This is an interesting article.

Gary

-----Original Message-----
From: Greene, John 
Sent: Friday, September 14, 2001 7:25 AM
To: Hickerson, Gary
Subject: FW: Very Interesting Article from The Washington Post


FYI - I am sure we already have enough of our own stocks on the books but this may be worth relaying to Greg, et al.

-----Original Message-----
From: Towarek, Michael 
Sent: Friday, September 14, 2001 11:44 AM
To: Greene, John
Subject: FW: Very Interesting Article from The Washington Post



> 
> Stocks to Trade Monday With Special Rule 
> Big Firms Can Buy Shares Back to Halt Plunge 
> By Kathleen Day and John M. Berry
> Washington Post Staff Writers
> Friday, September 14, 2001; Page E01 
> In advance of the planned reopening of U.S. stock markets on Monday, major
> securities firms and corporations have reached an extraordinary agreement
> to prop up prices by buying shares if a flood of sell orders threatens to
> send the markets into a free fall, industry and government sources said
> yesterday.
> Federal securities regulators have made it clear they will permit these
> and other market practices that might raise legal questions in ordinary
> circumstances, the sources said. Securities and Exchange Commission
> Chairman Harvey Pitt alluded to the informal accord yesterday when he said
> the agency would make it as easy as possible for companies to buy back
> their own shares and would open a hot line for brokers and companies with
> questions about proper trading practices.
> The government's green light was signaled late yesterday after a major
> firm approached the SEC requesting that the rules concerning share
> buybacks be relaxed temporarily because of widespread fears of an investor
> panic in reaction to Tuesday's terrorist attacks, Wall Street sources
> said. 
> "We intend to make it easy for public corporations to repurchase their
> shares," Pitt said at a news conference with New York Stock Exchange
> Chairman Richard A. Grasso and Nasdaq Chairman Harwick Simmons. But Pitt
> also made it clear the agency will be making sure investors don't get
> gouged, which securities lawyers interpreted to mean that the SEC will
> allow corporate buybacks only to the extent that they don't hurt investors
> by unfairly propping up or depressing individual company prices.
> The SEC chief said he will announce today a number of steps "to facilitate
> an orderly market." He hinted strongly that short selling -- a practice in
> which investors bet that stock prices will fall -- will be restricted.
> "With respect to short selling, the goal of all of us is to have a market
> that most closely approximates the normal trading environment," he said.
> "As a result of that, you can tell in which direction we will probably be
> leaning."
> The plan to resume stock trading on Monday after a four-day halt -- the
> longest since the Great Depression -- depends on a test of market systems
> scheduled for Saturday, the three men said.
> Securities industry executives interviewed yesterday said the Monday
> target is attainable but privately voiced concern about whether it will be
> met, warning that power outages, disrupted phone service and structural
> damage to buildings are proving to be more daunting than expected.
> While industry and government officials have struggled for days with the
> technical obstacles to reopening the U.S. markets -- the largest in the
> world -- the agreement yesterday reflected their concerns about the
> potential psychological hurdles ahead.
> "As the market opens on Monday, no one knows what will happen," said an
> executive of a major securities firm. "But people have been made aware
> that they're looking at facilitating the ability of companies to purchase
> shares if the market gets wacky."
> Pitt would not disclose details about how stock buyback rules will be
> eased, but SEC steps could include relaxing rules about the volume of
> stock that can be purchased and allowing such trades at the beginning and
> end of trading sessions, securities industry experts said.
> Sources said the SEC's decision is similar to steps the agency took to
> restore stability and confidence in the aftermath of the 1987 market
> crash.
> Before the SEC was created in the early 1930s, powerful Wall Street
> figures tried on occasion to prop up the market in times of distress. J.P.
> Morgan stopped a panic in 1907 that way. In October 1929, Richard Whitney,
> an exchange official, became a national hero by walking onto the jittery
> trading floor and placing a bold order to buy U.S. Steel above its price
> at the time. The move, backed by a group of bankers, buoyed hopes and
> prices -- but only for two days. Then the market crashed.
> Yesterday, the Federal Reserve, which pumped a record $38 billion into the
> U.S. banking system on Wednesday, put in another $70 billion in the
> afternoon to ensure that brokerage firms, investment banks and other
> companies providing financial services have no trouble financing loans or
> other types of investment activity.
> In another effort to shore up market confidence, Treasury Secretary Paul
> H. O'Neill issued a statement before television cameras taking sharp issue
> with the concerns, voiced by many private economists, that the terrorist
> assault will tip the slowing U.S. economy into a recession by destroying
> consumer confidence.
> "The destruction in New York City is horrible and detestable. At the same
> time, America's dynamic economy is not located in any one place," O'Neill
> said. "Innovation and productivity are found in every factory and farm,
> every laboratory, every financial institution, every small business and
> every home office across America. That spirit cannot be destroyed."
> Although the tragedy will cause some supply disruptions and transportation
> stoppages, "these effects will be transitory," O'Neill said. "The
> prospects for a rebound in the U.S. economy [later this year] remain
> unchanged."
> Helping to bolster optimism was the performance of markets in Europe,
> which continued to claw their way back from the steep drops Tuesday that
> followed the attacks on the World Trade Center and Pentagon. Germany's DAX
> index rose 1.32 percent, and London share prices were up 1.26 percent,
> though France's CAC 40 index dipped slightly. Japan's Nikkei index eked
> out a gain of 0.03 percent, and Hong Kong's Hang Seng index rose 0.8
> percent.
> But two pieces of news yesterday underscored how shaky the U.S. economy
> was even before this week's events.
> A monthly survey of consumer sentiment dropped to an 8 1/2-year low in the
> first part of this month. The survey, compiled by the University of
> Michigan, provided a reading of 83.6, down from 91.5 the month before, and
> by far the lowest since sentiment began falling late last year.
> Significantly, both consumers' assessment of the state of the economy and
> their expectations about it six months from now deteriorated noticeably.
> Analysts at the university said the "early September loss was due to
> heightened concerns about future prospects for the national economy as
> well as more pessimistic assessments by consumers of their own financial
> situation." Given the shock of the terrorist attacks, "the likelihood that
> the economic downturn could turn into a full-fledged recession has grown
> substantially."
> Meanwhile, the Labor Department said the number of initial claims for
> state unemployment benefits jumped to 431,000 last week, well above the
> 400,000 level that had been reported for several weeks. A number of
> analysts said the increase was a sign that the labor market is continuing
> to deteriorate and that joblessness is certain to continue rising.
> In the U.S. government bond market, where trading resumed yesterday after
> a two-day hiatus, yields on some Treasury bills plummeted more than
> four-tenths of a percentage point. Yields on six-month bills tumbled to
> 2.72 percent, the lowest level in decades.
> Analysts said the sharp drop was the result of several factors, including
> the "flight to quality" impulse that often materializes during crises as
> investors move money into U.S. government securities, which are viewed as
> the safest in the world. Strong demand for bonds causes yields to drop as
> investor become more willing to hold them regardless of their yields.
> Yields were also depressed by expectations of many investors and analysts
> that the Fed will cut interest rates no later than its next policymaking
> session on Oct. 2. That would be the eighth rate cut since the beginning
> of the year.
> SEC officials did an about-face from Wednesday, when a spokesman said the
> agency didn't know where investors having trouble contacting brokers
> should go to learn about their accounts and money. Pitt said that in
> addition to the hot line for financial institutions, the agency would
> today open another one for investors who have questions about their
> accounts. The numbers will be posted on the SEC's Web site (www.sec.gov).
> The National Association of Securities Dealers, the parent company of
> Nasdaq and the American Stock Exchange, said it will post on its Web site
> today (www.nasdr.com) information about where investors with questions can
> go.
> A Nasdaq spokesman also had to backtrack yesterday from a statement
> Simmons made Wednesday, apparently in error, that 19 of the 32 securities
> firms with offices in the World Trade Center had not been heard from. The
> spokesman said in fact Nasdaq had heard from 25 of the 32. It hadn't tried
> to contact the other seven. All 25 have said they can be up and running,
> at least in some capacity, the spokesman said.
> Staff writers Paul Blustein and Glenn Kessler in Washington and Carol
> Vinzant in New York contributed to this report. 
>