Treasury, Fed continue extensive bailout efforts

November 24, 2008

Monday November 24, 2:33 pm ET
By Christopher S. Rugaber, AP Business Writer

Nothing a few more billion can’t cure: Treasury, Fed take more steps to fight meltdown

WASHINGTON (AP) — The government’s latest effort to address the financial crisis is a $20 billion investment in banking giant Citigroup Inc. (C), along with an agreement to guarantee hundreds of billions of dollars in possible losses.

The step, announced late Sunday, is the latest in a long list of government moves to counter the financial meltdown:

–March 11: The Federal Reserve announces a rescue package to provide up to $200 billion in loans to banks and investment houses and let them put up risky mortgage-backed securities as collateral.

–March 16: The Fed provides a $29 billion loan to JPMorgan Chase & Co. (JPM) as part of its purchase of investment bank Bear Stearns (BSC).

–May 2: The Fed increases the size of its loans to banks and lets them put up less-secure collateral.

–July 11: Federal regulators seize Pasadena, Calif.-based IndyMac (IMB), costing the Federal Deposit Insurance Corp. billions to compensate deposit-holders.

–July 30: President Bush signs a housing bill including $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners.

–Sept. 7: The Treasury takes over mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE), putting them into a conservatorship and pledging up to $200 billion to back their assets.

–Sept. 16: The Fed injects $85 billion into the failing American International Group (AIG), one of the world’s largest insurance companies.

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November 18, 2008

Commentary: This is a great time to take a hard look at your financial adviser

By Bob Clark
Last update: 6:28 p.m. EST Nov. 18, 2008

SANTA FE, N.M. (MarketWatch) — A silver lining of the recent Wall Street/economic meltdown is a chance to assess your relationship with your financial adviser. Sure, you could do this anytime, but the best indication of whether you’re getting what you need is when you need it most.

Chances are this is probably one of those times. This is so true, in fact, that the best financial advisers get the majority of their new clients during times like these — folks who have become dissatisfied with their old advisers. In most of these cases, the need to make a change is obvious. To paraphrase an old saying: If you have to ask, you probably need a new adviser.

What if you’re just not sure? Most people like their adviser — it’s usually one of the main reasons why he or she is your adviser. So you’re inclined to give them the benefit of the doubt, especially during tough times when their business is undoubtedly hurting as much or more than your portfolio.

But we are talking about your financial future here. You really can’t afford to stick with any professional who isn’t getting the job done. This is one of those rare times when it really is all about you.

The problem that most people have with evaluating their financial adviser is they don’t have much experience with other advisers. How do they know whether their service is good or bad? Compared to what? Sure, if you’re really unhappy, the decision is clear. But what if you’re just mildly annoyed?

One excellent independent adviser I know won’t even take new clients who haven’t had at least a couple of other advisers first — he doesn’t feel they can fully appreciate his level of service and expertise if they don’t have other experiences to compare.

Ultimately, only you can make the call whether it’s time to look for another financial adviser. But it can help to get some sense of what good advisers do. For some perspective, here are some important issues in an adviser/client relationship, together with how they best handle them:

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Statements from the Federal Reserve

October 29, 2008

Release Date: October 29, 2008

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

Release Date: October 29, 2008

For release at 3:30 p.m. EDT

Today, the Federal Reserve, the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore are announcing the establishment of temporary reciprocal currency arrangements (swap lines). These facilities, like those already established with other central banks, are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well managed economies.

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Bailout becomes buy-in as feds move into banking

October 14, 2008

Tuesday October 14, 9:43 pm ET
By Jeannine Aversa, AP Economics Writer

Government moves into banking — to the tune of $250 billion — as the bailout becomes a buy-in

WASHINGTON (AP) — Big banks started falling in line Tuesday behind a rejiggered bailout plan that will have the government forking over as much as $250 billion in exchange for partial ownership — putting the world’s bastion of capitalism and free markets squarely in the banking business.

Some early signs were hopeful for the latest in a flurry of radical efforts to save the nation’s financial system: Credit was a bit easier to come by. And stocks were down but not alarmingly so after Monday’s stratospheric leap.

The new plan, President Bush declared, is “not intended to take over the free market but to preserve it.”

It’s all about cash and confidence and convincing banks to lend money more freely again. Those are all critical ingredients to getting financial markets to function more normally and reviving the economy.

The big question: Will it work?

There was a mix of hope and skepticism on that front. Unprecedented steps recently taken — including hefty interest rate reductions by the Federal Reserve and other major central banks in a coordinated assault just last week — have failed to break through the credit clog and the panicky mind-set gripping investors on Wall Street and around the globe.

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Europe puts more than US on the line for banks

October 13, 2008

Monday October 13, 4:48 pm ET
By Angela Charlton and Emma Vandore, Associated Press Writers

Europe puts $2.3 trillion, far more than US, on the line for banks and stocks soar

PARIS (AP) — Europe put $2.3 trillion on the line Monday to protect the continent’s banks, a figure that dwarfs the Bush administration’s $700 billion rescue program, in its most unified response yet to the global financial crisis after a stumbling start.

The pledges by Britain and the six countries that use the euro helped soothe stock markets, along with a promise by top central banks to provide unlimited short term dollar credits.

The action by Germany, France, the Netherlands, Spain, Portugal, Austria and Britain came after weeks in which the governments often acted at cross purposes and sniped at each other — a piecemeal approach that failed to stop steep and frightening slides on financial markets.

“The time of each one for itself is fortunately over,” French President Nicolas Sarkozy said, following a Cabinet meeting that approved France’s spending in the framework of the plan.

“United Europe has pledged more than the United States,” added Sarkozy, who has taken a lead in getting the cooperation.

The pledged money will not go into a collective pot. Instead, governments were deciding individually how much to commit to supporting their own banks under broad guidelines agreed at a summit Sunday. The sums are considered a maximum, and might not all be spent if the financial crisis eases.

About $341 billion of the European pledges was earmarked to be spent on recapitalizing banks by buying stakes.

The pledges put a price tag on the package agreed to Sunday by the 15 countries that use the euro. They agreed to individually guarantee bank refinancing until the end of next year, rescue important failing banks through emergency cash injections, and take other swift measures to encourage banks to lend to each other again.

Stock markets rebounded Monday after the European decision and other weekend efforts to find solutions to the financial crisis, which has crushed major banks in both the U.S. and Europe and battered stock exchanges worldwide.

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Historic bailout bill passes Congress; Bush signs

October 3, 2008

Friday October 3, 6:02 pm ET
By Julie Hirschfeld Davis, Associated Press Writer

Congress enacts historic bailout legislation for financial industry; Bush quickly signs it

WASHINGTON (AP) — With the economy on the brink of meltdown and elections looming, a reluctant Congress abruptly reversed course and approved a historic $700 billion government bailout of the battered financial industry on Friday. President Bush swiftly signed it.

The 263-171 vote capped two weeks of tumult in Congress and on Wall Street, punctuated by urgent warnings from Bush that the country confronted the gravest economic disaster since the Great Depression if lawmakers failed to act.

“We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Bush said shortly after the plan cleared Congress, although he conceded, “our economy continues to face serious challenges.”

His somber warning was underscored on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy, and the Dow Jones industrials dropped 157 points. The Labor Department said earlier in the day that employers had slashed 159,000 jobs in September, the largest cut in five years.

The historic vote was a striking turnaround from the measure’s spectacular failure earlier in the week, which had triggered a massive stock sell-off and prompted jittery lawmakers — fearing a crushing economic contagion that was spreading to their constituents — to reconsider.

“Let’s not kid ourselves: We’re in the midst of a recession. It’s going to be a rough ride, but it will be a whole lot rougher ride” without the rescue plan, said Rep. John A. Boehner, R-Ohio, the minority leader, as he prepared to cast his vote for the most sweeping federal intervention in markets in decades.

Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.

The bailout, which gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from tottering financial institutions, is designed to ease a credit crunch that began on Wall Street but is engulfing businesses around the nation.

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Bailout in chaos, feds seize WaMu

September 26, 2008

Fri Sep 26, 2008 3:07am EDT

By Tom Ferraro and Richard Cowan

WASHINGTON (Reuters) – A rescue for the U.S. financial system unraveled on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and Washington Mutual was closed by U.S. authorities and its assets sold in America’s biggest ever bank failure.

As negotiations over an unprecedented $700 billion bailout to restore credit markets degenerated into chaos, the largest U.S. savings and loan bank was taken over by authorities and its deposits auctioned off. U.S. stock futures fell by more than 1 percent.

The third-largest U.S. bank JPMorgan Chase & Co (JPM) said it bought the deposits of Washington Mutual Inc (WM), which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu’s depositors and customers. JPMorgan said it would be business as usual on Friday morning.

Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages.

Earlier on Thursday, U.S. lawmakers had appeared close to a final agreement on the bailout, lifting world stock markets and sending the dollar higher. But things spun off course during an emergency White House meeting between Congressional leaders with U.S. President George W. Bush.

In advance of that meeting, which included the two men battling to succeed him, Democrat Barack Obama and McCain, a compromise bipartisan deal seemed imminent.

After the session, Congressional leaders said an agreement could take until the weekend or longer.

Republican U.S. Sen. Richard Shelby bluntly told reporters, “I don’t believe we have an agreement.” He later said the deal was in “limbo.”

A group of conservative Republican lawmakers proposed an alternative mortgage insurance plan, eschewing the Bush administration’s Wall Street bailout just weeks before the November 4 election as many lawmakers try to hold on to their seats.

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