Finance topics

Bank rescues spread in Europe on Tuesday and President George W. Bush gave assurances that a $700 billion bailout plan for the financial sector was not dead, giving markets around the world a boost.

The House of Representatives rejected the bailout plan on Monday, sending stocks to their biggest percentage decline in 20 years.

Bush, Treasury Secretary Henry Paulson and congressional leaders pledged to continue negotiations, but the earliest that Congress could start work would be Wednesday.

“There’s an overarching belief that at some point this week, whether it’s Wednesday or Thursday, we’ll get something passed by the House,” said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.

Without the bailout plan, which would allow the Treasury to buy toxic mortgage-related assets from banks, credit markets around the world could remain frozen, which could lead to a recession.

“I assure our citizens and citizens around the world that this is not the end of the legislative process,” Bush said before the stock market opened.

The White House said Bush had “constructive” talks with presidential candidates Sen cash advance. John McCain, a Republican, and Sen. Barack Obama, a Democrat, on Tuesday. Both candidates have urged their fellow members of Congress to pass the bailout package, which has overshadowed their campaign for the November 4 election.

Ireland unveiled a blanket guarantee for savings held by its banks, covering up to 400 billion euros ($575 billion) in liabilities, sending Irish bank stocks roaring up against a weaker sector trend. 

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What’s better than a credit card that gives points for free flights?

How about a credit card that gives cash rebates?

You can book your own flights during seat sales, often a better deal than using the card.

There’s nothing worse than waiting years to collect points for a airline ticket, only to find you still have to pay hefty taxes and surcharges. If you have points piling up, you may be happier with cash rebates paid once a year that you can use to buy anything you like.

There are more cashback credit cards on the Canadian market than ever before. Let’s start with no-fee or low-fee cards.

The CIBC Dividend Card has three tiers of rebates. You get 0.25 per cent on net annual purchases up to $1,500, 0.5 per cent up to $3,000 and 1 per cent over $3,000.

Scotiabank’s Moneyback Visa card has the same three tiers of rebates. It has an $8 annual fee, but gives you an 18.59 per cent interest rate (lower than CIBC’s 19.5 per cent).

The TD Rebate Visa suits low spenders. It has just two tiers: 0.5 per cent on purchases under $3,000 a year and 1 per cent above that (up to $25,000 a year).

RBC’s no-fee Rewards Visa Gold and Rewards Visa Classic cards give you financial rewards. You can pay down an RBC mortgage, loan or line of credit, or contribute to a registered retirement savings plan or education savings plan.

Financial rewards are popular, accounting for 18 per cent of total gift certificate redemptions, says RBC spokeswoman Jackie Braden. People like to pay themselves first and get related tax benefits or grants.

BMO has a no-fee cashback reward option on its Mosaik MasterCard, giving 0.5 per cent on purchases and 1.5 per cent at Shell gas stations. (With the premium cashback option at $49 a year, you get 1 per cent on purchases and 2 per cent at Shell.)

Monty Loree, a blogger who writes about credit at www.canadian-money-advisor.ca, helped me find other cashback cards that looked enticing.

Citizen’s Bank lets you earn points for its financial products faxless payday loans. It donates 10 cents to non-profit initiatives worldwide each time you use the card.

At a cost of $45 a year, Citizen’s My Visa Rewards Plus card has a low interest rate of 11.25 per cent.

Capital One’s Cash Back Platinum Plus MasterCard, aimed at big spenders, gives you 1 per cent on purchases up to $10,000, 1.5 per cent up to $20,000 and 2 per cent on $20,000 or more.

It has a $59 annual fee and a variable interest rate of prime plus 15.05 per cent (equal to 19.8 per cent right now).

MBNA’s Premier Rewards Platinum Plus MasterCard gives you a 1 per cent rebate on all purchases with no limits. The annual fee is $29.

Finally, American Express has a Costco cash rebate card with three tiers: 0.25 per cent on the first $2,000, 0.5 per cent on the next $3,000 and 1.5 per cent on any amount over $5,000.

The maximum rebate is $500 a year, which requires $37,000 in spending.

While the Amex card is free, you have to pay for a Costco membership every year ($50). It’s the only credit card accepted by Costco stores. You can juice up your rebate by an extra 0.5 per cent when you carry a balance on the card.

Next week, we’ll look at the best deals in travel and merchandise rewards.

Ellen Roseman’s column appears Wednesday, Saturday and Sunday. You can reach her by writing Business c/o Toronto Star, 1 Yonge St., Toronto M5E 1E6; by phone at 416-945-8687; by fax at 416-865-3630; or at eroseman@thestar.ca by email.

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The Canadian Chamber of Commerce is urging federal politicians to turn their attention to the broader economy and to come up with a co-ordinated strategy to deal with a highly competitive, volatile global marketplace.

The chamber's election wish list includes personal and corporate income tax cuts, public debt reduction, improving Canada-U.S. relations, upgrading workforce skills, boosting national competitiveness and dealing with energy, transportation and climate-change issues.

All the items on the list, entitled "An Action Plan for a Competitive Canada," are equally important, Perrin Beatty, the business organization's president, said in an interview Tuesday.

"It's not a case of cherry picking and saying we can act in the area of taxes but not bother with infrastructure, not bother with skills and so on," he said, following a speech to the Economic Club of Toronto.

What's really important, he said, is "that there be a coherent, co-ordinated strategy" to deal with the worldwide credit crunch and slowing U.S. economy due to the subprime mortgage fiasco.

The U.S. slowdown has hurt Canada's export-sensitive forestry and automotive sectors, leading to mill and plant closings and thousands of layoffs.

"The real issue for us is the global marketplace is becoming so intensely competitive that governments and political parties have to put the economy at the top of the agenda," said Beatty, who held several cabinet posts in Brian Mulroney's Progressive Conservative government.

"What we've seen, even during the (election) campaign, is that they seem inclined to talk about everything else but .. advance america cash advance. including puffins," he said.

"The political parties have an obligation to focus on the real issues and make it clear where they stand," said Beatty, who also served as president of the CBC.

"The prescriptions outlined in our platform are key to positioning Canada in the global economy and are a remedy to the downturn we've experienced."

The chamber's political priorities:

– "Competitive" taxes, a lower national debt and effective government spending

– Improving Canada-U.S. relations through better border infrastructure, regulatory co-operation and easier travel

– Agreements to dismantle barriers to international trade and investment, and eliminate interprovincial trade barriers.

– A "market-based approach" to energy, with technology-neutral efficiency standards and "a balanced and effective framework" to reduce greenhouse gas emissions.

– "Smart regulations" to encourage research and development, combat counterfeit products and protect intellectual property.

– Increasing labour market participation by immigrants and older workers

– Improving infrastructure and transportation, with more public-private partnerships.

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REDMOND, Wash.–Software giant Microsoft Corp. said Monday its board approved a plan to buy back up to another $40 billion of its shares.

The program expires on Sept. 30, 2013. As of July 28, Redmond, Wash.-based Microsoft had about 9.13 billion shares outstanding, according to a regulatory filing.

The company said it has completed its previous $40 billion stock repurchase program.

Microsoft also raised its quarterly dividend to 13 cents from 11 cents. The dividend is payable Dec. 11 to shareholders of record on Nov. 20.

The company’s board has also authorized debt financings of up to $6 billion. As part of this authorization, Microsoft has established a $2 billion commercial paper program. The company plans to use the proceeds for general corporate purposes, including buybacks and funding for working capital.

On Monday, Moody’s Investors service assigned an "AAA" senior unsecured debt rating to Microsoft, with a stable outlook cash advance loan no fax. The ratings agency said this reflects the company’s "position as the world’s largest software company with a strong and defensible market position throughout its diverse core offerings."

Microsoft also said it received a "AAA" corporate credit rating from Standard & Poor’s Rating Services.

Shares rose $1.22, or 4.9 per cent, to $26.38 in premarket trading.

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Central banks in Japan and Australia added $15.7 billion to the financial system to hold down borrowing costs, slowing the pace of cash injections as a U.S. plan to buy banks' bad debts eased credit-market jitters.

The Bank of Japan added 1.5 trillion yen ($14 billion) to the financial system in its fifth day of fund injections. The Reserve Bank of Australia added A$2.025 billion ($1.7 billion) to the financial system, about a fifth lower than the daily average for the week ended Sept. 19.

The U.S. Federal Reserve led central banks in Europe and Asia in pouring cash into global financial markets over the past week as the collapse of Lehman Brothers Holdings Inc. sparked a crisis of confidence. Stocks rallied and money-market rates dropped after the U.S. government announced a $700 billion plan to avert a financial meltdown by buying troubled assets.

“Though funding pressures are still there, some of the tightness in cash markets has eased,'' said Sally Auld, interest rate strategist at JP Morgan Securities Australia Ltd. in Sydney. The RBA “put a little bit of cash in today though it's not as dramatic as some of the injections last week.''

Japan's overnight call loan rate was at 0.25 percent after the BOJ's operation at 9:20 a.m. in Tokyo, falling from as high as 0.45 percent, according to Tokyo Tanshi Co.

The BOJ pumped 11 trillion yen into the money markets last week, its biggest injection in at least six years as central banks around the world worked together to prevent a financial meltdown. The Reserve Bank of Australia added A$12.3 billion in the five days to Sept. 19, the most in a week since August 2007.

Non-Japanese Banks

“There may have been a need for today's operation because foreign banks' repo and operation rates are high,'' said Shinsuke Kanabu, a project and research director at Central Tanshi Co no fax payday loans. in Tokyo. “If you look only at the Japanese inter- bank rates, there's no need for the BOJ injections.''

Non-Japanese banks are facing the highest premiums to borrow yen overnight since UBS AG, the European bank hardest hit by the subprime crisis, reported a record loss on Feb. 14. The BOJ last week said it will use its $60 billion swap arrangement with the Federal Reserve to supply dollars to local and foreign financial institutions as required by market conditions.

Foreign lenders pay 0.61 percent to borrow yen overnight, while Japan's banks pay 0.23 percent, according to Tokyo Tanshi.

Australian Borrowing Costs

Australian banks' borrowing costs dropped from the highest in six months, according to a gauge that measures the availability of funds in the market.

The difference between the rate banks charge each other for three-month loans and the overnight indexed swap rate stood at 75.5 basis points at 11:34 a.m. in Sydney, down from 92.5 points on Sept. 19, Bloomberg data show. A basis point is 0.01 percentage point.

Europe's main central banks lent $71 billion on Sept. 19 as part of a coordinated effort with the Fed.

The European Central Bank poured $40 billion into the markets while the Bank of England allotted $20.8 billion out of $40 billion offered and the Swiss National Bank added $10 billion. The ECB's and the SNB's auctions were oversubscribed. The Fed on Sept. 18 almost quadrupled to $247 billion the amount of dollars central banks can auction around the world.

In repos, central banks typically buy debt securities for a set period, temporarily raising the amount of money available in the banking system. They don't signal a policy shift.

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Mark Carney on Thursday found himself back in the glass-faced tower at University and King where he used to chase business deals as a managing director with Goldman Sachs.

But this time he had a decidedly different job description.

For the past eight months the Bank of Canada governor has largely been kept out of the headlines generated by the growing chaos in the global financial system.

But this week, Carney’s role as steward of the central bank took on a more urgent profile as he quickly assembled the country’s top bankers at the Bank of Canada regional office on the 20th floor of 150 King St. W. The meeting took place the same day Canada, along with major central banks around the world, joined to orchestrate a $180 billion (U.S.) injection of desperately needed capital into the world’s wobbling money market.

The Bank of Canada’s contribution of a $10 billion backstop to the banking system was a relatively small but important vote of confidence at a time when investors worldwide were hitting the panic button. Inside the 20th-floor meeting, Carney was bound to be mapping out further action plans with bankers should the need arise. But Bank of Canada officials were divulging little of what went on, secretly ushering officials out of the building.

Those in the Canadian banking industry say they’re relieved to have the Oxford-educated banker at the helm of Canada’s central bank during these tumultuous times.

Upon his appointment last October, Carney was described by Finance Minister Jim Flaherty as "a steady hand" whose international experience and understanding of high finance would "help maintain the stability of Canada’s monetary system."

Who exactly is this steady hand?

When it came time to replace David Dodge as governor of the bank last fall, Carney – the senior bureaucrat in the country’s finance department at the time – was not a gambling man’s choice for the job. Most predicted Dodge’s deputy, Paul Jenkins, would take over as Canada’s top banker, but it was Carney’s experience as a global financier that pushed him to the top.

"He has very impressive credentials, and he has the sort of optimal combination of private- and public- sector experience, which allow him to be a very strong governor," Charmaine Buskas, TD Securities senior economic strategist, said then.

Louis Gagnon, a former Bay Street banker and current professor of finance at Queen’s University, likens Carney to the second coming of his predecessor, Dodge, and says he is a sharp mind in a central bank known for a measured approach to monetary policy.

"Mark Carney is from a very pragmatic school of thought," Gagnon says payday loans. "He has a cool head … and an understanding of the world."

The son of a high school principal, the banker was born in late winter 1965 in a small village in the Northwest Territories.

An academic and an athlete, Carney was a star goaltender with his high school hockey team and valedictorian of his graduating class before leaving Canada to study economics at Harvard. He later earned a PhD at Oxford University. It was there that he met his British-born philanthropic wife, Diana.

From Oxford, he moved to London and to Goldman Sachs, one of the world’s largest financial firms, where, for 13 years, he trotted around the globe, banking in the world’s major markets – London, New York, Tokyo and Toronto – where he earned his "whiz kid" moniker, a title which, as the second youngest Bank of Canada governor and the youngest central banker in the G8, continues to stick.

Those who knew him when he worked at Goldman Sachs remember him as a "high flyer."

He left that post and its undoubtedly rich pay in August 2003 to join the civil service. After a brief stint with the Bank of Canada in 2003-2004, Carney moved to the Ministry of Finance.

Since moving to Ottawa, the banker, his wife, and their four children have lived in a $1.3 million home in Ottawa’s exclusive Rockliffe Park. And it’s from from his current fourth-floor office overlooking Parliament Hill that he now monitors the global markets, leading Canada’s effort to bring calm to a financial panic not seen in most investors’ memory.

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FRANKFURT–Europe's central banks offered up more cash to jittery banks on Friday, putting a combined $90 billion into money markets in a lockstep move aimed at stemming a loss in confidence in the face of a withering global financial crisis.

The move is aimed at boosting shaky confidence and persuading fearful banks to lend to each other. Banks have been increasingly reluctant to lend to each other as distrust spread throughout the financial system.

The European Central Bank, which oversees the 15-nation euro zone, said it offered $40 billion in the three-day tender with 64 banks bidding $96.7 billion. That compared to the $100 billion that banks bid for on Thursday.

In London, the Bank of England said it provided $40 billion, as well.

The Swiss National Bank said it received bids worth $21.1 billion from banks seeking access to the US$10 billion it provided.

Earlier, the Bank of Japan pumped another 2 trillion yen ($18.7 billion) into money markets, its seventh injection this week.

The move came a day after the U.S payday loan. Federal Reserve plowed as much as $180 billion into money markets abroad and the New York Federal Reserve's action to ease a spike in overnight lending rates by injecting $55 billion into the banking system.

On Thursday, the Fed authorized new swap facilities with the Bank of Japan for as much as $60 billion; $40 billion for the Bank of England and $10 billion for the Bank of Canada. All told, Fed action increased lines of cash to central banks by $180 billion to $247 billion.

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Asia-Pacific nations kept up their efforts on Friday to shield the region from the fallout of Wall Street upheaval even as stock markets rallied in response to emergency action from the world’s top financial authorities.

Japan and Australia pumped a further $20 billion into their money markets as lending remained tight despite Thursday’s unprecedented $180 billion made available by the U.S. Federal Reserve to the global banking system.

New Zealand relaxed rules on collateral to ease funding conditions and South Korea’s central bank chief promised to act aggressively and supply enough cash to the financial system to calm markets. Bank of Japan Governor Masaaki Shirakawa will brief lawmakers about the authorities’ response to the crisis later on Friday.

The Chinese government was also trying to stabilize markets, buying shares in three of the biggest state-owned banks and ditching a tax on purchases of stocks.

Asian stock markets rallied on Friday taking cue from Wall Street gains overnight following news of a U.S instant payday loan. Treasury plan to create a fund that would mop up toxic debt, similar to one that helped resolve the savings and loan crisis of the late 1980s.

Britain imposed a temporary ban on short selling of financial stocks on Thursday. The Wall Street Journal reported U.S. regulators were considering a similar step and the Securities and Exchange Commission chairman Christopher Cox told reporters he could make a statement on the issue as early as Friday.

Short selling allows investors to profit from falling prices and has helped bring Wall Street icons to their knees.

The plans offered investors a glimmer of hope for resolution to the 13-month old credit crisis that sank Lehman Brothers, stripped Merrill Lynch and Bear Stearns of their independence and triggered a $85 billion bailout of insurer AIG. 

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Maple Leaf Foods Inc. said freshly sliced meats from its now thoroughly sanitized processing plant in Toronto would begin reappearing on store shelves by the middle of next week.

The plant on Bartor Rd. had been found to contain the same type of listeria implicated in the deaths of at least 17 Canadians and has been closed since Aug. 20.

The company said it had started the process of reopening the plant yesterday, four weeks after efforts to locate the source of listeria led it to areas deep within two meat-slicing machines.

As part of Maple Leaf’s efforts to regain consumers’ confidence, the country’s largest food processor said it has implemented rigorous new sanitation and food safety procedures on all 84 meat-slicing machines in its plants around the country.

As well, the entire Bartor Rd. plant has been thoroughly sanitized six times, tested and given a clean bill of health by government inspectors, third party experts and its own staff, the company also said.

Maple Leaf Foods said it would conduct several test runs before releasing any new products into stores.

"We recognize that we have to rebuild consumers’ confidence," said Michael McCain, president and chief executive officer of the $5.2 billion food-processing giant. "I am confident in the machines, with adjusted protocols."

He said it could take anywhere from several months to a year to restore product sales, based on other product recalls of this nature.

McCain declined to be more specific, or speculate on how much the recall had cost the processor of fresh pork and chicken, bacon, and ready-to-eat meals cheap payday loans. The company’s initial estimate was $20 million.

"While we operated to the highest standards … our best efforts were not enough. We have learned from this tragic experience and we can and will do more," said McCain.

While closed, the plant underwent six sanitization procedures under independent supervision, McCain said.

The company will disassemble and deep-clean all its slicing machines on a regular basis, McCain said. It will also double its testing of possible sources of listeria in the surrounding environment, such as fridges, walls and floor drains.

While defending Canada’s food safety standards, McCain also announced plans to name a chief food safety officer at Maple Leaf, who will report directly to McCain on the latest innovations and processes.

And the company plans to assemble a food safety advisory panel, within three months, to look at industry-wide best practises, he said.

McCain said he’d welcome more government food safety inspectors in his plants.

The union representing federal inspectors has complained they are understaffed.

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Canada’s big banks largely shrugged off the weekend bankruptcy filing of Lehman Brothers Holdings, but the third-largest Canadian life insurance company said Monday it will take an unspecified hit to third-quarter earnings because of its Lehman bond holdings.

Canadian bank and insurance stocks fell after a dramatic weekend during which Lehman Brothers sought bankruptcy protection, Merrill Lynch agreed to be bought by Bank of America and insurance giant American International Group was waging a fight for survival.

The S&P/TSX financial index fell 1.9 per cent Monday, while the broader benchmark, the S&P/TSX composite, tumbled 4 per cent.

Sun Life said it holds &334 million par value of Lehman bond securities and about C$15 million net value of Lehman derivative instruments.

Most of its Lehman exposure is held in segments backing liabilities, the company said, which means it will need to strengthen reserves and take a charge to income.

Shares of Sun Life fell 3 per cent to close at $39.31 on the Toronto Stock Exchange.

It was not known whether Canada’s other large life insurance companies, Manulife Financial and Great-West Lifeco, expect to take similar charges. Calls to those companies were not immediately returned.

A spokeswoman for the country’s biggest bank, Royal Bank of Canada, said that it had been working over the past several months to reduce risk related to Lehman.

Lehman is one of RBC’s trading and transactional counterparties, particularly in securities financing activities and derivatives, RBC spokeswoman Beja Rodeck said in an e-mail.

"We are well within our single name limits and are well-collateralized," Rodeck said.

Shares of RBC fell 2.2 per cent to $48.10.

Toronto-Dominion Bank spokesman Simon Townsend said that the Lehman situation has "no material impact" on TD’s overall operations.

Within its TD Securities unit, the risk involves replacing transactions in which Lehman acted as counterparty with acceptable counterparties, he said.

"Assuming markets remain liquid, we consider this risk to be manageable," Townsend said in an e-mail.

Shares of TD dropped 1.6 per cent to close at $61.30.

CIBC executives, speaking at an investor forum on their bank’s operations, said that CIBC’s mark-to-market loss on various Lehman-related positions was about $25 million as of Friday.

"We do not have large exposures," CIBC Chief Executive Gerry McCaughey said.

The positions in which Lehman is a counterparty are being re-hedged, and there could be a cost to that, said Richard Nesbitt, chairman and chief executive of CIBC World Markets, the bank’s corporate and investment banking unit.

Shares of CIBC fell to $61.11, down 4.8 per cent.

Bank of Montreal spokesman Ralph Marranca said the bank’s exposure to Lehman is "not significant." BMO shares slid 1.6 per cent to $48.34.

A Bank of Nova Scotia representative could not immediately be reached for comment us fast cash. Scotiabank shares dropped 2.4 per cent to close at $46.60.

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