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03/03/2010

Results of Survey on Government Financial Market Intervention


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U.S._Securities_and_Exchange_Commission_headquartersOn October 9, 2008, NYSSA launched a survey on the Government Financial Market Intervention plan. The survey was designed to gather feedback from our members and some nonmembers on their opinions about the effectiveness of the Intervention and if the bailout was sufficient to meet the need. Other information gathered included the changes in investment habits of respondents firms, reaction to proposed regulation changes and the availability of cash.

53% of respondents indicated that they worked for a Bank/Investment Bank or Investment Manager/Hedge Fund. Distribution across the other company types was relatively equal.

Regarding key concerns for the next twelve months, 76% indicated that further economic deterioration in the US. Other top concerns for respondents were financial market stability, with 42%, Bank and Financial company failures with 41%, short-term liquidity with 37%, and Housing prices and foreclosures with 36%.

Although the majority of those surveyed, 49% indicated that capital for investments was stable, 48% indicated that the willingness to make additional investments was decreasing. 51% indicated that the companies they follow are having trouble raising bank loans, and 55% indicating they are having trouble raising corporate debt. 

Opinions on the effectiveness of the governmental intervention on all levels were helpful, but many thought it insufficient. 

1. Fed Rate Cuts

  • Helpful and need to be increased (cut rates further) 29%
  • Helpful and appropriate in size and scope 37%
  • Neither helpful nor harmful 27%
  • Harmful and should be reduced (rates should be raised) 7%

2. Liquidity Provisions (e.g. TAF Auctions)

  • Helpful and need to be increased 38%
  • Helpful and appropriate in size and scope 48%
  • Neither helpful nor harmful 7%
  • Harmful and should be reduced 7%

3. Economic Stimulus Packages

  • Helpful, and need to be increased 32%
  • Helpful and appropriate in size and scope 27%
  • Neither helpful nor harmful 21%
  • Harmful and should be reduced 20%

4. Mortgage Market Support (e.g. Agency Programs, Foreclosure Restrictions)

  • Helpful, and need to be increased 33%
  • Helpful and appropriate in size and scope 30%
  • Neither helpful nor harmful 10%
  • Harmful and should be reduced 26%

5. Backing workouts (e.g. Bear Stearns)

  • Helpful and need to be increased 26%
  • Helpful and appropriate in size and scope 40%
  • Neither helpful nor harmful 7%
  • Harmful and should be reduced 26%

6. Guarantees (FDIC, Money Market Funds)

  • Helpful and need to be increased 50%
  • Helpful and appropriate in size and scope 41%
  • Neither helpful nor harmful 4%
  • Harmful and should be reduced 5%

7. Enforcement Actions (e.g. SEC, State Regulators)

  • Helpful, and need to be increased 53%
  • Helpful and appropriate in size and scope 19%
  • Neither helpful nor harmful 17%
  • Harmful and should be reduced 11%

8. Market Rules (e.g. Short Sale Restrictions)

  • Helpful, and need to be increased 23%
  • Helpful and appropriate in size and scope 15%
  • Neither helpful nor harmful 13%
  • Harmful and should be reduced 49%

9. The SEC is considering exemptions to these rules for investors who have an economic net long position (e.g. convertible arbitrage). Assuming that the rules are extended, do you believe that these exemptions should be put in place?

  • Yes 52%
  • No Opinion 29%
  • No 19%

10. The current Treasury Rescue Plan “TARP” (purchasing distressed securities) will be:

  • Helpful but insufficient by itself to start an economic recovery 63%
  • Helpful and sufficient to start an economic recovery 14%
  • Neither helpful nor harmful 6%
  • Harmful to the economy 16%

12. Are companies that you follow (outside of distressed financial firms) having trouble raising bank loans?

  • Yes 51%
  • No 8%
  • N/A 41%

13. Having trouble raising corporate debt?

  • Yes 55%
  • No 7%
  • N/A 38%

14. Having trouble accessing commercial paper market?

  • Yes 49%
  • No 7%
  • N/A 44%

16. Within your own organization, is the capital available for investment:

  • Increasing 7%
  • Stable 49%
  • Decreasing 44%

17. Within your own organization, is the willingness to make additional investments:

  • Increasing 14%
  • Stable 38%
  • Decreasing 48%

18. In making investments decisions or advice (either adding or reducing investment), is your group favoring:

  • U.S. Corporations 29%
  • Indifferent 31%
  • Non-U.S. Corporations 8%
  • N/A 31%

19. Thinking about the next twelve months, what are your largest concerns for the economy? Please indicate your top three concerns:

  • House Prices/Foreclosures 36%
  • Broader U.S. Economic Deterioration (retail, spending, jobs) 76%
  • Developed Country (Europe and Asia) Economic Deterioration 17%
  • Emerging Market Distress 6%
  • Bank/Financial Company Failures 41%
  • Corporate Default Rates Rising 21%
  • Hedge Fund Liquidations 15%
  • Short Term Liquidity (e.g. Inter-Bank Lending/Commercial Paper) 37%
  • Financial Market Stability 42%
  • Commodity Prices 3%
  • U.S. confidence in Overseas Investors 6%
  • Other 6%

21. Please describe your company:

  • Bank/Investment Bank 23%
  • Broker/Dealer 9%
  • Independent Research Firm 8%
  • Investment Manager/Hedge Fund 30%
  • Private Equity Firm 2%
  • Insurance Company 6%
  • Service Provider 6%
  • Real Estate Firm 1%
  • Other, please specify 15%

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