Briefly:

Previous Brieflies this week: | MON | TUE | WED | THU |

(September 22, 2008) Investors who hold issues of frozen asset-backed commercial paper can now exchange those investments for the new restructured notes.

The Pan-Canadian Investors Committee for Third-Party Structured ABCP announced that the process of tendering existing holdings of ABCP in exchange for restructured notes has begun. CDS Clearing and Depository Services has established a live online tender system for custodian institutions.

Meanwhile, noteholders who have the physical certificates must deposit them with CIBC Mellon Trust Company, using a letter of transmittal that is available on the court-appointed monitor’s website at www.ey.com/ca/commercialpaper.

The expiry date for tenders is Tuesday, September 30, 2008. All noteholders are encouraged to tender by this date. Noteholders who do tender by this date will be sent their new restructured notes, together with any interest payments to which they are entitled, within three business days of the restructuring being implemented.

The investors committee expects restructuring to commence on September 30 or shortly thereafter with a view to completing implementation during the month of October.

There has been no announcement as to when retail investors who hold ABCP and were subject to a buy-back deal from some Canadian brokerage firms can expect to receive the return of their principal investment.

• • •

Morgan Stanley, Goldman Sachs become holding companies

(September 22, 2008) The American banking industry is almost unrecognizable today from where it was just a week ago.

Japanese bank Mitsubishi UFJ Financial Group announced today its plans to acquire 10% to 20% of Morgan Stanley’s common stock.

This comes on the heels of yesterday’s annoucement that Morgan Stanley and Goldman Sachs, the two remaining independent investment banks, would turn themselves into holding companies. This would put them under the authority of the Feds and reduces the amount of leverage they can risk for every dollar.

The deal also means that these banks are subjecting themselves to tighter regulation and their ability to take risks is more limited, though they can now operate commercial franchises and accept retail deposits.

• • •

Bailout won’t stop crisis, U.S. NGO says

(September 22, 2008) The U.S.-based Center for Responsible Lending says the government plan announced by the U.S. Treasury and Federal Reserve fails to deal with the root cause of the crisis — foreclosures — and is instead “simply a bailout of the lenders.”

“By forcing taxpayers to buy abusive and reckless loans from irresponsible lenders, taxpayers are funding a multibillion-dollar subsidy to private corporations,” says CRL president Mike Calhoun. Yet the millions of families who have been unfairly pushed to the financial brink by these mortgages get nothing. Only by preventing the 6.5 million foreclosures expected in the next few years — and the $356 billion drop in surrounding property values that will result for an additional 46 million families — will the economy begin to recover.

Calhoun says regulators should instead focus on lifting the ban on judicial loan modifications that prevent homeowners from applying for loan changes through the bankruptcy courts if the loan is on their one and only home.

“Bankruptcy courts provide an existing infrastructure for supervising court-ordered loan modifications and addressing the many hurdles that prevent voluntary modifications. Judicial modifications are the best solution for preventing foreclosures that will drag down the economy further. This provides a fair, targeted way to make a real impact without requiring any tax dollars,” Calhoun says.

The government should also consider capping consumer loans at 36% interest, Calhoun says.

“This stops abusive interest rates that push vulnerable families back even further, and it also protects responsible lenders from unfair competition from abusive payday lenders charging as much as 400% interest,” he says. “Homeowners still have no escape routes to avoid foreclosure. With home prices in virtual free-fall, refinance options eliminated for many and higher adjustable-rate mortgage payments still ahead, home losses will continue to rise, which in turn will continue to exert downward pressure on home prices.”

• • •

Short-selling ban doesn’t affect ETFs: Horizons BetaPro

(September 22, 2008) BetaPro Management, the manager and trustee of the Horizons BetaPro exchange-traded funds, says the Ontario Securities Commission’s temporary ban on short-selling will not affect the trading of its ETFs.

Some of the HBP ETFs provide inverse (opposite) multiples of the daily performance of a specified underlying index — therefore achieving similar results to shorting a stock. However, Horizons BetaPro says the OSC’s announcement on Friday, September 19, 2008, which temporarily prohibits the short-selling of securities of certain financial institutions, does not affect the HBP ETFs.

The company says the ETFs will all continue to be offered on the Toronto Stock Exchange.

(09/22/08)