Results tagged “federalreserve”

Federal Reserve Chairmand Ben Bernanke said that the recession is probably over but had a caveat: "From a technical perspective, the recession is very likely over at this point. It's still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was." He added in his remarks to the Brookings Institute, "Unfortunately, unemployment will be slow to come down. It will come down but it may take some time. Obviously, that's a very serious concern." Unemployment was 9.7% last month; it's expected to hit 10% by the end of the year.

President Obama will re-appoint Federal Reserve chairman Ben Bernanke, the Wall Street Journal reports, "opting for continuity in U.S. economic policy despite criticism in Congress of the low-key central banker's frantic efforts to rescue the financial system." White House chief of staff Rahm Emanuel said, "The president thinks that Ben’s done a great job as Fed chairman, that he has helped the economy through one of the worst experiences since the Great Depression and that he has essentially been pulling the economy back from the brink of what would have been the second Great Depression."

With the opening day just moments away, it's time to look at the new Yankee Stadium's striking resemblance to another building. Yes, the new House That Jeter (And Lots of Money, Much In Tax-Free Bonds) Built looks a lot like the Federal Reserve's headquarters in D.C.—the Eccles building was designed in 1935, by Paul Philippe Cret (it was considered a "a daringly modernist interpretation of the Beaux-Arts style and has become a noted part of American architectural history," according to the Fed).

Yesterday, it was revealed that Treasury nominee Timothy Geithner didn't pay $34,000 in taxes between 2001 and 2004. Geithner, according to the NY Times, "huddled privately with members of the Senate Finance Committee on Tuesday afternoon to explain that he had now paid the back taxes and interest" (though he didn't pay most of it until last November). Now his confirmation hearings have been postponed.

Stocks soared after the Federal Reserve cut interest rates to the lowest level ever: 0% to 0.25%. The Dow closed just under 9,000 points, at 8,924 (gaining 350 points/4.3%) while the Nasdaq was up 5.4% and S&P 500 rose 4.5%. The NY Times points out the Fed's move "bring[s] the United States to the zero-rate policies that Japan used for six years in its own fight against deflation." The Fed said it would use all its "available tools" to continue to help the economy (Bloomberg News notes, "Nine rate cuts in the prior 14 months and $1.4 trillion in emergency lending failed to reverse the economic downturn."). And former St. Louis Fed president William Poole told Bloomberg TV, "The Fed is sending a message that it will print money to an unlimited extent until it starts to see the economy expanding."

There's a load of bad news: Consumer prices have dropped 1.7% last month, housing starts have dropped 18.9% ("the lowest since the government started compiling statistics in 1959"), Best Buy is offering workers voluntary severance to most of its corporate workers... Which means the Federal Reserve is poised to cut interest rates again. It's believed the Fed will cut 50 basis points from the base rate, which would then be 0.5%. CNBC reports, "Market watchers are hoping the Fed will signal quantitative easing measures, which essentially involves printing more money, to restore growth and signal an end to the ongoing recession."

Stock futures are up after the Federal Reserve announced two big plans in hopes of unfreezing consumer credit. One is a $600 billion program to buy mortgage-related debt, of which the Fed says, "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally." The other is a $200 billion effort to back consumer loans, like student, auto, and credit card loans; the Fed says it stepped in because "Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity."

The Federal Reserve cut the key rate by half a percent, to 1%; the Fed noted, "The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures... 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." The last time the interest rate was 1% was, according to CNBC, the "12-month period from June 2003 to June 2004." The NY Times summed up: "While Fed policy makers now have less room to maneuver on interest rates if the economy deteriorates further, investors had been hoping for the relatively aggressive cut as a sign of vigilance among American central bankers seeking to restore the free flow of credit." Right now, the stock market is relatively unchanged.

In spite of the Federal Reserve cutting the interest rate to 1.5%, stocks ended down after a volatile day. The Dow fell 189 points (2%) to end at 9258 points; the Nasdaq was down 0.83% and S&P 500 was down 1.13%.

The Federal Reserve announced that it was cutting the interest rate to 1.5% from 2%: "The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures."

Federal Reserve Chairman discussed the current economic and financial condition (speech transcript), outlining what happened with Fannie Mae, Freddie Mac, Lehman Brothers and AIG--and what the Fed is doing--and said, "Overall, the combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased."

After global stock markets fell--and the U.S.'s Dow Jones Industrial Average fell below 10,000 points for the first time since 2004-- the Federal Reserve announced it would create a new facility to buy the short-term debt (aka commercial paper) various companies hold. The "Commercial Paper Funding Facility" will "purchase three-month unsecured and asset-backed commercial paper" and "this facility should encourage investors to once again engage in term lending in the commercial paper market"--which is worth $1.6 trillion. Of course, it's unclear how much the Fed will ultimately buy.

The Dow Jones Industrial Average has fallen over 300 points. Per CNBC, "The CBOE Volatility Index, widely viewed as the best gauge of fear in the market, shot up 8 percent to about 38." This comes in spite of news that Citigroup will acquire Wachovia and that lawmakers have an agreement on the bailout plan. The NY Times reports that Federal Reserve "announced a coordinated move with nine other central banks to vastly increase the amount of liquidity in the world financial system." Update, 4:30 p.m.: The stock market had its worst day in two decades, with the House's failure to pass the bailout plan: The Dow fell 7%while the S&P 500 fell by almost 9%.

Sure, as the NY Times reports, "Bailout Talks Advance" between Congress and the Bush administration over the $700 billion financial institutions bailout. But the two sides have differences of opinions on things like executive pay, reducing "mortgage payments of borrowers facing foreclosure," and whether the taxpayers should get a stake in companies the U.S. bails out. The Wall Street Journal also details some of the issues with the plan, from both Republicans and Democrats.

The government took more steps to, hopefully, prevent more financial chaos in the financial markets. The NY Times characterizes the moves as "what could become the biggest bailout in United States history":

While details remain to be worked out, the plan is likely to authorize the government to buy distressed mortgages at deep discounts from banks and other institutions. The proposal could result in the most direct commitment of taxpayer funds so far in the financial crisis that Fed and Treasury officials say is the worst they have ever seen.

Thanks to news that the Federal Reserve was setting up, per CNBC, "a government facility to take on bad debts from financial institutions, preventing a worsening of the global credit crisis," the Dow Jones ended the day on the upswing.

Wall Street is poised for a rally as central banks around the world--from the U.S.'s Federal Reserve to the European Central Bank and Bank of Japan (and others)--put more cash into the markets. Per the NY Times:

The Fed said in a statement that it had authorized a $180 billion expansion of its temporary reciprocal currency arrangements, known as swap lines, to allow banks to borrow more dollars in markets at a lower rates...

Continue reading "Worldwide Central Banks Pump Cash into Markets"

$85 billion may be able to give AIG a second chance, but it's not enough to ease investors' worries. Stocks fell sharply, the Dow plummeting 200 points when the market open and then 338 points at one point.

Last night, the federal government gave insurer AIG a new lease on life with an $85 billion loan--in exchange for a 79.9% stake in the company. The NY Times reports, "The decision, only two weeks after the Treasury took over the federally chartered mortgage finance companies Fannie Mae and Freddie Mac, is the most radical intervention in private business in the central bank’s history." As the Wall Street Journal noted, the Fed decided not to bail out Lehman Brothers, but "this time, the government decided AIG truly was too big to fail."

After one of the worst days ever on Wall Street, stock market rallied by the end of the day, with the Dow Jones industrial average gaining 141.51 points today. That increase was helped by the belief the Federal Reserve will rescue AIG and news that Barclays would buy the Lehman's broker business.

CNBC reports "Under pressure from New York Governor David Paterson and AIG policyholders, the Federal Reserve is considering reversing its decision on Monday and providing some kind of financial aid to the troubled insurer." However, if there's no financing deal, the company could file for bankruptcy tomorrow. The Wall Street Journal has a Q&A about AIG, explaining why the company is in crisis and what the effects might be.

After the Dow Jones industrial average fell 504 points--the most since September 17, 2001--yesterday upon news of Lehman Brothers's bankruptcy, the sale of Merrill Lynch, and A.I.G.'s troubles, Wall Street is in for another difficult day. Asian stock markets were down sharply: Tokyo's Nikkei was down 5%, Seoul's Kospi was down 6.1% and Hong Kong's Hang Seng fell 5.9%.

The financial industry's worst weekend ended on these notes: Lehman Brothers filed for bankruptcy, after being unable to find a buyer; Bank of America, previously interested in Lehman Brothers (but didn't want to buy it with government protection) decided to buy Merrill Lynch for $50 billion; and it's worried AIG and Washington Mutual will fall next. The financial markets are expected to be in tumultuous territory, and a banking analyst told USA Today, "We are in a hysteria."

The Federal Reserve lowered the federal funds rate by 25 basis points to 2%, giving this explanation:

Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters...

Continue reading "Federal Reserve Cuts Interest Rate to 2%"

New York Federal Reserve Bank President Timothy Geither told lawmakers today, "What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises," as Federal Reserve officials defended why they helped JP Morgan rescue Bear Stearns from collapse. Fed chairman Ben Bernanke told the Senate Banking Committee, "Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain."

With JP Morgan now offering $1.2 billion for troubled Bear Stearns, it's expected the deal will close on April 8. JP Morgan needed 50% of Bear Stearns shareholder approval, and the new $10/share price would give them 45% yes votes (5% is expected from bondholders); an analyst told USA Today the revised deal "virtually guarantees a yes vote at $10 per share, vs. an almost certain no vote at $2."

The NY Times reports "JPMorgan Chase was in talks on Sunday night for a deal that would quintuple its offer for Bear Stearns...in an effort to pacify angry Bear shareholders." Over a week ago, JP Morgan had agreed to pay $2/share for Bear Stearns stock, for a total payout of $236 million, but the new talks would raise the price to $10/share, making it a billion-dollar deal.

This is going to be a tough morning on Wall Street. World financial markets fell and are falling after yesterday's news that JP Morgan had purchased Bear Stearns for $2 a share, a grand price of $236 million for a company valued at $3.54 billion on Friday. Tokyo's Nikkei 225 index fell 3.7%, and Hong Kong's Hang Seng fell 5.25%. Currnetly, London's FTSE 100 has fallen 2.2%, France's CAC 40 has fallen 2.5% and the German DAX has fallen 3.3%.

According to The Federal Reserve Bank of New York, the 11233 zip code that encompasses Bedford-Stuyvesant and Crown Heights had the highest foreclosure rates for subprime mortgages in the entire nation in October. More than one in four people, or 25.2%, with subprime loans in the zip code lost their homes to foreclosure. That's almost four times the national average of 6.9%.