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Someone wrote to me and said that, “I’m hearing that Treasury is about to announce its support for another vital industry through a new vehicle called TART.”  Treasury prices are slightly higher this morning ahead of today’s testimony on TARP by Fed Chairman Bernanke, Treasury Secretary Paulson and FDIC Chairman Bair. They will speak to the House Financial Services Committee on the Troubled Asset Relief Program (TARP).  Originally sold to legislators and the public as a way to purchase bad debts from investors’ balance sheets, it has been “redirected” toward resuscitating consumer lending. This follows yesterday’s Industrial Production number, which rose 1.3%, and yet another drop in the stock market. It is hard to say if this morning’s improvement is due to the hearing, or due to stocks selling off again overnight: people have to put their money somewhere! The Producer Price Index for October helped – it was -2.8%, helped by oil which is at a 22 month low.

There is certainly a lot going on in today’s financial markets: HP reported stronger-than-expected earnings, Mavericks owner Mark Cuban is charged with insider trading, Jerry Yang is stepping down as Yahoo’s CEO, Citi is not cutting 50,000 jobs – it is cutting 53,000. And Heather Locklear was charged with “misdemeanor driving under the influence of legally prescribed drugs” after her arrest two months ago in Santa Barbara County. The yield on the 10-yr has dropped to 3.61%, but mortgage prices have barely budged, not helping anyone hedging strictly with Treasuries.

Don’t be the last one on the block to be underwater on your house! The states with the fewest “underwater” borrowers (where one owes more than their house is worth) are Hawaii (5.6%), New York, Pennsylvania, and Montana. It is no surprise that, according to a study done by CoreLogic, the bulk of negative equity mortgages are in six states: Nevada, Michigan, Florida, Arizona, California and Georgia. And originators wonder why investors aren’t paying higher servicing released premiums for those states…

There are 12 regional home-loan banks, all of them chartered by Congress in 1932 to help the thrift institutions during the Depression. They are cooperatives owned by more than 8,000 commercial banks, thrifts, credit unions and insurers, and have enjoyed low borrowing costs since there is an assumption that the U.S. government would rescue the home-loan banks in a crisis. But they have been caught up in the credit crisis, and investors don’t seem interested in their bonds. Federal Home Loan Banks have been forced to focus mainly on issues of discount notes and other short-term borrowings. Two of them recently reported earnings: The Federal Home Loan Bank of Atlanta reported a third-quarter loss of $46.1 million, compared with earnings of $133.1 million a year before, and the Federal Home Loan Bank of Boston had unrealized losses on its private mortgage-backed securities of $1.3 billion in the third quarter. The FHLB said in a recently regulatory filing, however, that the bank’s management currently does not believe a write-down is warranted on those investments. Boston holds about $3.8 billion in securities backed by Alt-A mortgages.

A guy goes into a bar, orders twelve shots and starts drinking them as fast as he can.

The bartender says, "Dang, why are you drinking so fast?"

The guy says, "You would be drinking fast if you had what I had."

The bartender says, "What do you have?"

The guy says, "Seventy-five cents."