Bernanke gave testimony today, making the important point:
With such large near-term deficits, it may seem too early to be contemplating the necessary return to fiscal sustainability. To the contrary, maintaining the confidence of the financial markets requires that we begin planning now for the restoration of fiscal balance. As the economy recovers and resources become more fully employed, we will need to withdraw the temporary components of the fiscal stimulus. Spending on financial stabilization also must wind down; if all goes well, the disposition of assets acquired by the Treasury in the process of stabilization will be a source of added revenue for the Treasury in the out years.
I want to see stimulus spending, yes. But I also want to see a plan – with immediate tax increases – that will provide some credence to the view that it will be paid for eventually. Aint seen such yet.
Separately, the Fed announced that TALF has been launched:
Under today’s announcement, the Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain AAA-rated ABS backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans. Issuers and investors in the private sector are expected to begin arranging and marketing new securitizations of recently generated loans, and subscriptions for funding in March will be accepted on March 17, 2009. On March 25, 2009, those new securitizations will be funded by the program, creating new lending capacity for additional future loans.
The program will hold monthly fundings through December 2009 or longer if the Federal Reserve Board chooses to extend the facility.
Bernanke & Geithner minced no words when asked about the AIG bail-out:
“If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG,” Bernanke told lawmakers today. “AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.”
Bernanke’s comments foreshadow tougher oversight of systemically important financial firms, and come as President Barack Obama seeks legislative proposals within weeks for a regulatory overhaul.
…
The company “made huge numbers of irresponsible bets, took huge losses, there was no regulatory oversight because there was a gap in the system,” Bernanke said. At the same time, officials “had no choice but to try and stabilize the system” by aiding the firm.
…
“AIG is a huge, complex, global insurance company attached to a very complicated investment bank, hedge fund that was allowed to build up without any adult supervision,” U.S. Treasury Secretary Timothy Geithner said today during testimony to the House Ways and Means Committee.
One fascinating sub-theme of the banking crisis has been the attempts by the Fed to insinuate itself into securities regulation, with proposals that it should be supervising large brokerages, the conversion of some of these large brokerages into banks, and the CDS clearinghouse coming readily to mind. Could this testimony be indicative of a desire to have a hand in the insurance supervision pie?
I will need a lot of convincing before I accept that idea. Whether central banking and bank regulation mix is a question debated world-wide; my instinctive reaction is that it gives one set of bureaucrats too much power. And if we’re going to talk about systemic risk, let us not forget that it was the Fed in charge of supervising Citibank.
Sweetness & Light unveiled his market recommendations today, in direct competition with What-Debt?. His market timing track record was not disclosed.
PerpetualDiscounts had another unhappy day.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.5490 % | 816.1 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.5490 % | 1,319.7 |
| Floater | 5.73 % | 7.29 % | 68,627 | 12.08 | 3 | 0.5490 % | 1,019.5 |
| OpRet | 5.29 % | 5.00 % | 149,378 | 3.93 | 15 | -0.2105 % | 2,037.7 |
| SplitShare | 6.94 % | 9.33 % | 59,719 | 4.84 | 6 | -1.1227 % | 1,599.2 |
| Interest-Bearing | 6.23 % | 11.93 % | 38,873 | 0.79 | 1 | -0.2073 % | 1,884.6 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.6626 % | 1,473.9 |
| Perpetual-Discount | 7.32 % | 7.39 % | 173,808 | 12.03 | 71 | -0.6626 % | 1,357.5 |
| FixedReset | 6.19 % | 5.68 % | 494,054 | 13.93 | 27 | -0.0776 % | 1,778.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| LFE.PR.A | SplitShare | -5.26 % | Asset coverage of 1.2+:1 as of February 13 according to the company. Traded 33,200 shares in a range of 6.52-90 before closing at 6.49-69, 2×2. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2012-12-01 Maturity Price : 10.00 Evaluated at bid price : 6.49 Bid-YTW : 18.90 % |
| NA.PR.K | Perpetual-Discount | -4.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 19.20 Evaluated at bid price : 19.20 Bid-YTW : 7.72 % |
| SLF.PR.E | Perpetual-Discount | -4.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 14.02 Evaluated at bid price : 14.02 Bid-YTW : 8.05 % |
| HSB.PR.D | Perpetual-Discount | -4.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.54 Evaluated at bid price : 16.54 Bid-YTW : 7.74 % |
| SLF.PR.D | Perpetual-Discount | -3.95 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 14.12 Evaluated at bid price : 14.12 Bid-YTW : 7.90 % |
| POW.PR.B | Perpetual-Discount | -3.94 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 17.06 Evaluated at bid price : 17.06 Bid-YTW : 8.01 % |
| NA.PR.L | Perpetual-Discount | -3.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.55 Evaluated at bid price : 16.55 Bid-YTW : 7.42 % |
| BNA.PR.A | SplitShare | -3.16 % | Asset coverage of 1.9-:1 as of January 31 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2010-09-30 Maturity Price : 25.00 Evaluated at bid price : 22.95 Bid-YTW : 12.15 % |
| RY.PR.B | Perpetual-Discount | -3.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.34 Evaluated at bid price : 16.34 Bid-YTW : 7.27 % |
| BMO.PR.H | Perpetual-Discount | -2.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 18.71 Evaluated at bid price : 18.71 Bid-YTW : 7.16 % |
| SLF.PR.A | Perpetual-Discount | -2.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 14.80 Evaluated at bid price : 14.80 Bid-YTW : 8.05 % |
| GWO.PR.E | OpRet | -2.60 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2014-03-30 Maturity Price : 25.00 Evaluated at bid price : 24.35 Bid-YTW : 5.23 % |
| PWF.PR.J | OpRet | -2.57 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2013-07-30 Maturity Price : 25.00 Evaluated at bid price : 24.31 Bid-YTW : 5.55 % |
| RY.PR.W | Perpetual-Discount | -2.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 17.81 Evaluated at bid price : 17.81 Bid-YTW : 6.95 % |
| RY.PR.C | Perpetual-Discount | -2.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.10 Evaluated at bid price : 16.10 Bid-YTW : 7.22 % |
| BNS.PR.L | Perpetual-Discount | -2.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.52 Evaluated at bid price : 16.52 Bid-YTW : 6.92 % |
| MFC.PR.C | Perpetual-Discount | -2.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 14.89 Evaluated at bid price : 14.89 Bid-YTW : 7.60 % |
| TD.PR.Y | FixedReset | -2.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 20.25 Evaluated at bid price : 20.25 Bid-YTW : 4.85 % |
| GWO.PR.H | Perpetual-Discount | -2.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.01 Evaluated at bid price : 16.01 Bid-YTW : 7.59 % |
| BMO.PR.K | Perpetual-Discount | -1.91 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 17.47 Evaluated at bid price : 17.47 Bid-YTW : 7.60 % |
| TD.PR.A | FixedReset | -1.86 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 21.32 Evaluated at bid price : 21.60 Bid-YTW : 4.76 % |
| MFC.PR.B | Perpetual-Discount | -1.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.00 Evaluated at bid price : 16.00 Bid-YTW : 7.30 % |
| TD.PR.S | FixedReset | -1.72 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 4.78 % |
| PWF.PR.E | Perpetual-Discount | -1.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 18.31 Evaluated at bid price : 18.31 Bid-YTW : 7.64 % |
| BNS.PR.O | Perpetual-Discount | -1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 20.10 Evaluated at bid price : 20.10 Bid-YTW : 7.08 % |
| BNA.PR.B | SplitShare | -1.42 % | Asset coverage of 1.9-:1 as of January 31 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2016-03-25 Maturity Price : 25.00 Evaluated at bid price : 20.76 Bid-YTW : 8.20 % |
| CM.PR.E | Perpetual-Discount | -1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 17.81 Evaluated at bid price : 17.81 Bid-YTW : 8.01 % |
| ACO.PR.A | OpRet | -1.16 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2011-11-30 Maturity Price : 25.00 Evaluated at bid price : 25.50 Bid-YTW : 5.00 % |
| CM.PR.H | Perpetual-Discount | -1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 15.60 Evaluated at bid price : 15.60 Bid-YTW : 7.83 % |
| RY.PR.G | Perpetual-Discount | 1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.35 Evaluated at bid price : 16.35 Bid-YTW : 6.96 % |
| NA.PR.N | FixedReset | 1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 22.45 Evaluated at bid price : 22.51 Bid-YTW : 4.71 % |
| TD.PR.R | Perpetual-Discount | 1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 19.91 Evaluated at bid price : 19.91 Bid-YTW : 7.14 % |
| BAM.PR.K | Floater | 1.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 7.36 Evaluated at bid price : 7.36 Bid-YTW : 7.29 % |
| GWO.PR.I | Perpetual-Discount | 1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 14.90 Evaluated at bid price : 14.90 Bid-YTW : 7.57 % |
| ELF.PR.G | Perpetual-Discount | 1.41 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 13.69 Evaluated at bid price : 13.69 Bid-YTW : 8.87 % |
| CM.PR.G | Perpetual-Discount | 1.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 17.60 Evaluated at bid price : 17.60 Bid-YTW : 7.81 % |
| PWF.PR.L | Perpetual-Discount | 1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 16.30 Evaluated at bid price : 16.30 Bid-YTW : 7.96 % |
| BMO.PR.L | Perpetual-Discount | 1.79 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 19.95 Evaluated at bid price : 19.95 Bid-YTW : 7.35 % |
| PWF.PR.M | FixedReset | 1.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 24.80 Evaluated at bid price : 24.85 Bid-YTW : 5.46 % |
| BAM.PR.I | OpRet | 2.14 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2013-12-30 Maturity Price : 25.00 Evaluated at bid price : 21.96 Bid-YTW : 8.96 % |
| BAM.PR.J | OpRet | 2.71 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2018-03-30 Maturity Price : 25.00 Evaluated at bid price : 18.60 Bid-YTW : 9.98 % |
| SBN.PR.A | SplitShare | 3.01 % | Asset coverage of 1.5-:1 as of February 19 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2014-12-01 Maturity Price : 10.00 Evaluated at bid price : 8.55 Bid-YTW : 8.61 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| SLF.PR.D | Perpetual-Discount | 206,845 | Desjardins crossed two blocks of 100,000 each at 14.15. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 14.12 Evaluated at bid price : 14.12 Bid-YTW : 7.90 % |
| BNS.PR.T | FixedReset | 64,499 | Scotia crossed 50,000 at 25.05, then RBC crossed 10,000 at 25.10. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 24.99 Evaluated at bid price : 25.04 Bid-YTW : 6.11 % |
| SBN.PR.A | SplitShare | 56,700 | Kinda strange! RBC bought 24,700 from anonymous at 8.40, then sixteen minutes later bought 25,000 from (the same? a different?) anonymous at 8.79. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2014-12-01 Maturity Price : 10.00 Evaluated at bid price : 8.55 Bid-YTW : 8.61 % |
| TD.PR.G | FixedReset | 50,990 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-03-03 Maturity Price : 25.08 Evaluated at bid price : 25.13 Bid-YTW : 6.25 % |
| RY.PR.R | FixedReset | 36,813 | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 25.21 Bid-YTW : 6.23 % |
| LFE.PR.A | SplitShare | 33,200 | Asset coverage of 1.2+:1 as of February 13 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2012-12-01 Maturity Price : 10.00 Evaluated at bid price : 6.49 Bid-YTW : 18.90 % |
| There were 23 other index-included issues trading in excess of 10,000 shares. | |||
[…] still angry about AIG, as mentioned on March 3. Third, looking beyond the current crisis, the United States also needs improved tools to allow the […]