. GE General Electric Co.
3. OCN Ocwen Financial Corporation
4. KBW KBW, Inc.
5. GFG Guaranty Financial Group Inc.
6. MFG Mizuho Financial Group, Inc.
7. FMR First Mercury Financial Corporation
8. STC Stewart Information Services Corporation
9. FCF First Commonwealth Financial Corporation
10. MTB M&T Bank Corporation
11. DFS Discover Financial Services
12. BMO Bank of Montreal
13. TD Toronto Dominion Bank
14. CM Canadian Imperial Bank of Commerce
15. FMD The First Marblehead Corporation
16. BBV Banco Bilbao Vizcaya SA
17. CIB BanColombia SA
18. LM Legg Mason, Inc.
19. NFP National Financial Partners Corp.
20. AXP American Express Company
21. CIT CIT Group Inc.
22. GM General Motors Corporation
23. HIG The Hartford Financial Services Group
24. ADS Alliance Data Systems Corporation
25. ALD Allied Capital Corporation
26. RAS RAIT Financial Trust
27. DRL Doral Financial Corporation
28. FSR Flagstone Reinsurance Holdings
29. MCO Moody's Corporation
30. COF Capital One Financial Corporation
31. CS Credit Suisse Group AG

Source : http://www.crossingwallstreet.com/

You can see the other 799 of financial stocks banned list at here

Related Posts :

Hedge Funds Finding New Ways to Short

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