Banks

A Clear Line in the Canadian Annuity Market

Canadian Finance Minister Jim Flaherty intends to propose legislation that bans banks from selling products that are similar to annuities. Canadian law already prevents banks from selling annuity products. Canadian finance officials are apparently concerned that the lines between annuity and banking products are increasingly blurred. Bank products that are represented as lifetime cash flow vehicles presumably fall under this area of concern. This hybrid or blurred product category more than...

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The Real Cost of the Financial Crisis Bailout

In an extraordinary piece of investigative journalism, Bloomberg Markets Magazine describes the real financial bailout action that took place when banks tapped into the Federal Reserve’s Term Auction Facility for additional borrowing at below market rates. Select highlights include: While the TARP program had a big $700 billion price tag, the Federal Reserve committed as much as $7.77 trillion to banks as of March 2009. These additional trillions were provided in almost complete secrecy...

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Trees Grow

“Trees grow” is an adage that has stuck with me over the past several years.

In a post financial crisis interview, a successful investment manager was talking about his decision to load-up on Citigroup and a handful of other banks in early 2009 when the decision to do so was difficult to say the least.

The manager referenced a professor who shared the trees grow saying with him, and he emphasized the impact that the idea had on his decision to build and maintain significant long positions in banks and other financial services stocks when everyone else was certain the world was coming to an end.

The trees grow idea involves considering fundamental qualities of things—whether trees, people or businesses.

Growing is what trees do—it is...

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Why Your Retirement Just Became More Expensive

The extreme gyrations in the stock market over the past week create great headlines and quite a bit of trading activity. Equally if not more important for retirees, however, is the related action in bond markets.

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Structured Product Risks are a Hot Topic

Structured products are hot. U.S. sales rose 46 percent in 2010 to $49.5 billion. The appeal is understandable in the wake of the financial crisis. As folks in the indexed annuity business know, a floor of principal protection or "guaranteed" income combined with some upside potential is an easier sell in the current environment. Structured products also happen to be a hot topic with regulators. For example, FINRA just issued a warning to investors about structured products with principal...

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