14 July 2008
News and Comments 7-14-08
Posted by Roy Bischoff under: What's News .
Miss Universe 08
8 Comments so far...
Cameron Says:
14 July 2008 at 5:56 am.
Not bad if you like 5′10″ bleached blond latinas.
Now the Fed is trying to get more of a role in our policy making.
US spells out Fannie-Freddie backstop plan
By JEANNINE AVERSA, AP Economics Writer 24 minutes ago
WASHINGTON - Scrambling to bolster eroding investor confidence, the Federal Reserve and the Treasury Department announced steps to brace slumping mortgage giants Fannie Mae and Freddie Mac.
The companies’ shares have plunged as losses from their mortgage holdings threatened their financial survival.
The plan, unveiled Sunday, is intended to signal the government is prepared to take all necessary steps to prevent the credit market troubles that erupted last year with losses from subprime mortgages from engulfing financial markets.
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies “should such lending prove necessary.” They would pay 2.25 percent for any borrowed funds — the same rate given to commercial banks and big Wall Street firms.
The Fed said this should help the companies’ ability to “promote the availability of home mortgage credit during a period of stress in financial markets.”
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies and make an equity investment in the companies — if needed.
“Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies,” Paulson said Sunday. “Their support for the housing market is particularly important as we work through the current housing correction.”
The Treasury’s plan also seeks a “consultative role” for the Fed in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed’s role would be to weigh in on setting capital requirements for the companies.
http://news.yahoo.com/s/ap/20080714/ap_on_bi_ge/mortgage_giants_crisis
Cameron Says:
14 July 2008 at 9:47 am.
We need to clean house, I just hope people don’t panic and make this worse than it needs to be.
Analysts say more U.S. banks will fail
by Louise Story
As home prices continue to decline and loan defaults mount, U.S. regulators are bracing for dozens of American banks to fail over the next year.
But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?
The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.
But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.
“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”
http://www.iht.com/articles/2008/07/14/business/14bank.php
Mac Says:
14 July 2008 at 9:58 am.
Looks I’m not the only one who is sick of politics lately. It’s sure slow around here. I think it is really hard for republicans to care a lot right now. Not only that, the economy is so scary that its no fun to keep up on it right now. I have to admit I am spending more time with the sports pages.
Sharon Anderson Says:
14 July 2008 at 10:18 am.
The Sunday Times of London reported this weekend that “President George W. Bush has told the Israeli government that he may be prepared to approve a future military strike on Iranian nuclear facilities if negotiations with Tehran break down.” The Times report quoted a senior Pentagon official as its source.
http://www.newsmax.com/headlines/bush_iran_attack/2008/07/13/112320.html?s=al&promo_code=65E3-1
Sharon Anderson Says:
14 July 2008 at 10:51 am.
Hey, Mac, when you are through with the sports pages, you might want to take an inventory of your food storage and figure out what else you need and how you will use what you have.
I have been showing my children and grandchildren how to grind wheat and teaching them how to make bread. Last week I made a cardboard box oven and used it and about a dozen pieces charcoal to bake five loaves of bread. This week I want to learn more about solar ovens/cookers.
Figuring out what to do if there is no electricity or gas nlot only helps us prepare physically, but it helps prepare our minds. If a crisis comes, we will be ready to deal with it, while others might have to take some time just to adjust mentally. We will not feel the world is coming to an end, if life changes and we have to do things differently.
My husband and I have also started walking almost every morning. Not only are we getting more physically fit, but I feel empowered knowing that we could walk any where we might want/need to go.
Jesse Says:
14 July 2008 at 11:52 am.
I love your enthusiasm Sharon. I wish I had your kind of motivation
Benjamin Says:
14 July 2008 at 1:46 pm.
This is getting a little crazy. Mac is right, it feels like a bury your head in the sand kind of summer. Sharon is even more right, we have to try to be proactive and get prepared.
U.S. Stocks Fall, Led by Financials; Washington Mutual Tumbles
July 14 (Bloomberg) — U.S. stocks fell, sending financial shares to their lowest level since October 1998, on heightened concern that bank failures will spread.
Washington Mutual Inc. posted its biggest drop ever and National City Corp. tumbled to a 24-year low after last week’s collapse of IndyMac Bancorp Inc. spurred speculation that regional banks are short of capital. The companies said they’ve seen no unusual depositor activity. Fannie Mae and Freddie Mac erased an earlier rally fueled by Treasury Secretary Henry Paulson’s plan to help rescue the largest U.S. mortgage lenders.
The declines pushed the Standard & Poor’s 500 Financials Index of 89 companies down 4.8 percent and the KBW Bank Index to a 7.1 percent tumble, its steepest drop since at 1997. The S&P 500 declined 11.22 points, or 0.9 percent, to 1,228.27 at 1:26 p.m. in New York. The Dow Jones Industrial Average slumped 64.32, or 0.6 percent, to 11,036.22. The Nasdaq Composite Index slipped 28.07, or 1.3 percent, to 2,211.01. Almost three stocks declined for each that rose on the New York Stock Exchange.
“The factors that affected IndyMac are not isolated; while they’re probably more severe, the pressures are evident in other financials,” said Alan Gayle, the Richmond, Virginia-based senior investment strategist at Ridgeworth Capital Management, which oversees about $74 billion. The Treasury’s plan for Fannie Mae and Freddie Mac is “encouraging, but it does suggest that credit availability is going to remain somewhat impaired and borrowing costs will likely be higher.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4CojjiiioCw&refer=worldwide
Benjamin Says:
14 July 2008 at 6:25 pm.
As banks prepare to reveal quarterly results, investors wonder which could be next to fail
NEW YORK (AP) — The bank executives who promised months ago that the worst of the financial crisis had passed are looking less and less credible to investors. And that could pose a problem as the industry releases what are expected to be dismal second-quarter earnings over the next few weeks.
Certainly, not all banks are going the way of IndyMac Corp., which was seized by the government on Friday. In fact, analysts expect several banks to come out on top as the industry consolidates in the coming years.
But for now, investors aren’t taking any chances. After IndyMac was seized — the seventh bank to fail since the credit crisis began last summer, and the second-largest bank to fail in the Federal Deposit Insurance Corp.’s 75-year history — stocks in nearly all the nation’s banks were clobbered Monday as the market bet that there will be more failures.
Stocks that were hit the hardest Monday included First Horizon National Corp., which operates in the Southern United States; Zions Bancorp, located in Utah and Idaho; and Washington Mutual Inc., the nation’s largest savings and loan. Stocks of bigger banks such as Wachovia Corp., Citigroup Inc., Bank of America Corp., and Wells Fargo & Co., also tumbled.
It’s going to take more than a few hopeful corporate outlooks and capital raising plans this earnings season for investors and consumers to feel at ease again. No matter how much cash a bank has on hand, if enough customers are worried about their deposits and withdraw them, that bank will be in trouble, said Adam Schneider, a principal with Deloitte Consulting LLP.
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