News&Notes: TARP, IMF & More Market Manipulation

Treasury is considering taking stakes in insurance companies, signaling expansion of so-called TARP rescue plan

Treasury Secretary Paulson is said to plan buying stakes in regional U.S. banks - Bloomberg.com
Bloomberg.com reports Treasury Secretary Henry Paulson is preparing to take stakes in a number of regional U.S. banks as he seeks to halt the freeze of credit to businesses and households, according to a person briefed on the matter. The Treasury may announce the plans as soon as today, the person, who was briefed by bankers and Treasury officials, said on condition of anonymity. The purchases would be the second round in a $250 billion program to inject capital into financial companies, after an initial $125 billion was allocated to nine of the largest banks.
RCM Comment: Do these two stories really need a comment?

Regulators examining market close stock surges - Reuters
Reuters reports U.S. regulators are taking a closer look at unprecedented volatility in stock markets near the close of trading, hunting for any signs of manipulation. "It is something we're looking at," said Brendan Intindola, a spokesman for the Financial Industry Regulatory Authority. "We're really taking an extra close look at it in the light of the volatility we've seen in the market in recent weeks." FINRA typically looks at "market on close" activity, which are orders executed as near to the end of the exchange day as possible. But its surveillance unit has now ratcheted up its examination of possible efforts by some firms to try to raise the price of a stock for marking near the end of the trading day. "Marking the close" is a form of market manipulation.
RCM Comment: The regulators better watch out. They may very well discover that the government, through the PPT, has been manipulating the market in the last hour for months now.

IMF said to consider loans of 5 times members' quotas at IMF- Bloomberg
IMF is said to consider 3-6 month loans for emerging markets. said to consider aid to help with liquidity, not solvency.

TARP's purpose is to unfreeze credit markets, but process has become something like a 12-step program - Friedman Billings
Friedman Billing says the purpose of the Troubled Asset Relief Program is ultimately to unfreeze the credit markets, but the process has developed into something like a 12-step program. So far, the Emergency Economic Stabilization Act has provided for interbank guarantees, commercial paper purchase, and direct preferred equity investments in regulated financial institutions to promote M&A, and then create a value proposition for the survivors that allows the banks to attract equity in the public markets rather than be permanently financed via the TARP. Market conditions may cause officials to act with even more alacrity and create new and different experiments meant to stem the tide of sentiment. The system is past the tipping point into what could be a vortex that would be terribly destructive. The time to invest in financials is when they can present a value proposition to investors that involves good margins and the potential to grow.