Great news for the markets.

[chuck44l]

Keep your radars on the financials this week, As i have stated several times lately i believe that the past couple of weeks have created great opportunities for our future investments!!!!

Congress gets $700 billion financial bailout plan






WASHINGTON (Reuters) - The Bush administration on Saturday sent a $700
billion financial markets rescue plan to Congress where Democrats immediately questioned its impact not only on Wall Street, but on homeowners and taxpayers as well.

ADVERTISEMENT

The plan to move toxic mortgage-related debt off the balance sheets of U.S. banks and other institutions, and into a massive government portfolio, represents an all-out attack on the worst financial crisis since the Great Depression.

Under authority sought by the U.S. Treasury Department, the government could purchase as much as $700 billion in mortgage-related assets from U.S.-headquartered institutions.

Decisions by the treasury secretary related to the buyback program could not be reviewed by any court, according to a copy of the department's draft legislation obtained by Reuters.

In a related move, the U.S. government's debt limit would be raised to $11.315 trillion from $10.615 trillion.

Congressional leaders have promised swift action on the bailout package but many details are still to be worked out.

New York Democratic Sen. Charles Schumer, chairman of Congress' Joint Economic Committee, said the plan is a good start. "But it includes no visible protection for taxpayers or homeowners. We look forward to talking to Treasury to see what, if anything, they have in mind in these two areas," he said.

As lawmakers' aides huddled on Capitol Hill, President George W. Bush acknowledged the plan would put large amounts of taxpayer money on the line to buttress shaky markets.

"But I'm convinced that this bold approach will cost American families far less than the alternative," he said in his weekly radio address.

"Further stress on our financial markets would cause massive job losses, devastate retirement accounts, further erode housing values, and dry up new loans for homes, cars and college tuitions."

After government takeovers of individual firms in recent months failed to stop spreading credit turmoil, U.S. authorities are turning their focus to part of the underlying problem -- the rising tide of bad mortgage debt choking the financial system.

The draft legislation said Treasury could hire asset managers to handle debt purchases, which could include residential or commercial mortgages and related instruments that were originated or issued on or before September 17, 2008.

The authority to purchase ends two years from date of enactment, but the authority to hold the assets would continue.

Banking industry sources said "reverse auctions" would be held to purchase $50 billion tranches of debt, which could include residential and commercial mortgages and mortgage-backed securities. But that level of detail was not spelled out in the draft legislation.

A Treasury official said Friday that hedge funds would not be eligible to offload troubled assets under the plan, but that was not explicit in the draft legislation.

MAIN STREET

Congressional committees were to be briefed on Saturday on the legislation, which could be considered by the U.S. House of Representatives and Senate as early as next week.

Democrats have said they might try to use the financial bailout legislation to reduce home foreclosures and put some limits on the pay of corporate chief executives.

"We must not forget Main Street as we work to address the crisis on Wall Street," Senate Majority Leader Harry Reid, a Nevada Democrat, said on Friday.

The financial crisis has dominated the U.S. presidential campaign this week with Republican Sen. John McCain Barack Obama skirmishing over the proper government role.

And some members of Bush's Republican Party are upset with the government's increasing involvement in the private sector.

"The free market for all intents and purposes is dead in America," said Kentucky Sen. Jim Bunning. The Treasury proposal would "take away the free market and institute socialism in America," he said in a statement on Friday.

But financial markets have shown their approval and may be disappointed if Congress does not swiftly back the measures.

U.S. stocks had their best day in six years on Thursday on talk of an aggressive plan. On Friday the Dow Jones industrial average (.DJI) rose 368 points, or about 3.4 percent.

The Treasury and Federal Reserve have already put nearly $1 trillion of taxpayer money on the line to help credit flows.

And banks worldwide have suffered more than $500 billion of write-downs and loan losses since the global credit crisis began more than a year ago.

CRISIS GREW

The crisis grew more acute this month with government takeovers of mortgage companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N); the bankruptcy of Lehman Brothers Holdings Inc (LEHMQ.PK); Bank of America Corp's (BAC.N) shotgun agreement to buy Merrill Lynch & Co (MER.N); and a bailout of insurer AIG (AIG.N). This came just six months after a government-backed rescue of investment bank Bear Stearns.

The plan to buy back mortgage-related debt was just one of a series of measures unveiled in the last two days as the Treasury and Fed decided the frozen credit markets signaled a growing storm that would engulf the economy.

The Treasury said on Friday it would siphon up to $50 billion from a fund established in the 1930s to conduct foreign exchange market intervention to backstop the rattled U.S. money market mutual fund industry.

This long-safe corner of financial markets, home to some $3.5 trillion of deposits, has increasingly appeared at risk of falling victim to the year-old credit crunch. Money market fund assets dropped by a record $169.03 billion in the week ended September 17 as jittery investors pulled money out.

The U.S. Securities and Exchange Commission got involved too, imposing on Friday a 10 trading-day ban on short sales of 799 financial stocks.

And the administration will step up a program announced this month to directly buy mortgage-backed securities in the market, and said Fannie Mae and Freddie Mac would also increase their buying to try to get credit flowing.

Bush said he initially thought the government could deal with the trouble on Wall Street "one issue at time."

But the financial "house of cards was much bigger, and it started to stretch beyond just Wall Street in the sense of the effects of failure," he said at a White House event with Colombia's President Alvaro Uribe on Saturday.

(Writing by Tim Dobbyn, editing by Jackie Frank)

[chuck44l]

SEC Pushes Hedge Fund Oath in Manipulation Probe (Update1)

By David Scheer

Sept. 20 (Bloomberg) -- The U.S. Securities and Exchange Commission, seeking to jumpstart a hunt for suspected manipulation of financial stocks, will require hedge fund managers, brokerages and institutional investors to describe under oath their bets on the firms.

Investors with ``significant'' trades in the companies' securities or credit default swaps must disclose their positions and provide ``certain other information'' in written statements, the regulator said yesterday. SEC spokesman John Nester declined to say who would receive the requests.

The SEC issued a series of emergency measures, rules and warnings to hedge funds this past week as lawmakers including Senate Banking Committee Chairman Christopher Dodd and executives such as Morgan Stanley Chief Executive Officer John Mack said traders may be spreading misinformation and using abusive tactics to attack companies. On Sept. 17, the agency said it may also force funds to hand over their communications.

``This is the SEC saying it's going to get tough,'' said Barry Barbash, a former attorney at the agency now at Willkie Farr & Gallagher LLP, whose clients include hedge funds. ``By emphasizing that it's under oath, they're trying to say, `Don't think it's going to blow past us. Don't try to fast-talk us. We're taking a close look at what's going on.'''

Return Date

The regulator, which typically relies on subpoenas to acquire information, has resorted to sworn statements in some of its most prominent probes, such as its initial inquiry into the fraud that toppled WorldCom Inc. in 2002. In that case, investigators gave the company five days to describe what led it to restate earnings.

``I'm sure they'll have a very short return date for those sworn statements,'' said Gregory Bruch, a former SEC attorney who is a partner at Willkie Farr & Gallagher LLP in Washington. ``It'll give them a tremendous amount of information quickly.''

The New York Stock Exchange's regulatory arm and the Financial Industry Regulatory Authority, which polices almost 5,000 brokerages, will conduct a parallel probe into short sales, including on-site visits to firms, the SEC said. Large declines in brokerage shares this month were often accompanied or preceded by moves in credit default swaps tied to those firms, the Wall Street Journal reported today.

``Abusive short selling, market manipulation and false rumor mongering for profit by any entity cuts to the heart of investor confidence in our markets,'' said Linda Thomsen, the SEC's enforcement chief. ``We will root it out, expose it, and subject the guilty parties to the full force of the law.''

`Go Get Them'

The regulatory efforts are already attracting criticism from investors. James Chanos, president of hedge-fund firm Kynikos Associates Ltd., told CNBC yesterday there is ``no shred of evidence in the U.K. or the U.S. about a conspiracy or manipulation of shares'' and that short-sellers aren't to blame for the week's declines.

``If you have managers actively engaged in false rumor mongering and naked short selling, I'd say go get them,'' said Bill Grayson, president of Falcon Point Capital LLC, a San Francisco-based investment firm. ``But a wholesale witch hunt is not going to be met with a lot of smiling faces in the hedge-fund community.''

Among the SEC's other measures aimed at shoring up investor confidence this week, the regulator said it will force hedge funds and investors managing more than $100 million in securities to disclose their daily short-sale positions.

Yesterday, it temporarily banned short sales in shares of 799 financial companies through Oct. 2. Companies on the list include Morgan Stanley, Wachovia Corp., Washington Mutual Inc., Goldman Sachs Group Inc. and Warren Buffett's Berkshire Hathaway Inc