The segment you want to watch is As safe as houses. This explains the origins of sub-prime. Otherwise the documentary starts from the beginning. If you have the time it is a great piece on The Ascent of Money.
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Joined Feb 3, 2009
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Top Story: Bernanke Testimony…. F Sales Down 46.3%… Plus Mid Day Update
NYSE Percentage Gainers
ABM, TNS, AEC, GFW, GLG, GXM, XKK, OSK, PIJ, KTP
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Pending Home Sales: Prior +6.3% / Market Expects -3.5% / Actual -7.7% … Plus A Pod Cast From A Chap Named Keeble on Treasury Yields
Fed Announces TALF Will Start Loans by March 25th
Comments »March 3 (Bloomberg) — The Federal Reserve said its $1 trillion program to prop up the market for consumer and business loans will start disbursing funds March 25 and will probably accept securities backed by vehicle-fleet and equipment leases.
The Fed also lowered interest rates and so-called collateral haircuts for loans tied to asset-backed securities with guarantees by the Small Business Administration or to government- guaranteed student loans, the central bank and U.S. Treasury said in a statement in Washington.
The Fed and Treasury “currently anticipate that ABS backed by rental, commercial, and government vehicle fleet leases, and ABS backed by small ticket equipment, heavy equipment, and agricultural equipment loans and leases will be eligible for the April funding of the TALF,” which is scheduled for April 14, the agencies said.
Chairman Ben S. Bernanke and his colleagues, after cutting the benchmark interest rates almost to zero, are counting on the Term Asset-Backed Securities Loan Facility to help revive credit and end what may become the deepest U.S. recession since World War II.
The Fed originally planned to start the program in February. Central bank officials postponed the plan to ensure “all our legal and procedural steps had been taken,” Chairman Ben S. Bernanke said in congressional testimony Feb. 25.
The TALF will start by offering $200 billion in loans to hedge funds and other investors aimed at jumpstarting lending to consumers for autos, education and credit cards and to small businesses. The program also will help auto dealers finance the cars on their lots.
Protect the Fed
Treasury is providing $20 billion in capital from the Troubled Asset Relief Program to protect the Fed from losses. Treasury Secretary Timothy Geithner plans to increase the contribution to $100 billion, letting the Fed expand the program to $1 trillion and add other assets such as commercial mortgage- backed securities.
The central bank announced the TALF in November, and said in February the program could be expanded to commercial mortgage- backed securities and private-label residential mortgage-backed securities.
The Fed said on Dec. 19 it extended the term of TALF loans to three years from one year and will lend to all eligible borrowers rather than through an auction process.
The Fed’s Open Market Committee said in its Jan. 28 policy statement that it will “assess whether expansions of or modifications to lending facilities would serve to further support credit markets and economic activity and help to preserve price stability.”
U.S. Stock Futures Remain Positive As Banks Take a Rest From Selling Off…. Plus Market Movers
Futures in the green, but the over night trend has been down
Comments »March 3 (Bloomberg) — U.S. stock futures advanced after yesterday’s sell-off left companies in the Standard & Poor’s 500 Index valued at the cheapest relative to earnings since 1986, overshadowing concern the economy will deteriorate further.
Citigroup Inc. rose 13 percent in early New York trading, while Bank of America Corp. gained 5.1 percent. The S&P 500 traded at 12.2 times company profits from the past 10 years as of yesterday’s close, according to data compiled by Yale University professor Robert Shiller, who uses a decade of earnings to smooth out short-term fluctuations.
Futures on the S&P 500 expiring this month added 0.5 percent to 709.20 as of 12:22 p.m. in London after the index closed at the lowest level since October 1996. Dow Jones Industrial Average futures gained 0.5 percent to 6,826 and Nasdaq-100 Index futures advanced 0.6 percent to 1,092.50.
“Everything is a buying opportunity because valuations are super attractive,” said Jacques Porta, a fund manager at Ofi Patrimoine in Paris, which oversees about $615 million. “We’ve never seen anything like it. But the problem is there is still the risk of declines. We’re still in a credit crunch and the outlook on the economy is negative.”
Obama Administration is Mulling Over the Purchase of Toxic Assets
Comments »NEW YORK (Reuters) – The Obama administration is considering a plan to purchase bad loans and other distressed assets by creating multiple investments funds, according to The Wall Street Journal, quoting people familiar with the matter.
The funds would be part of what the administration is calling a private-public financing partnership that would take distressed assets off banks’ books. No decision has been made on the partnership’s final structure, but a set of separate funds run by private investment managers is one leading idea, according to the Journal.
The managers, the Journal said, would have to put up a certain amount of capital while additional financing would come from the government. The government would share in any profit or loss.
