Morning Bell

• SEC expected to keep mark-to-market accounting rule
  Rather than suspending the controversial mark-to-market accounting rule, the Securities and Exchange Commission is planning to refine its application, a source told The Wall Street Journal. Congress has ordered the SEC to complete a study on the rule, but new guidance on applying the rule won't likely be included in the study. Lobbyists for the banking industry have been urging the SEC to allow greater flexibility in the application of the rule, which they say is behind the financial meltdown. The Wall Street Journal (tiered subscription model) (12/8)

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Industry News

• Analysis: Fighting foreclosures could help MBS market
  Mortgage-backed securities could get a boost from government policies that help stem foreclosures, Peter Eavis writes in The Wall Street Journal. Current government proposals to curb foreclosures don't appear as if they'll have as big of an effect as Washington lawmakers would like, and expanding the programs may increase political pressure. "But politicians might be willing to bear that if improved initiatives look likely to rapidly minimize foreclosures -- and don't tempt current borrowers into default," Eavis said. The Wall Street Journal (tiered subscription model) (12/8)

• Dialogue with China ends in unexpected way for Paulson
  Treasury Secretary Henry Paulson initiated the Strategic Economic Dialogue with China a couple of years ago as a way for the U.S. to teach the Asian giant about a free-market economy. In the past year, however, the financial crisis has forced the discussions down an unexpected path. Paulson recently completed his final SED in Beijing, where he and U.S. capitalism were severely criticized. The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (12/5)

• Bank of America, Merrill shareholders approve merger
  For shareholders of Merrill Lynch, the merger with Bank of America is a lifeline. For BofA, the deal offers a foothold in investment banking, although the future of the industry is in question. The acquisition also comes with Merrill's wealth-management business. The next announcement from the combined company is expected to be a large cut to its work force. FinanceAsia.com (12/8)

• Other News

• Merrill board resists Thain's $10 million bonus request
  The Wall Street Journal (tiered subscription model) (12/8)

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Regulatory Roundup

• SEC approves EMMA as central disclosure depository
  The Securities and Exchange Commission has approved rules that make the Municipal Securities Rulemaking Board's EMMA system a free, centralized repository for the filing of bond-related, secondary-market disclosure documents. The rules go into effect July 1. The SEC is considering other changes to increase municipal disclosure standards. The Bond Buyer (subscription required) (12/7)

• Fed official: Regulation should ensure stability
  Federal Reserve Bank of Boston President Eric Rosengren said he believed overhauling the financial-regulation system should focus on ensuring economic stability and the stability of Wall Street firms and banks. "There is a clear link between the financial regulation of institutions and the stability of markets and the macroeconomy," Rosengren said in Geneva, Switzerland, today. "Inadequate oversight can cause periods of financial turmoil that are quite destructive." Bloomberg (12/8)

• Commentary: Bernanke hoping gamble will yield results
  Federal Reserve Chairman Ben S. Bernanke, who will continue to play a pivotal role in righting the nation's economy when President-elect Barack Obama takes office, is in an unprecedented situation, Robert Samuelson writes in a RealClearPolitics commentary. "If the Fed is too timid, it may deepen today's slump; the financial magazine Barron's -- hardly a socialist bastion -- suggested the Fed should balloon its credit to an astounding $6 trillion. But too much money and credit might someday boomerang as higher inflation. Considering the consequences of being wrong, Bernanke faces an enormous intellectual challenge and no less an agonizing personal burden," he said. RealClearPolitics (12/8)

Legislative Update

• Swap legislation could end OTC business
  Legislation regulating swaps and other credit derivatives may be overreaching, according to industry trade groups. The groups, which include SIFMA, say the proposed rules could result in over-the-counter transactions' being declared illegal and void contracts. "This bill effectively ends the over-the-counter business as it exists today," said Travis Larson, a SIFMA spokesman. InvestmentNews (free registration) (12/7)

• Congress to scrutinize proposal concerning advisers
  A proposal by the Department of Labor would allow advisers to recommend the products of their choice, which is raising concerns that they may be pressured to push funds with the highest fees. The next Congress is expected to look closely at the proposal. "We do expect (House Committee on Education and Labor Chairman) George Miller and the Education and Labor Committee will look at what the Labor Department has done," said Liz Varley, managing director of government affairs in the Washington office of SIFMA. "There's going to be a reassessment in terms of their strategy." InvestmentNews (free registration) (12/7)

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Hot Topics

Top five news stories selected by SIFMA SmartBrief readers in the past week.

• SIFMA aims to restore confidence in securitization markets (Securities Technology Monitor)

• Report: BofA could cut 30,000 jobs as it absorbs Merrill Lynch (CNBC)

• Morgan Stanley jump-starts push into retail banking (The Wall Street Journal (tiered subscription model))

• SEC warns CEOs not to cut compliance when slashing costs (Reuters)

• Sale of Neuberger falls through, leaving unit with managers (The Wall Street Journal (tiered subscription model))

• Results based on number of times each story was clicked by readers.

Investor Trends

• Investors search for signs that Goldman, Morgan will grow
  Investors are not optimistic about upcoming results for Goldman Sachs and Morgan Stanley, so they're looking beyond results for indications of plans to grow. While Goldman CEO Lloyd Blankfein offered a forecast that includes a 20% return on tangible equity, his claims are debatable, according to this article. Meanwhile, James Gorman, co-president of Morgan Stanley, said new limits on leverage as a result of becoming a bank holding company will reduce profitability. MarketWatch (12/5)

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.

SmartQuote

What great changes have not been ambitious?" --Melinda Gates, co-founder of Bill & Melinda Gates Foundation