Regulators To Approve Derivatives Clearing House ·
U.S. regulators will reportedly approve a clearing house for the $55 trillion credit derivatives market in the next several weeks. Meanwhile, Depository Trust & Clearing Corp. said Friday it will help boost market transparency by releasing weekly data on derivatives trades linked to the top 1,000 companies and benchmark indexes. (CNBC, Bloomberg)
October 31, 2008
Credit Crisis
Laeven: The Cost Of Crisis Resolution [OPINION] ·
International Monetary Fund economist Luc Laeven calculates that between 1970 and 2007 the fiscal cost of banking crises in industrialized economies averaged 15% of GDP, three times the U.S.'s $700 billion bailout plan, suggesting costs associated with the current credit crisis could rise appreciably. (VOX)
Treasury Halts Negotiations With Detroit Automakers ·
The U.S. Treasury is reportedly no longer negotiating with Detroit automakers about a possible capital infusion via its $700 billion Troubled Asset Relief Program, complicating prospects for a tie-up between struggling General Motors and Chrysler. (Detroit Free Press)
Bank of Japan Cuts Key Rate, Nikkei Plunges ·
The Bank of Japan lowered its key interest rate to 0.3% Friday, down from an already record low 0.5%, to help stave off a prolonged recession. The Nikkei 225 index plunged 5% after three of the eight board members dissented in favor of a larger cut. (Bloomberg)
E. Greenberg: Insurers Don’t Need Subsidies [OPINION] ·
Evan Greenberg, CEO of ACE Limited and chairman of the American Insurance Association, protests that U.S. insurers should not have to partake in the U.S. Treasury's Capital Purchase Program because they have yet to show they pose a systemic risk to the financial system. (WSJ)
IMF Extends $9B Loan To Pakistan ·
The International Monetary Fund reportedly agreed Friday to extend a $9 billion loan to Pakistan in an effort to help it meet foreign debt payments amid the global credit crisis. (CNBC)
ABA Requests Deadline Extension For Capital Plan ·
The American Bankers Association sent a letter to U.S. Treasury Secretary Henry Paulson requesting a deadline extension to participate in its recapitalization plan. The lobby took issue with the program's dividend restrictions and expressed concern it will stigmatize healthy banks. (American Banker)
Barclays Chases $10B Capital Injection ·
Barclays is reportedly close to securing a $9.8 billion investment from the Qatar Investment Authority and an Abu Dhabi-based sovereign wealth fund in a move that would help it meet new U.K. capital benchmarks. The bank also discussed investment possibilities with Libya’s sovereign wealth fund. (FT)
Lazard Chief Sees Significant New Losses Ahead ·
Lazard's CEO Bruce Wasserstein said Thursday the largest U.S. banks refuse to lend for an obvious reason: they know significant losses on bonds backed by credit card debt, commercial real estate loans and other assets loom ahead if the economy gets worse. (Fortune)
GM, Chrysler Merger Could Cost 74,000 Jobs ·
Grant Thornton estimated in a report Thursday that 74,000 employees could lose their jobs if General Motors and Chrysler receive financing approval for a merger. The accounting firm also said half of Chrysler's plants could be shuttered. (Bloomberg)
U.S. Stocks Shake Off GDP Report ·
The Dow Jones Industrial Average added 189 points, or 2.1%, on Thursday after signs of improvement in credit markets tempered an expected decline in economic growth. The S&P 500 index gained about 2.6%. (NYT)
“Incontrovertible Evidence” Of A Securities Earthquake [INTERVIEW] ·
Economist Roger Kubarych and author Richard Whalen discuss the warning signs missed (and dismissed) by Wall Street and Washington in the months leading to the credit crisis, beginning with the February 2007 collapse of New Century Financial. (Institutional Risk Analytics)
Moscow Bails Out Wealthiest Oligarch ·
Russia reportedly extended a $4.5 billion loan to UC Rusal, the holding company of its wealthiest oligarch Oleg Deripaska, to help it retain the 25% stake in Norilsk Nickel that it pledged as collateral to Merrill Lynch, Royal Bank of Scotland and other western banks. (FT)
Cost To Liquidate Lehman Swells [ANALYSIS] ·
Analysts predict Lehman Brothers' bankruptcy will be the most expensive ever, besting the record set by Enron in 2004, as the cost for administrators, accountants and lawyers swells to more than $1.6 billion. Law firm Weil Gotshal & Manges, Lehman's adviser, could bank $209 million in fees alone. (Bloomberg)
U.S. Economy Shrinks As Consumers Cut Back ·
The U.S. Commerce Department reported Thursday that the economy contracted at a 0.3% annual rate in the third quarter, the sharpest decline since 2001, as personal consumption fell the most in 28 years. (Economix)
