Hey, Henry, buy our s***!

This had most of us here at HW giggling. From the site: Use the form below to submit bad assets you’d like the government to take off your hands. And remember, when estimating the value of your 1997 limited edition Hanson single CD “MMMbop”, it’s not what you can sell these items for that matters, it’s what you think they are worth. The fact that you think they are worth more than anyone will buy them for is what makes them bad assets.

Quote of the Day

Heard during recent testimony by Treasury Secretary Henry Paulson to the House Financial Services Committee, regarding community banks’ role in the proposed bailout: Paulson: “This is something we haven’t communicated so clearly about the program.” Frank: “There’s a lot of that going around.”

Ben Bernanke testimony on financial markets, bailout

Below is Fed chairman Ben Bernanke’s prepared remarks to the Senate Banking Committee regarding a historic bailout plan being proposed by Bush adminstration officials*: (*Bernanke actually never said much of the below in his testimony, ditching his prepared remarks to speak off-script regarding the issue of pricing bad assets for purchase) Chairman Dodd, Senator Shelby, and members of the Committee, I appreciate this opportunity to discuss recent developments in financial markets and the economy. As you know, the U.S. economy continues to confront substantial challenges, including a weakening labor market and elevated inflation. Notably, stresses in financial markets have been high and have recently intensified significantly. If financial conditions fail to improve for a protracted... more»

Paulson’s testimony on turmoil in credit markets

Below is Treasury Secretary Henry Paulson’s prepared testimony to the Senate Banking Committee on a proposed historic bailout of the U.S. financial markets: Chairman Dodd, Senator Shelby, members of the committee, thank you for the opportunity to appear before you today. I appreciate that this is a difficult period for the American people. I also appreciate that Congressional leaders and the Administration are working closely together so that we can help the American people by quickly enacting a program to stabilize our financial system. We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses both small and large, and the very health of our economy. The... more»

Fed Statement on Morgan Stanley, Goldman Sachs

Below is the full statement from the Federal Reserve on a historic change to the status of Goldman Sachs and Morgan Stanley: The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies. To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve’s primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility (PDCF);... more»

Crude oil futures jump record $16

This bears watching around mortgage markets as well — crude oil futures soared on Monday. Per MarketWatch: Crude futures leaped more than $16 per barrel Monday to score their biggest daily gain in dollar terms since 1984 — when crude began trading on the New York Mercantile Exchange. Crude futures rallied to a high of $130 a barrel to reach their strongest intraday level in two months, buoyed by a steep drop in the U.S. dollar and speculation that the Bush administration’s proposal to stabilize the financial sector may help revive economic growth.

Full text of Treasury’s proposal

Below is the full text of the original proposal sent by Treasury to Congress for consideration: LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS Section 1. Short Title. This Act may be cited as ____________________. Sec. 2. Purchases of Mortgage-Related Assets. (a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States. (b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation: (1) appointing such employees as may... more»

Fed intervenes in Major League Baseball

Via an investor newsletter at FTN Financial Friday (no link): While the headlines of government largesse were surging across the screens this morning, this one caught our eye from a competing firm: Fed Gives Yankees 15 Additional Wins. There’s nothing the Fed can’t do, apparently.

Ah, so it was a shotgun wedding, after all…

Who knew? Via Bloomberg Thursday night, comes this: Merrill Lynch & Co. Chief Executive Officer John Thain told employees that Bank of America Corp. “cut our trading lines” in the days before it bought the firm, signaling a loss of confidence in the brokerage’s ability to pay. Thain made the comments while explaining his decision to sell Merrill, according to five employees who attended the event at the company’s New York headquarters. The Sept. 15 remarks were rebroadcast on an internal system to all 60,000 employees. I don’t know which HW readers have been through M&A wars before, but let’s just say Merrill’s Thain was likely worried about much more than being left in the cold if Lehman had found a deal…

Chart of the day

This pretty much says it all — spreads on A2/P2 nonfinancial commercial paper literally have blown up in a liquidity crisis that really is amazingly far-reaching. The spread covers high and low quality 30 day nonfinancial commercial paper, and it’s pretty clear how unprecedented the spread jump is. Fist pound to Calculated Risk for the find.

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