Gina Burgio

Last month, the US gov't announced that it was lending US$85billion to AIG (American International Group Inc.) in exchange for an 80% equity stake in AIG. The gov't has also increased its credit to AIG by another US$38billion. The Fed is in the process of also appointing trustees to oversee the US gov't's stake.

There have been mixed reactions in the marketplace regarding the US gov't taking an ownership interest AIG, the nations largest insurance company. AIG subsidiary, AIG United Guaranty, provides mortgage default insurance to lenders, including financial institutions in Canada since 2006. Canada Mortgage and Housing Corporation (CMHC), a corporation owned by the Canadian gov't, also provides mortgage default insurance to financial institutions in Canada and has been doing so successfully since 1954. Even though AIG has a broader portfolio is businesses and type of insurances products, CMHC has managed to operate well in the marketplace under Canadian gov't control. Hopefully AIG, now under US gov't control, will be able to stablize and be able to do the same.

I am of the belief that, long term, it was a wise move by the US gov't to take control of AIG, with a focus towards stabilizing the world financial system. This Insurer, along with Freddie and Fannie, provides the US gov't with a vehicle to convey that message and back up the banks, while minimizing the amount of dollars they would have otherwise had to injection into the system (well beyond the $700billion already planned) if they had stood back and watched those companies collapse.

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com

Each VERICO Broker is an independent owner operator.

Thousands of people rushed to register their numbers on the Do-Not-Call List caused the website servers to crash. The CRTC has since announced that they are increasing capacity/bandwidth to their website.

The CRTC has also said that by 1:30pm on Tuesday, 223,000 people has registered for the service. More than one million people tried to access their telephone hotline to register. Their site and hotline were activated at 12:01am on Tuesday.

Though the service was launched Tuesday, it won't take effect until 31 days after a person has registered.

Bankers around the world went into miser mode Tuesday after the defeat of a U.S. bailout plan, pushing an interest rate they charge each other for quick cash to a record level.

The key bank-to-bank lending rate, the London interbank offered rate, known as LIBOR, soared to 4.05 per cent from 3.88 per cent for three-month U.S. dollar loans and to 6.88 per cent for overnight dollar loans, the highest level since tracking began in 2001.

That is especially worrisome because LIBOR normally is just slightly above the U.S. Federal Reserve's target for the federal funds rate, an interbank lending rate. Now, it is more than four percentage points above the target rate of two per cent.

LIBOR, based on a daily survey of banks, is calculated by the British Bankers Association and announced at 11 a.m. London time every business day. It comes in 10 currencies and 15 terms, ranging from overnight to one year.

Financial contracts tied to LIBOR amount to more than $300 trillion US, or $45,000 US for every person in the world.

Starting this month, Canadians will be able to register their phone numbers on a national do-not-call list, but they may find telemarketing calls replaced by junk mail and spam.

There are also telemarketing exemptions, which includes:

• Registered charities seeking donations.
• Newspapers looking for subscriptions.
• Political parties and their candidates.
• Companies that have an existing business relationship with a consumer within the previous 18 months.
• Organizations directing calls and faxes to businesses.

Canadians who don't want to receive marketing calls from a company with whom they have a relationship can ask to be put on the firm's internal do-not-call list. This would mean the company cannot call you for up to three years, even though it has a technical exemption from the do-not-call list.

When the U.S. do-not-call registry came into effect, 30 per cent of nearly $2 billion spent on telemarketing moved into direct mailing and traditional media advertising.

The posted interest rates on five-year mortgages jumped more than a third of a percentage point to 7.2 per cent at major Canadian banks this week.

Some think the extra government borrowing and a growing supply of money will sow the seeds for higher inflation and interest rates.

The cost for Washington and Ottawa to borrow for 10 years has spiked in the past two weeks - but is still well less than 4 per cent a year.

Recent official inflation rates have not been much lower.

The yield on Canada's inflation-adjusted bonds has jumped to 2.06 percentage points, more than the consumer price index, and up from about 1.5 points in August.

But that's down from more than 4 per cent just a decade ago.

Gina Burgio, Mortgage Agent

VERICO Designer Mortgages Inc.

Toll Free: 1-877-34-LOAN-5 or 1-877-345-6265

Fax: 1-877-345-6256

Email: gina@ginaburgio.com