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Great volume today.
Thar she blows!!!!
Finally...
Fannie Mae's October portfolio jumps 28 percent
11/25 03:12 PM
NEW YORK, Nov 25 (Reuters) - Fannie Mae (FNM:$0.5116,$0.1716,50.47%) , the largest U.S. home funding source, said it beefed up its mortgage investment portfolio in October, the first full month that the company was under government control.
The company's mortgage holdings grew at a nearly 28 percent annual rate last month to $777.1 billion from $761.4 billion in September.
Commitments to purchase mortgages and securities in future months were $33.48 billion in October compared with $43.76 billion the prior month.
Seriously delinquent rates on Fannie Mae (FNM:$0.5116,$0.1716,50.47%) conventional single-family mortgages jumped 15 basis points in September, the latest month reported, to 1.72 percent, the company said in a statement.
Freddie Mac (FRE:$0.60,00$0.15,0033.33%) , the second largest U.S. home funding source, on Monday reported a 43.6 percent jump in its retained mortgage portfolio to $763.7 billion in October. The company, also taken under government control in early September, said its agreements to buy mortgages in coming months rose to $17.4 billion in October from $2.5 billion the prior month. (Reporting by Lynn Adler, Editing by Chizu Nomiyama)
Mortgage Bond Buying Intensifies, Premiums Tighten 28 BPs
11/25 09:24 AM
NEW YORK (Dow Jones)--Risk premiums on mortgage bonds and debt issued by Fannie Mae (FNM:$0.4901,$0.1501,44.15%) and Freddie Mac (FRE:$0.619900,$0.169900,37.76%) tightened drastically Tuesday morning as buyers returned multifold to the market.
"It's a big event that the Federal Reserve is offering to buy up nearly 10% of the agency mortgage market," said Art Frank, a mortgage strategist with Deutsche Bank (DB:$31.8300,$1.1500,3.75%) .
Tuesday morning, the Federal Reserve announced that it would buy up to $500 billion of mortgage bonds guaranteed by Fannie, Freddie and Ginnie Mae, providing the ultimate support to prop up the $4.8 trillion market of these securities. The central bank also will buy $100 billion of the mortgage finance companies' debt securities, including that of the Federal Home Loan Bank, through reverse auctions starting next week.
So far, other initiatives to prop up the market including a plan to have both the government-sponsored enterprises buy nearly $200 billion of these bonds and the U.S. Treasury's unlimited purchase of these bonds have done little to stop the weakening of risk premiums on mortgage bonds. As a result, mortgage rates have remained at elevated levels with little relief to consumers.
Tuesday morning, however, was a different story with risk premiums on these mortgage bonds tighter by 28 basis points on the back of the Fed support.
The hope is that this would translate to lower mortgage rates. However, the rapid gapping out of Treasury yields may temper the fall, market participants say.
Meanwhile, Fannie and Freddie debt securities tightened up to 40 basis points in the secondary market.
Risk premiums on Fannie's 3-year benchmark note were 28 basis points tighter at 145 basis points, while the Freddie Mac's (FRE:$0.619900,$0.169900,37.76%) 10-year bond was 32.5 basis points tighter at 127 basis points.
These debt securities have been slammed in the past couple of months on investors' concerns over the extent of government guarantee on this debt, and the future of the two mortgage giants. Further, the launch of new government- guaranteed bank debt created a competing asset class that potentially could lure away traditional buyers of Fannie and Freddie debt.
-By Prabha Natarajan, Dow Jones Newswires, 201-938-5071; prabha.natarajan@ dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=VNf1o8oJFnifzxvjBbgEew%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
11-25-080924ET
Copyright (c) 2008 Dow Jones & Company, Inc.
I didn't realize the significance of 36...
It's all smoke and mirrors...
This could get ugly. And by ugly, I mean beautiful...
Ask at .3594
Its moving, but has been getting jumped since 35.
The ask keeps getting jumped...
17 straight white candle starting...............NOW!
17 straight black candles will do that to a person, LOL...
News Highlights: Top Equities Stories Of The Day
11/21 04:00 PM
TOP STORIES
OBAMA PICKS GEITHNER FOR TREASURY POST
New York Fed President Timothy Geithner will be nominated to be Treasury secretary, according to a person close to the transition process. Obama plans to introduce his entire economic team early next week. Bill Richardson is expected to be Commerce secretary, NBC News reports.
US STOCKS RALLY ON OBAMA PICKS
Stocks rally on several names finally being announced for various cabinet posts in the Obama Administration. The biggest one, to the stock market, is Tim Geithner as Treasury Secretary. Reports say Bill Richardson has been tapped for Commerce and Hillary Clinton will accept job of Secretary of State. DJIA soars about 400 points.
CITIGROUP BOARD MEETS TO EXPLORE OPTIONS; SHARES DROP
Citigroup's (C:$3.76,00$-0.95,00-20.17%) stock falls 21% as the bank's board meets to consider its options and a top executive moves to reassure clients. In a meeting with executives, CEO Vikram Pandit says he has "no desire to sell Smith Barney," referring to Citigroup's (C:$3.76,00$-0.95,00-20.17%) brokerage operation.
WAL-MART NAMES MIKE DUKE CEO, REPLACING SCOTT
Wal-Mart's (WMT:$52.76,00$2.10,004.15%) board of directors elects international chief Mike Duke to succeed Lee Scott as president and chief executive officer, effective Feb. 1. Move will end Scott's nearly 9-year tenure in charge of the world's largest retailer.
CLINTON SAID TO ACCEPT SECRETARY OF STATE POST
Hillary Clinton will agree to serve as secretary of State, the New York Times (NYT:$5.32,00$-0.40,00-6.99%) reports, citing two Clinton confidants. Clinton decided after follow-up discussions with Barack Obama after their in-person meeting last Thursday in Chicago.
BIG THREE GO HOME EMPTY-HANDED
The Big Three are on their own for now. Congressional efforts to rescue Detroit's auto makers collapse, with lawmakers saying the industry lacks credible plans to return to profitability.
FANNIE, FREDDIE TO SUSPEND FORECLOSURES
U.S. mortgage giants Fannie Mae (FNM:$0.34,00$0.01,003.03%) and Freddie Mac (FRE:$0.450000,$-0.040000,-8.16%) will suspend foreclosure sales and evictions on certain properties until after the holiday season, as they prepare to implement a loan-modification program.
'PROTRACTED PERIOD' OF WEAK GROWTH SEEN
Federal Reserve Bank of Chicago President says he expects to see more economic weakness in an uncertain environment, and that the U.S. runs a higher risk of entering a deflationary period than a few months ago.
TOP DEMOCRATS TO SEND LETTER TO AUTOMAKERS
House Speaker Nancy Pelosi and Majority Leader Harry Reid say they're sending a letter to automakers explaining the standards by which congressional leaders will judge the companies' turnaround plans in order for them to get aid.
KEYCORP DOWN AMID BANK-SECTOR DECLINE
Bank shares fall, with KeyCorp (KEY:$6.27,00$-0.64,00-9.26%) among the major decliners, hitting levels not seen since April 1985 after slashing its dividend late Thursday. KeyCorp (KEY:$6.27,00$-0.64,00-9.26%) pares some earlier losses and trades down 19%.
GM TO ANNOUNCE FURTHER PRODUCTION SHUTDOWNS
Auto maker will implement further cutbacks to its North American production schedule and plans to inform employees about the changes this morning. Cutbacks come amid a substantial slowdown in the U.S. market and follow a series a plant shutdowns already slated for coming months. Shares down 2%.
RESEARCH IN MOTION LAUNCHES NEW BLACKBERRY
BlackBerry Storm goes on sale at Verizon Wireless stores following months of speculation. It's the latest device in what has become the most ambitious product launch schedule to date by Research In Motion (RIMM:$44.80,00$3.28,007.90%) , which is battling to keep its large share of the market for so-called smart phones.
COURT MAY NOT CHANGE CORPORATE LIABILITY STANDARD
A federal appeals court appeared unwilling to consider changing the standard used to determine a company's criminal liability when one of its employees commits wrongdoing, saying the issue ought to be argued before the U.S. Supreme Court.
BUFFETT DOESN'T SEE TURNAROUND BY MID-2009
In an interview airing today on Fox Business Network, Warren Buffett says it will take longer than mid-2009 for the U.S. economy to begin recovering, as some Fed officials suggest, and predicts unemployment will rise for some time.
US MASS LAYOFFS REMAIN HIGH IN OCTOBER
Despite retreating slightly from September, U.S. employers lay off 232,468 workers in October, the highest level for the month since 2001 as automakers, temp agencies and discount department stores shed thousands of jobs.
SEMGROUP PROBE TURNS TO FORMER EXECUTIVE, EMPLOYEES
SumSemGroup wants a court to order its former chief operating officer and two other ex-employees to cooperate with its probe of trading losses that took down the company, saying they've refused to provide information.
PETERSON PRESSES OBAMA TEAM ABOUT CFTC
House Agriculture Committee Chairman Collin Peterson is pressing President- elect Barack Obama to elevate the stature of the U.S. commodities regulator, saying that the CFTC has clearly been left out of things.
GM TO SELL TWO PRIVATE JETS AMID CRITICISM
General Motors (GM:$3.012,0$0.132,04.58%) , skewered for sending CEO Rick Wagoner to Washington, D.C., in a private jet to plead for a bailout, will offload two of its corporate planes and slash travel expenses, the company says. GM shares fall 1%.
BUSH SIGNS UNEMPLOYMENT-BENEFITS EXTENSION
President George W. Bush signs legislation that extends unemployment-insurance benefits by seven weeks, to 20 weeks, and creates a second tier of 13 weeks of benefits for those in states with unemployment rates over 6%.
MORGAN STANLEY STARTS PREVIOUSLY ANNOUNCED LAYOFFS
Investment bank, which announced plans last week to lay off 10% of its institutional securities professionals, has laid off traders and analysts from its proprietary trading desk. Shares edge lower.
USG TO SELL NOTES TO BERKSHIRE, FAIRFAX
USG agrees to sell $400 million in convertible senior notes to shareholders Berkshire Hathaway (BRK/A:$88,000.00,00$10,500.00,0013.55%) and Fairfax Financial Holdings (FFH:$276.68,00$-0.61,00-0.22%) as the building-materials maker looks to boost cash levels due to constricted credit markets. USG shares up 20%.
CONFERENCE BOARD SEES CUTBACK IN HOLIDAY SPENDING
Private research group says U.S. households are planning to spend an average of $418 on gifts this year, down from planned spending of $471 last year, because of the bad economy, according to its survey.
CRUDE INCHES HIGHER ON PIPELINE ATTACK, OPEC
Crude oil futures break a five-session losing streak as an attack on a Turkish pipeline and the prospect of an OPEC production cut allows the market to momentarily set aside demand concerns. January delivery settled 51 cents up at $ 49.93 a barrel.
FED'S LACKER SAYS 2009 RECOVERY SEEMS PLAUSIBLE
Richmond Fed president Jeffrey Lacker says consumer spending could rise sharply once labor market uncertainties recede. He also sees housing drag easing next year. While the risk of inflation is up, the risk isn't very large, he says.
FOOT LOCKER (FL:$5.46,00$-2.17,00-28.44%) , FINISH LINE SHARES SLUMP
Shares of athletic-apparel retailers drop after Foot Locker (FL:$5.46,00$-2.17,00-28.44%) cuts its outlook for the rest of the year, saying slowing economy has hurt shoe sales, particularly in the past two months. Foot Locker (FL:$5.46,00$-2.17,00-28.44%) drops 33%. Finish Line declines 16%.
======= DOW JONES NEWSWIRES ANALYSIS AND COMMENTARIES =======
COMPLIANCE WATCH
Risk Management Seen As Gaining Influence
The nation's deepening financial crisis and the likelihood of heightened regulation will transform risk management at securities firms to a more enterprise-wide function, writes Suzanne Barlyn.
TECHNICALLY SPEAKING Bear Markets Have Bear Market Rallies
Major indexes extend downtrends, and as of this writing the Dow Industrials, the S&P 500, and the Nasdaq Composite are each trading only slightly higher on the day, but near Thursday's lows, and that configuration, by itself suggest new lows presently, writes Stephen Cox.
============ U.S. MARKETS ACTION ===========
DJIA up 344.00 points to 7896.29
NASDAQ up 48.39 points to 1364.51
S&P 500 up 34.50 points to 786.94
10-year T-note 104 21/32 at 3.199 yield dn .118
NYMEX Crude up $0.51 at $ 49.93/bbl at close
Euro/Dollar up 0.0101 at 1.2555
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=%2FyQit1qi1GWz7Y2iwr8Vcw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
11-21-081600ET
Copyright (c) 2008 Dow Jones & Company, Inc.
UPDATE:CREDIT MARKETS:Some Improvement; Unease Still Prevalent
11/21 03:55 PM
By Romy Varghese
OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--After their dramatic tumble a day earlier, credit markets Friday maintained an uneasy tone and trading remained thin for most of the day.
Several areas, such as agency mortgage-backed securities, saw some improvement, and a key barometer of investor sentiment toward credit strengthened. But activity was subdued, especially in agency debt markets ahead of the Federal Deposit Insurance Corp. hearing.
As expected, the FDIC approved key changes to the bank guarantee program including a tiered fee program, and clarification of the extent of the FDIC guarantee. This will pave the way for new debt issue in direct competition with debt securities from Fannie Mae (FNM:$0.335,0$0.005,01.52%) and Freddie Mac (FRE:$0.4473,$-0.0427,-8.71%) . Market participants said banks could start issuing FDIC guaranteed debt Monday at the earliest.
The one positive for the agency market was the retention of the risk weighting of FDIC-guaranteed debt at 20%, the same as the current level of Fannie and Freddie debt. But upon the release of the changes, short-end agency debt began to lose steam.
Investors had other concerns as well, such as the fate of U.S. automakers and of Citigroup (C:$3.67,00$-1.04,00-22.08%) , which is said to be exploring options, including a sale. The uncertainty over what Citi will look like has caused the cost of protecting its debt against default to rise Friday.
The environment remains unfavorable for credit spreads, analysts at BNP Paribas (BNPQY:$22.8500,$1.8500,8.81%) wrote, citing the "raft of bad news on the U.S. and euro-zone economies, the auto sector crisis and continued weakness of financials." Going into the weekend, systemic risk remains elevated, while markets await some resolution on Citigroup (C:$3.67,00$-1.04,00-22.08%) , they added.
Adding to the evidence of the "broad-based nature of the economic downturn," the number of firms globally whose credit default swaps trade in points up front - a characteristic of distressed credits - has jumped to 226 compared to 67 in mid-March, wrote Markit's Gavan Nolan in a note.
Financial firms continue to dominate the list, but consumer cyclicals are also seen, as well as energy and utilities. In addition, the list includes ten governments, compared to none seen in March, Nolan wrote.
Agencies
Risk premiums on Fannie Mae (FNM:$0.335,0$0.005,01.52%) and Freddie Mac (FRE:$0.4473,$-0.0427,-8.71%) debt gave back some of the dramatic gains of the morning session by the afternoon. Spreads on Fannie's 2-year note were now just 13 basis points tighter at 175/166, while Freddie's 10-year note was 16.3 basis points tighter at 154/143, according to TradeWeb data.
Mortgages
Agency mortgage-backed securities had a good afternoon as buyers including the U.S. Treasury came in to buy at the cheap levels. "It was a moderate volume day skewed toward buyers, that helped recoup some of the last couple of sessions' losses," said Art Frank of Deutsche Bank (DB:$24.03,00$1.21,005.30%) . Risk premiums were 6 basis points tighter to Treasurys, and finished the week at 280 basis points over comparable Treasurys yields.
Asset-Backed Securities
The derivative index that tracks subprime mortgages reversed course Friday, posting gains for the first time this week. Buyers coming in to cover their shorts after the drastic drop in the index this week helped spur a slight upward tick, said Art Frank of Deutsche Bank (DB:$24.03,00$1.21,005.30%) . The Markit ABX AAA 06-2 was 2.25 points tighter from its close Thursday at 39.57 cents on the dollar. This index, which had hovered above 55 points for a long time, this week saw its values erode after the Treasury said it wouldn't buy mortgage bonds under the $700 billion bailout plan.
Investment-Grade Corporates
Citigroup's (C:$3.67,00$-1.04,00-22.08%) credit default swaps traded Friday at 500 basis points, according to broker Phoenix Partners Group. The privately traded contracts closed Thursday at 430 basis points, according to CMA DataVision. That means it now costs $500,000 a year - a $70,000 increase - to protect a notional $10 million of Citi senior bonds against default for five years. This shows increased pessimism toward Citi.
The benchmark high-grade credit derivatives index, the Markit CDX IG11, was tighter at 275 basis points, compared to a close at 280 basis points the previous day.
Some $296.7 billion in corporate bonds were affected by ratings downgrades in the third quarter, Fitch Ratings said Friday. This tops the worst quarter of the 2001/2002 downturn, the agency said. "This year's rating activity clearly reflects the depth of the credit crisis and deteriorating prospects for global economic growth," said Mariarosa Verde, managing director of Fitch credit market research.
Junk Bonds
The U.S. junk bond market suffered its biggest weekly decline of 2008 this week on continued negative economic news and rising concerns that a proposed government bailout of the beleaguered U.S. automotive industry could be in doubt, Fitch Ratings said in a note. The agency said activity in the secondary market has been a touch better over the past five days compared with the last week's holiday shortened trading.
Yields on speculative grade or junk bonds remained above 20% Thursday, reaching 21.426%, according to the Merrill Lynch US High Yield Master Index. This is the highest since the index was launched in 1986.
General Motor's bonds are lower again Friday, although trading in them was limited, according to MarketAxess (MKTX:$5.42,00$0.92,0020.44%) data. The 8.375% bond due 2033 are quoted at 14.5. That's 3.5 points lower on the day. The 7.7% and 7.2% are off 9 points and 3 points, respectively, at 14.9 and 19. The pleas of the big three auto companies' executives for help from the government were unsuccessful this week.
-By Romy Varghese, Dow Jones Newswires; 201-938-4287; romy.varghese@ dowjones.com
(Prabha Natarajan and Kate Haywood contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=%2FyQit1qi1GWz7Y2iwr8Vcw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
11-21-081555ET
Copyright (c) 2008 Dow Jones & Company, Inc.
SEC subpoenas CDS brokers on trades -sources
11/21 03:48 PM
NEW YORK, Nov 21 (Reuters) - The Securities and Exchange Commission has sent subpoenas to interdealer credit derivative brokers relating to the trading of credit default swaps on financial companies in September, sources said.
The move follows a request from New York Attorney General Andrew Cuomo in the past weeks, also relating to the trading of financial CDS in September, the month that Lehman Brothers (LEHMQ:$0.0305,$-0.0055,-15.28%) failed.
Credit default swaps are used to insure against the risk of a borrower defaulting on their debt or to speculate on their credit quality.
Regulators are probing the $47 trillion, privately traded market for evidence of potential price manipulation, which they believe could have enhanced worries about financial companies and contributed to the failure of companies including Lehman.
In September, the SEC said that hedge fund managers, broker-dealers and big investors with significant trading activity in financial firms or positions in credit default swaps would be required to disclose those positions to the SEC and provide other information.
The regulator in September ordered more than two dozen big investors and broker dealers to hand over data about trading activity in American International Group (AIG:$1.58,00$0.14,009.72%) , Lehman Brothers, Goldman Sachs (GS:$53.82,00$1.82,003.50%) , Merrill Lynch (MER:$8.25,00$0.29,003.64%) , Morgan Stanley (MS:$9.8800,$0.6800,7.39%) and Washington Mutual <WM.N>, said a source briefed on the matter.
The same source said the SEC is looking at trading activity in the securities of those firms between Sept. 1 and Sept. 19, as well as short positions in the specified companies.
The exact details of the subpoenas could not be determined.
A SEC spokesman on Friday declined to comment beyond the regulator's September announcement.
Jamie Cawley, chief executive at broker IDX Capital, confirmed the firm has received a subpoena from the SEC and that it is in the process of responding.
"We encourage and embrace any effort from the regulatory authorities to bring greater transparency and fair dealing to the marketplace," he said.
Spokespeople at brokers Phoenix Partners Group, Creditex and ICAP Plc declined comment. Officials at Tullett Prebon Plc, BGC Partners and Standard Credit Securities were not immediately available for comment. (Reporting by Karen Brettell; Editing by Leslie Adler)
Inducing a mass squeeze does come off like a cheap trick, but that seems like it is the only way at this point to bring money back to the stock market.
Trade FRE. Buy FNM. Much easier to hold FNM, as well as buy, IMO. BTW, how much money has FNM taken? Does anybody else see FNM getting out of conservatorship sooner than FRE?
The next bubble is going to be the "Short Bubble". If Uncle Sam plays it right...LOL
Detailed Quote for Fannie Mae (FNM)
$ 0.33 -0.05 (-13.16%) Volume: 33.14 m 4:03 PM EST Nov 20, 2008
After Hours: $ 0.37 0.04 (+12.12%) Volume: 119.84 k 7:59 PM EST Nov 20, 2008
Posted by: Grumman G21a Date: Thursday, November 20, 2008 11:54:27 PM
In reply to: None Post # of 12057
U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission
SEC Chairman Cox to Convene Meeting of International Regulators
Agenda Includes Short Selling, Derivatives Regulation
FOR IMMEDIATE RELEASE
2008-278
Washington, D.C., Nov. 20, 2008 — Securities and Exchange Commission Chairman Christopher Cox today announced that he will convene a meeting of the International Organization of Securities Commissions (IOSCO) Technical Committee on Monday, November 24 by teleconference to discuss urgent regulatory issues in the ongoing credit crisis.
"In addressing turbulent market conditions, it is essential not only that regulators act against securities law violations, including abusive short selling, but also that there be close coordination among international markets to avoid regulatory gaps and unintended consequences," said Chairman Cox. "This high-level coordination among international regulators will allow us to review the steps we have taken thus far and ensure that our ongoing and future actions are effective and mutually reinforcing."
The Technical Committee meeting will consider:
* Short Selling — Consider the effectiveness of recent regulatory responses in reducing manipulative short selling without stifling legitimate short selling activity, and explore possible coordination on rules relating to naked short sales, in particular with regard to position reporting and delivery and pre-borrowing requirements
* Under-Regulated or Unregulated Products — Develop disclosure principles to promote transparency in OTC markets for derivatives and other financial instruments which will contribute to enhanced investor protection and mitigating systemic risk.
The meeting also will focus on:
* Credit Rating Agencies — Assess members' progress in adopting rules based on IOSCO's revised Code of Conduct, and accelerate work on developing a common examination module.
* International Accounting Standards — Ensure that the process of developing international accounting standards continues to take account of the interests of investors.
# # #
http://www.sec.gov/news/press/2008/2008-278.htm
Home | Previous Page
Modified: 11/20/2008
Detailed Quote for Fannie Mae (FNM)
$ 0.33 -0.05 (-13.16%) Volume: 33.05 m 4:03 PM EST Nov 20, 2008
After Hours: $ 0.38 0.05 (+15.15%) Volume: 34.14 k 4:45 PM EST Nov 20, 2008
I am seeing 36 as the close, but ATP showed a close of 33, believe it or not. Millions of shares(3M?) traded between 36 and 40(right after 4PM), then one print for 54K shares at 33. I hope that 33 wasn't some poor fools stop loss. Looks to me like they cleared the board under 40, but tomorrow is another day. Funky to say the least. I guess take it for what it is worth.
GET IN THE GAME!!!
I love it when you talk toxic.
And whether or not Buffet likes it, he is in FNM too, now that he is in GS. GS bought even more than Eddie from what I saw.
He announces he is in big, and it loses 40%? Buffet bought big in Goldman, since then it is down over 50%? I can understand it not having an impact on the entire market, but not even in those individual stocks? He will get the last laugh I am sure, but bears are in complete control right now. Buffet and Eddie are bulls in these instances. JMO
Funked up trading there after the bell...
Higher than 36.
UPDATE: US Treasury Agrees To Backstop Money Market Fund
11/20 03:48 PM
By Meena Thiruvengadam
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The U.S. Treasury Department on Thursday said it would serve as a purchaser of last resort for securities that The Reserve Fund'sU.S. Government Fund is trying to sell in a liquidation.
The money market fund, a sister fund of the Reserve Primary Fund which earlier this year broke the buck and heightened fears among money market mutual fund investors, could end up selling a maximum of $5.6 billion in government securities to the Treasury.
Money market mutual funds aim to maintain a net asset value of $1 a share to ensure shareholders can get back at least their initial investment.
The Treasury plans to purchase from the fund any assets it is unable to sell prior to Jan. 3, 2009. It will purchase remaining securities at an amortized cost.
Funds to purchase those securities would come from the Treasury's Exchange Stabilization Fund, which also is being used to insure the holdings of money market mutual funds through another program.
"This action is being taken to ensure that the fund is liquidated in an orderly and timely fashion," the department said.
The fund has estimated assets of approximately $6.3 billion, including $231 million in cash. The fund's holdings include debt and securities from Fannie Mae (FNM:$0.36,00$-0.02,00-5.26%) , the Federal Home Loan Banks and the Federal Farm Credit Bank.
"Because of this agreement, the Government Fund will be able to return all of the fund's money to investors early next year," said Bruce R. Bent, president of Reserve Management Company Inc., the fund's adviser.
Treasury said the fund's unique position prompted it to provide the assistance. The fund, facing a run on deposits after the failure of its sister fund, was permitted by the Securities and Exchange Commission to suspend redemptions Sept. 17. Its board decided to liquidate the fund Sept. 19.
Because no other funds have similar deals with the SEC, the Treasury doesn't expect to provide similar assistance to other money market mutual funds.
The fund also is part of Treasury's temporary guarantee program, but it hasn't made a claim under that initiative.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; meena.thiruvengadam@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=ZeJWYD76SSUIrDh7xN%2BBbg%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
11-20-081548ET
Copyright (c) 2008 Dow Jones & Company, Inc.
...and get your certs Eddie!...
Eddie is being disrespected, he should just buy all the shares out of spite. Buffet can't do that with Goldman, but Eddie could at these prices. JMO
I really hope tomorrow isnt another "great day to buy"...
Well I doubled the order I had yesterday, at 36. Got my fill, wish me luck!
Detailed Quote for Fannie Mae (FNM)
$ 0.38 -0.09 (-19.15%)
Volume: 42.26 m
4:03 PM EST Nov 19, 2008
After Hours: $ 0.40 0.02 (+5.26%)
Volume: 5.1 m
5:06 PM EST Nov 19, 2008
I'm going lower tomorrow if I dont fill. Tomorrow is a different day...
They fear my 36's...
If this isn't the bottom, I am gonna have a whole lotta more shares if it "bottoms" further. Win, win...
GLTY! GLTA, (except shorts)
If it is not near the bottom, we can't fault ourselves for thinking it could be.
Wait until the PR comes out that says "Fannie Mae eats babies". That will get me my 36's...