OurHouse.com was replaced by Capital One, a major credit card issuer, in time for the Michigan-Auburn matchup on New Year's Day, with an option for 2002.
To make it even more galling for the investors, the brokerage firms that sold the paper to them get additional payments from the issuer every time there is a failed auction.
What makes preferred stocks odd ducks is that they can be "called" — redeemed by the issuer in times of falling rates (just like bonds) — can be converted into common shares and can shift from fixed to adjustable dividends.
Like other central banks, it has been quietly taking on fewer bonds from the American Treasury and more from other issuers for some time anyway.
The cost of two filings is not a big problem for senior issuers, but the time it could take to get full S.E.C. approval is a concern.
Access and Barclaycard were the sole issuers at that time and they have agreed to accept liability on pre-1977 cards but only up to the amount of the transaction.
At the same time, issuers of premium credit cards are engaged in fierce competition, with airlines as partners, for customers who pay hefty annual fees for perks like priority boarding, free checked bags, bonus frequent flier miles — and airline lounge access.
Given the hysterical business headlines of the time, issuers also saw a hot IPO as a "branding event," but any benefit from such branding was extremely short-lived, Hambrecht says.
As borrowers become "distressed," the credit card issuer has more time to pile on interest charges and fees until the client actually goes bankrupt.
Because most defaults historically have occurred in unrated securities of one-time issuers — mostly in the housing and health care sectors — one way to protect a portfolio is to focus on investment-grade bonds of well-established issuers.
