SHORT BAN HIGHLIGHTS

SHORT BAN HIGHLIGHTS

-Effective immediately,ends Oct 2,08.

-Extendable by 30 days if deemed necessary.

-Includes National Banks,Investment Banks,Regional Banks,Insurance Companies.

-799 Financial Companies.

-Requires Institutional money mangers to report new short sales of certain Public-traded Securites.

-Eases restrictions on security buy-backs.

THE UNSHORTABLES

Citi
Deutsche Bank
Wachovia
Morgan Stanley
Barclays PLC
SunTrust
Washington Mutual
Bank of America
State Street
Goldman Sachs
Mitsubishi
Merrill Lynch
Wells Fargo
U.B.S

SEC bans short-selling of 799 financial stocks By MARCY GORDON, AP Business Writer SEPT 19,08

WASHINGTON - Federal securities regulators, in an effort to boost investor confidence in the face of a market crisis, took the dramatic step Friday of temporarily banning the trading practice of betting against financial stocks. The move, announced on the Securities and Exchange Commission's Web site, will temporarily ban what is called short selling of nearly 800 financial stocks.Short selling is a legitimate method of trading, but has been blamed for widening the scope of the recent financial crisis and contributing to the collapse of values of investment and commercial bank stocks in particular.The turmoil has swallowed some of the most storied names on Wall Street. Three of its five major investment banks — Bear Stearns, Lehman Brothers and Merrill Lynch — have either gone out of business or been driven into the arms of another bank.Short selling involves betting against company stocks by borrowing its shares, selling them, and pocketing the difference when they fall.In its announcement, the commission said it was acting in concert with the U.K. Financial Services Authority in taking emergency action which announced a similar ban there on Thursday.The SEC said it hoped its move would protect the integrity of the securities market and boost investor confidence.

The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets, SEC chairman Christopher Cox said in a statement. The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets.The move, he said, would not be necessary in a well-functioning market and is only a temporary step that is part of the actions being taken by the Federal Reserve, the Treasury and Congress.Short-selling can contribute to efficiency while adding liquidity to the markets. But a recent wave of the maneuvers — profiting by selling unowned shares of companies in the anticipation their prices will drop — has been blamed in part for the demise of venerable investment firm Lehman Brothers and other big financial companies.Some British politicians also claim that short-selling attacks were partly responsible for HBOS PLC's abrupt takeover by banking rival Lloyds TSB PLC on Thursday amid a sharply falling share price. Market regulators in Britain, citing current extreme circumstances, announced a temporary ban on short-selling Thursday.Cox held a closed-door meeting with members of Congress Thursday night, Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke. The SEC said its action calls a time-out to aggressive unbridled short-selling in financial stocks and said it would consider measures to address short-selling in other publicly traded companies.The California Public Employees' Retirement System, the nation's largest pension fund, is no longer lending out shares of Goldman Sachs Group Inc. and Morgan Stanley, joining a growing number of public pension funds that are attempting to curb short-selling of two investment banks' stocks.On Wednesday, New York Sens. Charles Schumer and Hillary Clinton, both Democrats, had appealed to the SEC for a temporary short-selling ban, saying the watchdog agency has the power to take a temporary but important step to help restore a measure of stability to our financial markets.

The SEC on Wednesday had adopted rules it said would provide permanent protections against abusive instances of naked short-selling, where sellers don't even borrow the shares before selling them, and then look to cover positions immediately after the sale. Those new rules took effect Thursday, restricting but not banning short-selling by, for example, shortening the required time for short sellers to deliver the stocks underlying the sale transactions.But some critics assailed those new measures as inadequate to stem the tide of short-selling, and asked for a prohibition on all naked short-selling similar to the SEC's 30-day emergency ban this summer covering the stocks of mortgage finance giants Fannie Mae and Freddie Mac and 17 large investment banks.New York Attorney General Andrew Cuomo said his office is launching an investigation into whether some short sellers engaged in conspiracy or spread rumors and negative information to drive down the share prices of Lehman, American International Group Inc., Goldman Sachs, Morgan Stanley and other firms.Some investors contend that naked short-selling, if left unchecked, would have given hedge funds and other aggressive short sellers an unfair advantage to attack other victims after Lehman Brothers Holdings Inc., which made the biggest bankruptcy filing in U.S. history on Monday. Merrill Lynch & Co. — being bought by Bank of America Corp. in a $50 billion shotgun deal — or giant insurer AIG, rescued with an $85 billion cash injection from the Federal Reserve, were said to be among the likely targets. Shares of regional banks and investment firms nationwide continued to be targeted by aggressive short sellers after the SEC's emergency ban took effect in mid-July, according to banking industry representatives. Associated Press writer Andrew Taylor contributed to this report.

Congress promises quick action on bailout package By JEANNINE AVERSA and JULIE HIRSCHFELD DAVIS, Associated Press Writers SEPT 19,08

WASHINGTON - Congress promised quick action on a plan to buy up toxic assets, such as bad mortgages, held by troubled banks and other institutions, hoping to lift the nation out of its worst financial crisis in decades. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are crafting a plan, which they plan to soon deliver to lawmakers, after concluding they need broader powers to combat fallout from a housing and credit market meltdown that has sent shock waves through Wall Street and around the globe. Congressional leaders said they expected to get the plan Friday and act on it before Congress recesses for the election.We hope to move very quickly. Time is of the essence, House Speaker Nancy Pelosi, D-Calif., said after Paulson and Bernanke briefed congressional leaders Thursday night.

Stocks on Wall Street shot up more than 400 points late Thursday on word that a plan was in the works. Fallout from the housing and credit debacles have badly bruised the economy and pushed unemployment to a five-year high.I don't say any prudent money manager would say we're out of the woods, but right in this moment it all seems positive and leading toward an upward move for the market going into Friday session, said Scott Fullman, director of derivative investment strategy for New York-based institutional broker WJB Capital Group.Fullman said the biggest bonus of any potential government plan is that it is being put together to help the banking industry as a whole. Until now, the Treasury and Fed have selectively bailed out institutions that were the most vulnerable.This staves off Judgment Day, said Anthony Sabino, professor of law and business at St. John's University. This is a detox for banks, and will help cleanse themselves of the bad mortgage securities, loans and everything else that has hurt them.The roots of the current crisis can be traced to lax lending for home mortgages — especially subprime loans given to borrowers with tarnished credit — during the housing boom. Lenders and borrowers were counting on home prices to keep zooming upward. But when the housing market went bust, home prices plummeted. Foreclosures spiked as people were left owing more on their mortgage than their home was worth. Rising mortgage rates also clobbered some homeowners.As financial companies racked up multibillion-dollar losses on soured mortgage investments, and credit problems spread globally, firms hoarded cash and clamped down on lending. That crimped consumer and business spending, dragging down the national economy — a vicious cycle policymakers have been trying to break.

The root cause of the stress in the capital markets is the real estate correction, Paulson said, adding he hopes to have a solution aimed right at the heart of this problem.Bernanke said a resolution would help get our economy moving again.Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, discounted the idea of setting up a new agency — similar to the Resolution Trust Corp. — established in 1989 to help resolve a savings and loan crisis at a cost to taxpayers of $125 billion.It will be the power — it may not be a new entity. It will be the power to buy up illiquid assets, Frank said. There is this concern that if you had to wait to set up an entity, it could take too long.The federal government already has pledged more than $600 billion in the past year to bail out, or help bail out, some of the biggest names in American finance. There was no immediate word on how much the new rescue plan might cost.Paulson, Fed Chairman Ben Bernanke and other officials planned to work through the weekend on a solution.Christopher Cox, chairman of the Securities and Exchange Commission, told lawmakers the SEC may put in a temporary emergency ban on all short-selling, not just the aggressive forms it already has targeted, according to a person familiar with the matter, speaking on condition of anonymity because no final decision had been made.The ban might apply to stocks of selected financial companies, to all financial companies or even possibly to all public companies. Short-selling, which has been practiced on Wall Street for decades, is not illegal per se.For more than a year, investors around the world have watched with growing alarm as the U.S. economy, the world's largest, has struggled to right itself amid massive home foreclosures, many of them from mortgages issued to homeowners with bad credit. The turmoil has swallowed some of the most storied names on Wall Street. Three of its five major investment banks — Bear Stearns, Lehman Brothers and Merrill Lynch — have either gone out of business or been driven into the arms of another bank. Associated Press writers Andrew Taylor and Marcy Gordon in Washington and Joe Bel Bruno in New York contributed to this report.