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December 4, 2008 Sign up Forward Archive Advertise News on the capital markets, securities and financial industry   Morning Bell    SIFMA aims to restore confidence in securitization markets SIFMA is taking part in a global initiative to offer recommendations that do not require legislation or new regulations but strive to restore confidence in securitization markets. "Securitization is part of the engine that drives consumer finance, and a significant part of that engine is stalled," said Timothy Ryan, president and CEO of SIFMA. Residential mortgage-backed securities are the focus of many of the recommendations, which include a call to boost transparency, standards for due-diligence disclosure and repurchase procedures. Other groups participating in the effort include the European Securitisation Forum, the American Securitization Forum and the Australian Securitisation Forum. Read the SIFMA news release. Securities Technology Monitor (12/3), Reuters (12/3), Investment Executive (Canada) (12/3)   Video View  Bank of England, ECB slash interest rates   Source: CNBC The Bank of England lowered its key interest rate from 3% to 2% on Thursday, and the European Central Bank followed less than an hour later with a 75 basis point cut to its rate. The ECB took its benchmark rate from 3.25% to 2.5%. Rarely has the BoE cut rates by more than a half a percentage point. Despite the significant cut, some may be disappointed. The markets had started to expect a reduction as dramatic as the 150 basis point cut made in November. Some analysts had also predicted a larger rate cut from the ECB. CNBC (12/4), Financial Times (free content) (12/4), Google/The Associated Press (12/4)   Industry News  Automakers could convert industrial-loan firms to tap TARP If a federal rescue falls through, the Detroit Three may have another option for tapping the Troubled Asset Relief Program. Ford Motor, Chrysler and General Motors could convert their industrial-loan companies into bank holding companies. Doing so would give the automakers access to TARP, but the plan is not without obstacles. Financial Week (12/3) Analysis: Falling rates revive old problem for banks After Federal Reserve Chairman Ben S. Bernanke said the Fed might invest in longer-term Treasuries, the yield on 10-year notes dropped below 2.7% for the first time since the Eisenhower administration. When long-term rates fall, it is more difficult for banks to increase lending margins and, thus, make money. "For banks to function properly, risk has to be priced into loans," said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co. "As the system delevers, rates are going to rise, but that doesn't mean the government can't push rates low now to get the system back on its feet." Reuters (12/3) Commentary: Crisis requires shift in thinking Mohamed El-Erian, co-CEO and co-chief investment officer of Pimco, says the economic situation will improve only if both the private and the public sectors shift their thinking. Instead of the goal being a return to "business as usual," a different direction needs to be established. "It is time to suspend unquestioned faith in a quick return to the past and adjust to the reality of change," El-Erian writes. Financial Times (free content) (12/3) Other News GE Capital's new plan may be more conservative, analysts say Bloomberg Businessweek (12/3) Harvard's endowment loses 22%, warns of more losses NYTimes.com (12/3) Sale of Neuberger falls through, leaving unit with managers The Wall Street Journal (tiered subscription model) (12/4)   Regulatory Roundup  SEC cracks down on ratings agencies; more changes likely The Securities and Exchange Commission made steps toward tightening the rules for bond-rating firms by curtailing potential conflicts of interest and revising disclosure requirements regarding the ratings process. However, the SEC postponed more controversial changes. Sen. Charles Schumer, D-N.Y., said the agency's changes are not likely to be the last. "None of the rules adopted today are a substitute for the larger regulatory reform that is coming next year," Schumer said. The Washington Post (12/4), The Guardian (London)/Reuters (12/3), NYTimes.com/The Associated Press (12/3), The Wall Street Journal (tiered subscription model) (12/4) IRS may perform audits based on survey results About 200 governmental issuers will receive surveys from the Internal Revenue Service on their post-issuance compliance. The surveys are expected to go out next month. Unlike earlier surveys sent to charities, the IRS may follow up the current round with audits. The Bond Buyer (subscription required) (12/4) Beige Book reveals economy in downturn since October The U.S. economy has been in decline since early October, according to the Federal Reserve's Beige Book. The Fed's summary says labor markets weakened while energy and retail prices fell. Reuters (12/3), The Washington Post (12/4) As Treasury secretary, Geithner may try to oust Bair Timothy Geithner, president of the Federal Reserve Bank of New York and President-elect Barack Obama's nominee for Treasury secretary, has said that Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., is too focused on protecting the FDIC rather than the broader financial system and that she is not a team player. Insiders expect Geithner to try to push Bair out of office, but doing so may be quite a challenge. Bloomberg (12/4)   Investor Trends  Crash in commodity stocks outpaces that of tech in 2000 In the past six months, oil, grain, copper and other commodity stocks have taken a nose dive, and chart watchers said more losses are expected. "All of commodities are collapsing," said Frank Lesh, broker and futures analyst at FuturePath Trading. "The oil charts are bearish. I expect commodities to [remain] under pressure in the first quarter of next year." The Wall Street Journal (tiered subscription model) (12/3)   SIFMA News  SIFMA's Industry Compensation Reports Now Available For Purchase SIFMA's 2008 compensation reports, Management & Professional Earnings in the Securities Industry and Office Salaries in the Securities Industry, are now available for purchase. These reports provide 2008 base salary and 2007 base salary, bonus, other cash compensation and total compensation for 240 management and professional positions, and 96 clerical positions nationwide. Click here to buy the report on Management & Professional Earnings. Click here to buy the report on Office Salaries in the Securities Industry. For more information, please contact Nancy Cosentino. SIFMA events: Your tickets to keeping abreast of the industry SIFMA conferences and events bring together policymakers, regulators and industry experts to examine and discuss the changing landscape of financial services. Make an investment by clicking here, to serve your firm and clients better by being part of these premier events. SIFMA is your powerful resource regarding the securities industry and global capital markets. 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