Compliance Training Program To Reflect New TLGP Revisions

Edcomm Banker'S Academy Updates Compliance Training Program To Reflect New TLGP Revisions

Edcomm Banker's Academy has made an immediate update to its compliance training program to reflect recent revisions made to the Temporary Liquidity Guarantee Program (TLGP).

Mar 23, 2009 - New York, NY  - Edcomm Banker's Academy has made an immediate update to its compliance training program to reflect recent revisions made to the Temporary Liquidity Guarantee Program (TLGP). Focus on Compliance has been updated to include this new information as part of Edcomm Banker's Academy's commitment to providing financial institutions with the most up-to-date, accurate information. Regulatory changes are immediately updated in Banker's Academy's content.

According to the new changes made to the TLGP, entities participating in the debt guarantee program may issue certain FDIC-guaranteed Mandatory Convertible Debt (MCD). The intent of this amendment is to give eligible entities additional flexibility to obtain funding from investors with long-term investment horizons and to reduce the concentration of FDIC-guaranteed debt maturing in mid-2012 that might otherwise have to be rolled into new debt.

Focus on Compliance, from Edcomm Banker's Academy, is a computer-based, distance-learning program, and can be delivered via Internet, Intranet or CD-ROM. The program teaches banking compliance using easy-to-understand language in an interactive, self-paced format. Participants learn from their own perspective, with a curriculum customized to their position. Focus on Compliance covers: Bank Secrecy Act (BSA), Anti Money Laundering (AML), USA PATRIOT Act, OFAC, Privacy, Reg P, Gramm-Leach-Bliley Act, Right to Financial Privacy, Sarbanes-Oxley (SOX), Reg CC & Check 21, Reg D, Reg E, Reg Z, Truth in Lending, FCRA, FACT Act, HMDA, CRA, and Bank Bribery, among others. The program also includes a quick reference guide to all banking regulations, as well as a glossary of terms and a library of reference materials.

For more information about programs like this, or to find out how The Edcomm Group Banker's Academy can customize any training program, log onto www.bankersacademy.com or call 888-433-2666.

The Edcomm Group Banker's Academy is a 21-year-old multimedia education and communication consulting firm specializing in the development of creative business solutions that improve productivity, customer service and market share - providing bottom-line results. The Edcomm Group Banker's Academy has had the privilege of assisting many distinguished clients with business solutions in the form of eLearning programs, classroom instruction, multimedia production and online and print based documentation. Edcomm Banker's Academy offers many off-the-shelf and customized courses such as Teller Training, Compliance Training and Systems Training specifically designed for Banks, Credit Unions and Money Services Businesses (MSBs).

The Edcomm Group Banker's Academy (www.bankersacademy.com) is headquartered in New York City with locations and representation throughout the world.

Contact:
Linda Eagle
Edcomm Banker's Academy
21 Penn Plaza Suite 1010
New York, NY 10001
888-433-2666
linda.eagle@edcomm.com
http://www.bankersacademy.com

Pimco Official Wary of Fed Buying Treasurys

A senior fund manager at bond fund giant Pacific Investment Management Co. said Tuesday that purchasing risky assets rather than Treasurys should be the top priority for the Federal Reserve.

Steve Rodosky, head of Treasury and derivatives trading at Newport Beach, Calif.-based Pimco, said he is “suspicious” about the argument that buying long-dated Treasury securities will help improve credit markets.

“The risk of buying Treasurys is that you would widen the yield spreads between Treasurys and risky assets,” said Rodosky in an interview.

That would run against the Fed’s stated intention of bringing down mortgage rates and corporate bond yields. Supporters of Fed purchases argued that yields on long-dated Treasurys are anchors for many types of fixed-rate corporate and consumer loans, including home loans.

But others, including Rodosky, counter that Treasury bond yields are already at very low levels. Purchases by the Fed would only serve to drive yields on government bonds even lower without having any impact on debt sold by the private sector as it wouldn’t change the concerns investors have about the economy’s outlook and the problems plaguing the banking sector

Rodosky said the Fed has other options to help keep rates low in the broader economy: The central bank could expand existing programs by increasing its purchases of mortgage-backed securities and agency debt.

Policymakers could also step in to relieve banks of their bad assets or even provide aid to the municipal bond market, said Rodosky. He supports the idea of setting up a “bad bank” to remove toxic assets from banks, though many issues need to be resolved.

Rodosky said a rebound in the economy in the second half of the year, as some have forecast, seems “pretty early” because there is still a lot of uncertainty, with much depending on the impact of the economic stimulus plan.

Rodosky said he continues to favor high-quality agency mortgage-backed securities and agency debt over U.S. Treasurys, as well as high-quality corporate bonds and bank debt insured by the Federal Deposit Insurance Corporation. â€"Min Zeng

Source:- WSJ.com

Many contributed to financial crisis

I believe that the reason why the nation’s economic problems have reached epic proportions is due to the vast number of people who contributed to them. We’ve all heard about the speculators who bought homes with as little money as possible and then sold them for thousands of dollars more. Their house flipping was a key factor in driving up prices at lightning speeds.

We’ve also heard about the unethical deals struck by some of the subprime lenders and their clients. In these cases, the borrowers took out mortgages they couldn’t afford, thanks sometimes to deceitful practices of both lenders and borrowers.

Well, there’s plentiful information about the other contributors. I came across it while reading Paul Muolo’s book called “$700 Billion Bailout: The Emergency Economic Stabilization Act and What It Means to You, Your Money, Your Mortgage, and Your Taxes.”

Muolo, executive editor of National Mortgage News, said that when the wheelers and dealers from Wall Street got involved in the action, the money being staked on risky mortgages grew exponentially.

Investment banking firms such as Bear Stearns, Merrill Lynch and Lehman Brothers have profited in the past by creating bonds backed by low-risk mortgages. As part of this process, the firms made money by selling those bonds to institutional investors in the United States and overseas. However, in recent years, these investment houses and other Wall Street firms started looking for ways to increase their income.

The solution they adopted was to add subprime mortgages to the process. These riskier mortgages carried a higher interest rate and therefore a larger yield.

Muolo explained that once this practice began, there were investors who bought the new bonds without knowing exactly what they were buying. So, he said, the investment firms bought bond insurance to make them feel more secure.

At the same time, Wall Street firms and insurance companies sold investors a product called “credit default swaps.” These were insurance contracts, Muolo said, “where an investor makes a bet against the value of a bond.”

Since there can be more than one contract issued against the same bond, the consequences for policy issuers, if you will, could be staggering. These contracts can be made for any type of bond, and a huge number of them have been created.

Although no one knows what percentage of existing contracts is for mortgage-backed bonds, the shocking picture that emerges when contracts are compared to mortgages might be revealing.

According to the estimates that Muolo provided, there is an astounding $44 trillion worth of credit default swaps in the United States. In stark contrast, his figures indicate that the entire amount owed on all mortgages now stands at about $9.6 trillion. The portion of this amount that is attributable to subprime mortgages is $1 trillion.

The roll call of contributors to the financial crisis doesn’t stop here. Credit rating agencies gave excellent ratings to the risky subprime mortgage-backed bonds. These agencies considered the bonds safe because they were insured. On the other hand, the government made no effort to regulate the gigantic credit default swaps market.

For example, it didn’t mandate that the firms that sold credit default swaps keep enough money in reserve to cover their contracts.

Not surprisingly, when borrowers started defaulting on their subprime mortgages, the entire financial system ground to a halt. The institutions that owned bonds based on subprime mortgages not only lost income, but also their bonds decreased in value.

These bond owners were typically Wall Street firms, insurance companies, banks, pension funds and governments at the state and city levels.

The bond insurance companies involved were caught unprepared for the high 30 percent default rate and were consequently unable to pay off on all their insurance policies.

Investment firms that had sold credit default swaps for mortgage-backed bonds were in the same predicament.

A credit crisis developed as bankers tried to figure out how many more mortgages were going to fail and which institutions would suffer severely because of them. As the banks attempted to play it safe by holding onto their money, they denied the requests of businesses and individual consumers who were in need of loans.

Clearly, by the time this happened, a lot of the contributors referred to earlier had already made a ton of money. But I didn’t see any of them offering their money to help the nation get its finances back on track. On the contrary, the government asked taxpayers for $700 billion to bail the financial industry out.

This may have been necessary at the time, and I hope it works. However, I also want the people who were responsible for getting the nation in this mess to pay restitution.

Source:- thesouthendnews.com

GE Capital Sells First FDIC Bonds in Asian Currency

General Electric Capital Corp., General Electric Co.’s finance arm, borrowed HK$1 billion ($129 million) with the first Federal Deposit Insurance Corp.-backed bonds sold in an Asian currency.

Stamford, Connecticut-based GE Capital sold three-year floating-rate notes paying 0.2 percentage point more than the three-month Hong Kong interbank offered rate, according to an e- mail sent to investors today. HSBC, a unit of HSBC Holdings Plc, managed the top investment grade-rated sale.

“The fact we have an issuer coming from afar reflects general comfort for the positive bond market fundamentals in this part of the world,” said Tim Condon, head of Asia research with ING Groep NV in Singapore. “You still have traditional investors who need to buy high-quality assets.”

The Washington-based FDIC, which oversees 8,384 U.S. institutions with $13.6 trillion in assets, in October agreed to guarantee financial companies’ bonds to help them survive more than $1 trillion of writedowns and losses and weather the global recession. Companies and governments have sold $11.7 billion of bonds in Asian currencies this year, 39 percent more than in the same period a year earlier, data compiled by Bloomberg show.

Bank deposits in Hong Kong rose 3.2 percent from a year earlier to HK$6.06 trillion at the end of 2008, according to the Hong Kong Monetary Authority. The city’s foreign currency reserves rose 20 percent to $182.5 billion, compared with an average of 3.1 percent growth for G-7 nations and a 13 percent decline in the U.S.

Relative Costs

GE Capital will pay interest of 1.15 percent on its Hong Kong dollar bonds after three-month Hibor was fixed at 0.95 percent today, Bloomberg data show.

The company’s $1 billion FDIC-backed floating-rate notes maturing in June 2012 pay 0.3 percentage point more than the London interbank offered rate while its 75 million pounds ($108 million) three-year guaranteed bonds pay 0.33 percentage point above pound sterling Libor. Three-month dollar Libor was fixed at 1.23 percent yesterday while pound Libor was at 2.16 percent.

Investors earned a return of 5.4 percent from Hong Kong dollar-denominated bonds in the past year, according to HSBC’s Local Bond Indices.

GE Capital’s Hong Kong sale adds to more than $24 billion the company has borrowed since Dec. 4 using the FDIC guarantee.

The U.S. government agreed in November to insure as much as $139 billion in debt for GE Capital to help it compete with banks already covered by the guarantee. The amount represented 125 percent of total senior unsecured debt outstanding as of Sept. 30 and maturing in by June 30, the company said on Nov. 12.

Russell Wilkerson, a spokesman for Fairfield, Connecticut- based GE, couldn’t be reached for comment outside U.S. business hours today.

Moody’s Investors Service on Jan. 27 said it may cut GE Capital’s long-term credit ratings due to “heightened uncertainty” about its asset quality and earnings. A downgrade wouldn’t affect FDIC-backed securities.

Source:- Bloomberg

Insurers’ Corporate-Bond Losses May Exceed Subprime

Corporate debt defaults may cost U.S. life insurers “substantially” more than losses on securities linked to subprime, Alt-A and commercial mortgages.

Corporate defaults are poised for a “significant” increase this year as the recession deepens, Berg, based in New York, said in a research note yesterday. The American Council of Life Insurers estimated the industry,led my Metlife Inc. and Prudential Financial Inc, holds $1 trillion in corporate debt.

“None of the life insurers we studied appear to be doing a particularly good job” of picking bonds backed by companies, Berg said. “Understandably, investors are concerned.”


Life insurers have plummeted in the past year in New York trading as investment losses and guarantees on slumping retirement products sap capital. Hatford Financial Services Group Inc. leads the industry with $7.9 billion in writedowns and unrealized losses tied to the real-estate market since 2007, while New York-based MetLife has accumulated $7.2 billion, according to Bloomberg data.

Hatford and Prudential have cut jobs, asked regulators to ease reserve standards and applied for aid from the government’s $700 billion rescue program to replenish funds after reporting net losses in the third quarter. Metlife sold $2.3 billion of stock in October to bolster finances. The Standard & Poor’s Supercomposite Life & Health Insurance Index has declined about 61 percent in the last 12 months.

Source:- Bloomberg

Dexia Will Cut 900 Jobs After Fourth-Quarter Loss

Dexia SA, the world’s largest lender to local governments, will cut about 900 jobs this year to reduce costs after an estimated 2.3 billion-euro ($3 billion) fourth-quarter loss.

Dexia plans to stop proprietary trading and focus on public finance in its main markets of France, Belgium and Luxembourg, the Paris-and Brussels-based company said today. The job cuts, which amount to about 3 percent of staff, will lead to savings of 200 million euros in 2009, Dexia said. The bank aims to triple that cost cutting amount over three years.

“It was difficult to do otherwise,” said Christophe Ricetti, a Paris-based analyst at Natixis Securities who has a “reduce” rating on the stock. “I’m not optimistic that conditions at Dexia would become acceptable again soon with its current scope of business.”

Dexia, which got a 6.4 billion-euro lifeline from France, Belgium and Luxembourg last September to avert collapse, is among the worst-hit European banks following the failure of Lehman Brothers Holdings Inc. Chief Executive Officer Pierre Mariani agreed in November to sell an unprofitable U.S. bond- insurance unit to Assured Guaranty Ltd. for $722 million and pledged to slash costs by 15 percent over three years.

No Dividend

Dexia won’t pay a dividend or bonuses to top managers for 2008 after posting a full-year net loss of 3 billion euros.

The bank’s board members will have their salary cut 50 percent this year as part of the cost-cutting plan and ways of attributing bonuses within the company will be rethought, Mariani said at a press conference in Brussels.

“We are reducing the lifestyle of the company, behaviors will be changing,” said Mariani, 52. “Everyone will be making an effort.”

The company fell 7.2 percent to 2.46 euros in Brussels trading, valuing the bank at 4.3 billion euros. The shares have declined 85 percent in the past 12 months.

“We hope that with the step-by-step improvement of the restructuring program, we can find in 2009 again a certain profitability,” Chairman Jean-Luc Dehaene told Bloomberg News in an interview today in Brussels. “The aim should be at least that we are not in a loss situation like we are today.”

Less Risk

Dexia will take less risk in its trading activities and concentrate them in Brussels and Dublin. The bank will stop public finance operations in Australia, Eastern Europe, Mexico and Scandinavia and reduce lending to local governments in the U.K. and the U.S. The Slovakian unit Dexia Banka Slovensko will be kept as well as public finance operations in Italy and the Iberian Peninsula.

The French-Belgian lender is facing an increased cost of funding after the bankruptcy of Lehman froze credit markets. Dexia had to accept state guarantees on borrowings with a maturity of up to three years to fund its lending activities.

Dexia’s “liquidity situation” is gradually improving, the bank said. It had a Tier 1 capital ratio, an indicator of financial strength, above 10 percent at the end of December.

Deposits at the retail banking network in Belgium increased at the end of December from the end of September, Mariani told reporters.

FSA Losses

The bond insurance unit, Financial Security Assurance Inc., contributed 1.7 billion euros to the fourth-quarter loss. In addition, Dexia had 1.2 billion euros of provisions and writedowns related to the financial crisis. The bank plans to complete the sale of the bond insurer at the beginning of the second quarter.

Dexia agreed to sell FSA’s insured portfolio of $425 billion, including $110 billion of asset-backed securities, to Assured Guaranty, the bond insurer backed by billionaire Wilbur Ross. Dexia agreed to cover losses of as much as $4.5 billion on FSA’s $16.5 billion financial products portfolio, which includes subprime mortgage-backed securities.

FSA’s financial-products portfolio is excluded from the Assured Guaranty deal. Dexia said Nov. 14 it will cover losses of as much as $3.1 billion from that unit on top of the $1.4 billion provisioned by Sept. 30. The French and Belgian states will guarantee the unit’s assets, Dexia said.

Dexia will publish detailed full-year results on Feb. 26.

Cource:- Bloomberg

Yankees Face Higher Muni Borrowing Costs to Complete Stadium

The New York Yankees baseball team will test demand today for lower-rated tax-exempt bonds with a $259 million municipal offering arranged through a city agency.

Yankee Stadium LLC is raising funds to finish the team’s $1.4 billion ballpark in the Bronx, after construction costs rose 43 percent, according to Standard & Poor’s. New York’s Triborough Bridge and Tunnel Authority also plans to sell $250 million in tax-exempt bonds to fund capital projects today.

Even with insurance, the Yankees may have to offer yields of 7 percent or more to sell 40-year bonds, based on trades this month for similar securities from the team’s first round of tax- exempt financing in August 2006. Bonds issued at 4.51 percent and due in 2046 fell in price to yield 7.05 percent Jan. 15, data from the Municipal Securities Rulemaking Board show.

“It’s a difficult environment for any credit that might not be deemed Aaa,” said Mike Pietronico, chief executive officer of Miller Tabak Asset Management in New York. “It’s going to require a concession. Most people see the weakening economy and the political wrangling that has gone on about this particular deal.”

Bond insurance on the Yankees’ deal will be provided by Assured Guaranty Corp., rated AAA by S&P and Aa2 by Moody’s Investors Service. The bonds carry underlying ratings of Baa3 from Moody’s and BBB- from S&P, the lowest investment grades. Goldman Sachs Group Inc. is managing the sale.

Top-rated state and local government bonds due in 30 years rose in yield yesterday to 5.32 percent, the highest in more than two weeks, according to a daily survey by Concord, Massachusetts- based Municipal Market Advisors.

Stadium Critic

The Yankees franchise fielded months of criticism from Democratic New York State Assemblyman Richard Brodsky about public subsidies and the bond approval process, before the city’s Industrial Development Agency gave the final go-ahead to the deal Jan. 16.

The bonds are secured by payments in lieu of property taxes, or Pilots, made by Yankee Stadium LLC, run by Yankees Global Enterprises LLC, a 99 percent limited partner in the team.

About $184 million of the latest Yankee Stadium bonds will mature in 2049 and pay interest semiannually. The rest, known as capital appreciation bonds, will pay out their full return only upon maturities ranging from 2012 through 2047.

The Yankees are borrowing to fund added security measures, modifications for scoreboards and video screens, and structural upgrades at the stadium.

Mets Stadium

Also this month, the New York Mets won an $82 million authorization for a second round of Pilot bonds to complete that team’s ballpark construction in Queens. The bond sale for Citi Field, managed by Citigroup Inc., will come tomorrow, according to data compiled by Bloomberg.

Both New York stadiums will open in time for the beginning of Major League Baseball’s regular season in April.

Since the two teams started building new homes, the value of municipal bond insurance has declined as most firms in the industry were stripped of their AAA financial strength ratings.

Philadelphia, rated BBB by S&P and Baa1 by Moody’s, last month agreed to pay a yield of 7.25 percent on 30-year bonds insured by Assured Guaranty.

The yield was 140 basis points more than AAA general obligation bonds tracked by Municipal Market Advisors that day, compared with a premium of just three basis points at a similar insured sale by Philadelphia in April 2008, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

Insured bonds have accounted for 10 percent of municipal offerings in 2009 through last week, down from 36 percent during the comparable period last year, according to data compiled by Thomson Reuters.


Source- Bloomberg