PrefBlog

Assiduous Readers will be aware that I am wary of regulatory initiatives that seek to protect investors from themselves. Well … if the following catches on and spreads, it may become illegal to buy equities in your RRSP:

[Vanguard Founder and Zombie Master] Bogle recommended a single defined contribution plan with annuities from low-cost providers. The single system would be overseen by an independent Federal Retirement Board to protect the interests of plan participants, Bogle said.
…
Retirement savings are too exposed to market risk, according to Dean Baker, co-director of the Center for Economic and Policy Research in Washington and another witness at today’s hearing. Baker proposed a government-managed system that would provide a modest rate of return for employees. He said it would build on Social Security and allow workers a voluntary default contribution of at least 3 percent of their salaries.

Employees must work longer to extend retirement savings and Social Security, which “has shined during this crisis,” could be stabilized and supplemented by target-date funds, said Munnell. Target-date funds shift money into more conservative investments as an investor approaches retirement.

Dealbreaker reports an amusing anecdote regarding regulatory capture. It’s sad, but we never see any statistics regarding job migration between regulatory and industry roles. Golly, I wonder why that is!

There is a bit more news on the Lyondell bankruptcy:

Lyondell asked U.S. Bankruptcy Judge Robert Gerber to approve the loan at a hearing tomorrow. The financing terms, which may return as much as 20 percent in fees to some lenders, are the best and only terms available, Lyondell said. It also said a proposed “roll-up,” which would allow pre-bankruptcy lenders to convert old debt to new debt with a priority for repayment, is “permissible.”
…
The so-called debtor-in-possession loan, designed to fund operations while Lyondell reorganizes, wasn’t made in “good faith,” the company’s committee of unsecured creditors said in court papers. They alleged the loan’s December maturity date is too early, and other financial covenants are “tripwires” for defaults that would hand control of the company to the lenders.

The Lyondell situation is interesting because of the allegations that CDS-protected creditors are not acting in good faith.

Another poor day for PerpetualDiscounts, with Royal issues again getting hit hard. SplitShares enjoyed a dead-cat bounce; and after the bell, MFC announced a new Fixed-Reset, 6.60%+456.

This entry was posted on Tuesday, February 24th, 2009 at 9:09 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.