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Log inInfusion to banks kindles new hope
Infusion to banks kindles new hope
by Outspoken on Wed Oct 15, 2008 4:33 am
Infusion to banks kindles new hope
The U.S. is pouring up to $250 billion into banks and is counting on them to ease the credit crunch.
By JEANNINE AVERSA
The Associated Press
WASHINGTON — Big banks started falling in line Tuesday behind a reworked bailout plan that will have the government forking over as much as $250 billion in exchange for partial ownership – putting the government of 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 logjam and the panicky mind-set gripping investors on Wall Street and around the globe.
The Dow Jones industrials declined 76 points Tuesday after piling up their biggest point gain ever Monday on news of Europe's rescue plan and in anticipation of the new U.S. measures.
It was the first time in nine sessions that the Dow didn't close with triple-digit losses or gains, although it did swing in a 700-point range.
Big advances by many bank stocks helped offset some of the declines in the Dow and the Standard & Poor's 500 index, giving them a better showing for the day than the Nasdaq composite index, which fell more than 3 percent.
Profit-taking set in after the Dow surged more than 400 points at the opening. Wall Street is expected to see jittery trading in the weeks and perhaps months ahead because of worries about the economy.
"We don't know if the bottom is in," said Lincoln Anderson, chief investment officer and chief economist at LPL Financial, referring to the market's advance Monday after huge losses last week. "We certainly expect heightened volatility for a fair amount of time while we sort out just exactly what's going on."
Initially, the U.S. government will pour $125 billion into nine major banks with the hope that they will use the money to rebuild their reserves and to increase lending to consumers and businesses. Another $125 billion will be made available this year to other banks – if they need it – for cash infusions.
http://pressherald.mainetoday.com/story.php?id=216105&ac=PHnws
The U.S. is pouring up to $250 billion into banks and is counting on them to ease the credit crunch.
By JEANNINE AVERSA
The Associated Press
WASHINGTON — Big banks started falling in line Tuesday behind a reworked bailout plan that will have the government forking over as much as $250 billion in exchange for partial ownership – putting the government of 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 logjam and the panicky mind-set gripping investors on Wall Street and around the globe.
The Dow Jones industrials declined 76 points Tuesday after piling up their biggest point gain ever Monday on news of Europe's rescue plan and in anticipation of the new U.S. measures.
It was the first time in nine sessions that the Dow didn't close with triple-digit losses or gains, although it did swing in a 700-point range.
Big advances by many bank stocks helped offset some of the declines in the Dow and the Standard & Poor's 500 index, giving them a better showing for the day than the Nasdaq composite index, which fell more than 3 percent.
Profit-taking set in after the Dow surged more than 400 points at the opening. Wall Street is expected to see jittery trading in the weeks and perhaps months ahead because of worries about the economy.
"We don't know if the bottom is in," said Lincoln Anderson, chief investment officer and chief economist at LPL Financial, referring to the market's advance Monday after huge losses last week. "We certainly expect heightened volatility for a fair amount of time while we sort out just exactly what's going on."
Initially, the U.S. government will pour $125 billion into nine major banks with the hope that they will use the money to rebuild their reserves and to increase lending to consumers and businesses. Another $125 billion will be made available this year to other banks – if they need it – for cash infusions.
http://pressherald.mainetoday.com/story.php?id=216105&ac=PHnws
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Plato (427-347 BC)
Plato (427-347 BC)
