Banks stand to reap billions because of accounting rule

• Banks stand to reap billions because of accounting rule
  An accounting rule could allow JPMorgan Chase to benefit from bad loans it acquired when it bought Washington Mutual. Transforming the loans into income could lead to a $29 billion windfall for JPMorgan. Bank of America, Wells Fargo and other financial institutions are similarly poised to reap rewards from acquiring home lenders and their troubled loans. "It will benefit these guys dramatically," said Robert Willens, who runs a tax and accounting consulting firm in New York. "There's a great chance they'll be able to record very substantial gains going forward." Bloomberg (26 May.)

Read Full story on Bloomberg.com

Times Online: Credit crunch has ended, according to Ted and Libor

Economists called the end of the credit crunch yesterday as the short-term interest rate that banks charge to borrow from each other fell to a record low on dollar, euro and pound-denominated loans.
The continuing decline in the London interbank offered rate (Libor) signalled a return to normality for the credit markets for the first time since May 2007, according to Peter Chatwell, an interest rate strategist at Calyon, the investment banking unit of Crédit Agricole. “This marks a return to normal territory and gives us hope that we can cope with anything that comes now. It indicates that the banks are well capitalised, with no more surprises. It gives us hope that we have a functioning banking system and that we can now go about the job of running the broader economy,” Mr Chatwell said.

Read the full news online at Times Online: Credit crunch has ended, according to Ted and Libor

GM's survival is made difficult by CDSs

• GM debt holders could make billions off credit default swaps: The large number of credit default swaps written on General Motors debt is making it increasingly unlikely that GM's debt holders will support a restructuring for the troubled automaker. Owners of the debt stand to make billions of dollars on the swaps in the event of a default but would put those proceeds at risk by trading their debt for an equity stake in a restructured GM. Financial Times (11 May.)

Bloomberg: Mutual Funds, Traders, Companies Oppose Resurrection of Uptick

May 5 (Bloomberg) -- Mutual funds, traders and even companies that blame short-sellers for driving down share prices oppose bringing back the so-called uptick rule, which may deter U.S. regulators from resurrecting the provision.
Fidelity Investments opposes all five rules the Securities and Exchange Commission proposed last month to regulate short- selling, including a return of the uptick measure, senior vice president Brian Conroy said at a public meeting in Washington today. Executives from companies including General Electric Co. said they prefer an alternative to the uptick.
The SEC is weighing options to dictate when traders can bet shares will fall after lawmakers said short-sellers attacked banks reeling amid the worst financial crisis since the Great Depression. SEC Chairman Mary Schapiro said any new rules will uphold the benefits of short-selling while restricting market abuses.

Click here for full article:
Mutual Funds, Traders, Companies Oppose Resurrection of Uptick