Friday, April 3, 2009

Quick Notes for the Day - April 3

Freddie Mac & Fannie Mae - Bonus Details - Mortgage giants Fannie Mae and Freddie Mac expect to pay about $210 million in retention bonuses to 7,600 employees over a year and a half, The Wall Street Journal reported Friday. The top retention bonus for any individual executive under the plan will total $1.5 million during the 18 months ending in early 2010, according to the report, which cited a letter from the mortgage firms' regulator.

Dollar, Gold, Treasurys Fall After Job Report - The dollar fell slightly against major counterparts Friday, after the Labor Department said the economy shed 663,000 jobs in March (lower than analysts had expected), pushing the total number of jobs lost since the recession began to 5.1 million, and the unemployment rate to 8.5%. Gold futures extended losses Friday, down 1% to below $900 an ounce (after the jobs report) reducing the metal's appeal as a safe asset. Treasury prices also declined after the jobs report showed fewer job losses than had been previously expected.

Stocks Going Higher After Jobs Report - U.S. stock futures gained steam on Friday, extending gains into a fourth consecutive day after the March unemployment report was released.

Big Banks to Buy Toxic Assets? - Large U.S. banks that have received bailout money from the government, including Citigroup, Goldman Sachs, Morgan Stanley and J.P. Morgan Chase & Co., are eyeing purchasing troubled assets to be sold by other financial institutions under the Treasury Department's plan to revive credit markets, according to a published report. The Financial Times late Thursday reported the banks' plans are controversial and may raise public ire because the government's public-private partnership is designed to assist banks in selling, rather than acquiring, toxic assets. The public-private plan would have private investors and the Treasury put in equal amounts of money that would then be backed by a loan guarantee from the FDIC to buy loans and mortgage-backed securities from the banks.


Free-Marketeers Should Welcome Some Regulation - By Paul Singer - The Wall Street Journal - "Reform must begin with a regulatory regime focused on "behavior" instead of "systemically important institutions." Today, even small entities that trade complex instruments or are granted sufficient leverage can threaten the global financial system. It's true that monetary policy was too lax for too long, and the government encouraged lending to people who were unlikely to repay their loans. But this crisis was primarily caused by managements and individuals throughout the financial system who exercised extremely poor judgment. The private sector, not the public sector, is where the biggest mistakes were made."

Sources: The Wall Street Journal, Financial Times, MarketWatch

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