EU politicians and financial executives have agreed to inject billions of euros into banks in an effort to stabilize and restore confidence in the world financial system.
The basic plan follows that of Britain', with the governments taking direct equity stakes in distressed banks and guaranteeing bank lending for up to five years. France and Germany are expected to release national packages worth billions of Euros on Monday. Some figures have been bandied about, Germany is considering a plan to inject 50 billion to 100 billion euros into its banks, with a price tag for all of the new measures reaching as much as 400 billion euros, or $536 billion, according to a person briefed on the government’s work.
“The meeting that we had was exceptional,” President Nicolas Sarkozy of France, said at a news conference. “We need concrete measures, we need unity. That’s what we achieved. The plan on which we agreed today will be applied in all our respective states.”
The Belgian finance minister, Didier Reynders, said, “We are committed in all European states to recapitalize banks if we establish a threat to solvency and a risk to the economy....The goal is to kick-start the interbank lending market,” he said.
Additionally unfreezing the commercial paper market used by companies to finance their businesses, is to be an aim of the plan.
Contrary to Britain or the US, a price tag has not been put on the rescue package.
“Our goal is to have coordinated action for the euro zone,” Angela Merkel, the German chancellor, said, and the meeting “is a very important signal for the strength of the euro zone.”
Showing posts with label bailout. Show all posts
Showing posts with label bailout. Show all posts
Sunday, 12 October 2008
Monday, 29 September 2008
Shock Defeat for Bailout In House of Representatives
House Votes Down $700bn Bailout
The US House of Representatives has voted by 228 to 205 down the $700bn bailout agreed over the weekend. Two-thirds of Republicans and 95 Democrats rejected the deal.
A massive drop in the Dow Jones ensued with a 778 point decline. After the close the percentage was 7.7%. The S&P 500 suffered its biggest percentage drop since Black Monday in 1987.
The FTSE dropped 270 points or 5.3%.
Other Market Moves
Three governments, the Dutch, Belgian and Luxembourg pumped €11bn into Fortis bank. Fortis for its part will have to sell its stake in the ABN Ambro bank.
French bank Dexis has become the latest target of speculators. Dexia handles a lot of the finance for local government. The French government made the now obligatory statement tha the bank would not be allowed to fail.
Wachovia, another bank under attack has been swallowed by Citigroup in a government backed deal..
The UK government is nationalising the Bradford and Bingley bank. Spanish banking giant Santander is to take the savings business and branch network.
The US House of Representatives has voted by 228 to 205 down the $700bn bailout agreed over the weekend. Two-thirds of Republicans and 95 Democrats rejected the deal.
A massive drop in the Dow Jones ensued with a 778 point decline. After the close the percentage was 7.7%. The S&P 500 suffered its biggest percentage drop since Black Monday in 1987.
The FTSE dropped 270 points or 5.3%.
Other Market Moves
Three governments, the Dutch, Belgian and Luxembourg pumped €11bn into Fortis bank. Fortis for its part will have to sell its stake in the ABN Ambro bank.
French bank Dexis has become the latest target of speculators. Dexia handles a lot of the finance for local government. The French government made the now obligatory statement tha the bank would not be allowed to fail.
Wachovia, another bank under attack has been swallowed by Citigroup in a government backed deal..
The UK government is nationalising the Bradford and Bingley bank. Spanish banking giant Santander is to take the savings business and branch network.
Sunday, 28 September 2008
$700bn Bailout Deal Hammered Out
A bill is likely to be bought to the House floor on Monday on the proposed $700bn bailout of the financial markets by the US Federal Reserve. Congressional leaders and the Bush administration have reached a tentative agreement.
Staff members from Congress are working through the night to finalize the details and language of the bill. Headline items that have become attached are executive pay limits for executives whose firms seek aid and help to prevent home foreclosures by the government as owner of the distressed mortgage-backed securities.
Firms may have to surrender an equity stake to the government, so the taxpayer can profit if it actually works in the years ahead.
A Congressional panel is to have strict oversight of the deal. Firms hired by the US Treasury are to abide by conflict of interest rules. The White House conceded these restrictions on its requested unfettered authority to run the bailout programme. Democrats for their part removed a demand for judges to be allowed to amend first mortgages. A fee on securities transactions, essentially a tax, to pay for the rescue was also dropped.
“All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street,” Nancy. Pelosi said at the news conference. “We have to commit it to paper so we can formally agree, but I want to congratulate all of the negotiators for the great work they have done.”
In a statement, Tony Fratto, the deputy White House press secretary, said: “We’re pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.”
Staff members from Congress are working through the night to finalize the details and language of the bill. Headline items that have become attached are executive pay limits for executives whose firms seek aid and help to prevent home foreclosures by the government as owner of the distressed mortgage-backed securities.
Firms may have to surrender an equity stake to the government, so the taxpayer can profit if it actually works in the years ahead.
A Congressional panel is to have strict oversight of the deal. Firms hired by the US Treasury are to abide by conflict of interest rules. The White House conceded these restrictions on its requested unfettered authority to run the bailout programme. Democrats for their part removed a demand for judges to be allowed to amend first mortgages. A fee on securities transactions, essentially a tax, to pay for the rescue was also dropped.
“All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street,” Nancy. Pelosi said at the news conference. “We have to commit it to paper so we can formally agree, but I want to congratulate all of the negotiators for the great work they have done.”
In a statement, Tony Fratto, the deputy White House press secretary, said: “We’re pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.”
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