Archive for the ‘financial crisis’ Category

Fighting the Financial Crisis, One Challenge at a Time

November 18, 2008

WE are going through a financial crisis more severe and unpredictable than any in our lifetimes. We have seen the failures, or the equivalent of failures, of Bear Stearns, IndyMac, Lehman Brothers, Washington Mutual, Wachovia, Fannie Mae, Freddie Mac and the American International Group. Each of these failures would be tremendously consequential in its own right. But we faced them in succession, as our financial system seized up and severely damaged the economy.

By Henry M. Paulson, Jr.
Treasury Secretary
Op-Ed, The New York Times

Treasury Secretary Henry Paulson addresses a gathering of corporate ...
Treasury Secretary Henry Paulson addresses a gathering of corporate CEOs, Monday, Nov. 17, 2008. (AP Photo/J. Scott Applewhite)

By September, the government faced a systemwide crisis. After months of making the most of the authority we already had, we asked Congress for a comprehensive rescue package so we could stabilize our financial system and minimize further damage to our economy.

By the time the legislation had passed on Oct. 3, the global market crisis was so broad and so severe that we needed to move quickly and take powerful steps to stabilize our financial system and to get credit flowing again. Our initial intent was to strengthen the banking system by purchasing illiquid mortgages and mortgage-related securities. But the severity and magnitude of the situation had worsened to such an extent that an asset purchase program would not be effective enough, quickly enough. Therefore, exercising the authority granted by Congress in this legislation, we quickly deployed a $250 billion capital injection program, fully anticipating we would follow that with a program for buying troubled assets.

There is no playbook for responding to turmoil we have never faced. We adjusted our strategy to reflect the facts of a severe market crisis, always keeping focused on our goal: to stabilize a financial system that is integral to the everyday lives of all Americans. By mid-October, our actions, in combination with the Federal Deposit Insurance Corporation’s guarantee of certain debt issued by financial institutions, helped us to accomplish the first major priority, which was to immediately stabilize the financial system.

Read the rest:
http://www.nytimes.com/2008/11/18/opinion
/18paulson.html?_r=1

Advertisements

A bad day for the GOP on politics, bailout plan

September 26, 2008

By CHARLES BABINGTON, Associated Press Writer

WASHINGTON – Even for a party whose president suffers dismal approval ratings, whose legislative wing lost control of Congress and whose presidential nominee trails in the polls, it was a remarkably bad day for Republicans.

Read the rest:
http://news.yahoo.com/s/ap/20080926/ap_on_bi_ge/financial_
meltdown;_ylt=Akc_DQGqX3yqvh_ycjQKvd6s0NUE

White House Financial Crisis Meeting “About the Wildest Ever Held There”

September 26, 2008

An insider characterized the Thursday, September 25, 2008, White House meeting on the financial crisis between the President and key Congressional leaders including Barack Obama and john Mccain as “about the wildest meeting ever held there….”

From: Politico

A high-profile White House meeting on Treasury’s $700 billion Wall Street rescue plan ended on a sour, contentious note Thursday after animated exchanges among lawmakers laced with presidential politics just weeks before the November elections.

Treasury Secretary Henry Paulson came up to the Capitol hours later to revive talks, but House Republicans did not participate, and Democrats warned that the whole process could collapse unless President Bush gets them to come to the table.

“Unless this fourth leg shows up at some point, this could fall off very quickly,” said Senate Banking Committee Chairman Christopher Dodd (D-Conn.).

At the White House, in fact, House Minority Leader John Boehner had bluntly warned about the lack of Republican support for the massive government intervention: “I can’t invent votes,” Boehner said. But House Financial Services Committee Chairman Barney Frank (D-Mass.) angrily accused the minority of trying to undercut Paulson by crafting a late-breaking alternative proposal—with the tacit support, Frank said, of Republican presidential candidate John McCain.

Read the rest:
http://www.politico.com/news/stories/0908/13918.html

Gridlock On U.S. Financial Crisis Rattles Asian Markets

September 26, 2008

By Danny McCord

HONG KONG (AFP) – Asian stock markets fell Friday as political wrangling held up a 700-billion-dollar bailout package for the US financial system despite earlier hopes that a deal was near.

Talks over the rescue proposal were gridlocked Thursday as lawmakers were at loggerheads over the way forward, with Democrats accusing the Republicans of dragging their feet.

Tokyo’s Nikkei closed down 0.94 percent, Hong Kong was off 2.0 percent at the break, Sydney ended the day 0.5 percent down and Taiwan shares shed 2.2 percent.

Some stocks had risen earlier, taking a cue from Wall Street, which closed 1.82 percent up on prospects that an agreement could be reached.

US Democrats said Republican White House contender John McCain had sabotaged the rescue package, which they said had largely been agreed upon.

“John McCain did nothing to help, he only hurt the process,” Senate Majority Leader Harry Reid told a joint news conference with Senate banking committee chairman Christopher Dodd.

Under the proposal the government would buy 700 billion dollars of toxic mortgage-related assets at the heart of the global credit crisis. The move would be the biggest government bailout since the 1930s Great Depression.

Read the rest:
http://uk.news.yahoo.com/afp/20080926/
tbs-stocks-world-65f2640.html

***************
Bloomberg
.
Woori Finance fell 4.5pc on concern the credit crisis is deepening after Republicans splintered over the proposed $700bn bailout and WaMu was seized by regulators. Mitsui OSK Lines, Japan’s largest operator of dry-bulk ships, lost 3.8 pc.

“The assumption is that the bailout will take longer than expected, which is negative,” said Tsuyoshi Shimizu, a senior fund manager at Mizuho Asset Management Co., which oversees $26bn.

“As with Washington Mutual, the longer it takes to pass something, the more victims we’re going to see.”

The MSCI Asia Pacific Index fell 1.1pc to 113.52 by lunchtime in Tokyo, erasing an earlier 0.9pc advance. The index has declined 0.6pc this week, a fourth weekly retreat.

Japan’s Nikkei 225 Stock Average lost 1.4pc to 11,843.98. New Zealand’s NZX 50 Index dropped 0.9pc after government data showed the economy contracted in the second quarter, driving the nation into its first recession in a decade.

Standard & Poor’s 500 Index futures slid 1.7pc after a group of House Republicans led by Eric Cantor of Virginia said they wouldn’t back a plan based on the approach outlined by Treasury Secretary Henry Paulson and backed by President George W. Bush and Democratic leaders.

Read the rest:
http://www.telegraph.co.uk/finance/markets/3083761
/Asian-shares-fall-as-doubt-cast-on-US-bailout.html

McCain Leaps Into a Thicket

September 26, 2008

By ADAM NAGOURNEY and ELISABETH BUMILLER
The New York Times

Senator John McCain had intended to ride back into Washington on Thursday as a leader who had put aside presidential politics to help broker a solution to the financial crisis. Instead he found himself in the midst of a remarkable partisan showdown, lacking a clear public message for how to bring it to an end.

At the bipartisan White House meeting that Mr. McCain had called for a day earlier, he sat silently for more than 40 minutes, more observer than leader, and then offered only a vague sense of where he stood, said people in the meeting.

In subsequent television interviews, Mr. McCain suggested that he saw the bipartisan plan that came apart at the White House meeting as the proper basis for an eventual agreement, but he did not tip his hand as to whether he would give any support to the alternative put on the table by angry House Republicans, with whom he had met before going to the White House.

He said he was hopeful that a deal could be struck quickly and that he could then show up for his scheduled debate on Friday night against his Democratic rival in the presidential race, Senator Barack Obama. But there was no evidence that he was playing a major role in the frantic efforts on Capitol Hill to put a deal back together again.

On the second floor of the Capitol on Thursday night, Senator Lindsey Graham, Republican of South Carolina and one of Mr. McCain’s closest confidants, complained to a throng of reporters that Democrats were using Mr. McCain as a scapegoat for the failure of the rescue package. But Mr. Graham was met with a barrage of questions on why Mr. McCain never explicitly said he favored the bailout proposal.

The situation was evolving so rapidly that it was all but impossible to judge the political implications; with the government under intense pressure to avoid another breach in confidence in the global financial markets, it was possible that a deal could be struck without further reshaping the campaign and that Mr. McCain could still be able to claim a role in a positive outcome.

Read the rest:
http://www.nytimes.com/2008/09/26/us/politics/
26campaign.html?_r=1&hp&oref=slogin

White House Meeting Fails To Yield Financial Crisis Settlement

September 26, 2008

By Paul Kane and Lori Montgomery
The Washington Post

A renegade bloc of Republicans moved to reshape a massive bailout of the U.S. financial system yesterday, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the “fundamentals” of a deal.

At a meeting at the White House that included President Bush, top lawmakers and both presidential candidates, House Minority Leader John A. Boehner (R-Ohio) floated a new plan for addressing the crisis that has hobbled global markets.

Democrats accused Boehner of acting on behalf of GOP presidential candidate Sen. John McCain (Ariz.) in trying to disrupt a developing consensus. The new proposal also displeased White House officials, including Treasury Secretary Henry M. Paulson Jr., who chased after Democrats leaving the meeting and — half-jokingly — dropped to one knee and pleaded with them not to “blow up” the $700 billion deal, according to people present at the meeting.

Before the meeting broke up, President Bush had issued a stark warning about the impact on the nation’s economy if the measure did not pass. “If money isn’t loosened up, this sucker could go down,” Bush said, according to one person in the room.

Under the alternative Republican plan, the government would set up an expanded insurance system, financed by the banks, that would rescue individual home mortgages. The government would not have to buy up the toxic mortgage-backed assets that are weighing down financial institutions.

Paulson and Federal Reserve Chairman Ben S. Bernanke had already considered and discarded a similar idea, White House spokesman Tony Fratto said. “I’m not convinced it does what needs to be done for the banking system, and neither is Secretary Paulson or Fed Chairman Bernanke,” he said.

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/09/25
/AR2008092500268.html?hpid=topnews

Amid GOP revolt, bailout deal breaks down

September 26, 2008

House Republicans walked out of the over night negotiations….

By JENNIFER LOVEN and JULIE HIRSCHFELD DAVIS, Associated Press Writers

WASHINGTON – A Republican rebellion stalled government efforts Thursday to avoid economic meltdown, a chaotic turnaround that disrupted the choreography of an extraordinary White House meeting meant to show joint resolve from the president, the political parties and the presidential candidates. Instead, the summit broke up so bitterly that Treasury Secretary Henry Paulson got on one knee before Democratic leaders in a theatrical attempt to salvage talks.

After six days of bare-knuckled negotiations on the $700 billion financial industry bailout proposed by the Bush administration, with Wall Street tottering and presidential politics intruding six weeks before the election, there was far more confusion than clarity.

An apparent breakthrough was announced with fanfare at midday by key members of Congress from both parties — but not top leaders. Wall Street cautiously showed its pleasure, with the Dow Jones industrials closing 196 points higher.

But the good news and the market close were followed by a rash of less-positive developments.

Washington Mutual Inc. was seized by the Federal Deposit Insurance Corp. in the largest failure ever of a U.S. bank, after which JPMorgan Chase & Co. Inc. came to its rescue by buying the thrift’s banking assets.

And the late-afternoon White House gathering of President Bush, presidential contenders John McCain and Barack Obama, and top congressional leaders turned into what one person in the room described as “a full-throated discussion” and McCain’s campaign called “a contentious shouting match.”

Conservatives were in revolt over the astonishing price tag of the proposal and the hand of government that it would place on private markets.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the White House meeting to say the announced agreement “is, obviously, no agreement.” McCain’s campaign issued a statement saying, “the plan that has been put forth by the administration does not enjoy the confidence of the American people as it will not protect the taxpayers and will sacrifice Main Street in favor of Wall Street.” The White House, too, acknowledged there was no deal, only progress.

Read the rest:
http://news.yahoo.com/s/ap/20080926/ap_on_bi_ge/financial_
meltdown;_ylt=ArSQTcpSrgq0OpaubiFNOGKs0NUE