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Investors support bailout, wish for uptick

Two thirds of investors in a survey think the US government's bailout plan is the best solution to the current economic crisis.

In an overnight survey of about 3,200 investment professionals, the CFA Institute found the majority of investors felt the government's massive $700 billion bailout to save the financial system was on the right track.

In addition to supporting the overall plan, 60% of the investors polled said they would support the $700 billion liquidity pool to buy illiquid subprime securities and derivatives using taxpayer funds.

Sixty-three percent of the investors polled also said they supported the government's plan to guarantee $3.4 trillion of US money market deposits.

But they were hesitant about other actions taken by regulators.

For instance, the survey found the US Securities and Exchange Commission's temporary ban on the short selling of financial shares was not supported by the majority of investors.

Fifty-five percent of the investors polled were against the short selling ban overall and 63% said they would have preferred the SEC bring back the “uptick rule” rather than ban short selling.

The “uptick rule,” which was in effect from 1938 to 2007, required short sellers to sell above the last price paid for a stock, or at the price of the stock's last trade if it was higher than the previous price.

And despite calls that mark-to-market accounting be suspended, 73% of the investors polled said financial firms should still be required to write-down the value of derivatives to current market values.

US lawmakers appeared close to a final agreement on the rescue plan on Thursday, but investors did feel the plan should be executed with certain limitations.

Three-quarters of the investors polled, however, agreed with the focus by legislators on executive compensation, saying the $700 billion bailout package should include limits or oversight on executive compensation for the firms that access it.

Also, 74% of the investors felt the government should pay fair value for the illiquid subprime, mortgage and derivatives securities it plans to purchase rather than any other value. (Reuters)