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)
October 31, 2008
Financial Crisis
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)
Banks Owe Executives $40B In Pay, Pensions ·
Top Wall Street banks scheduled to receive $125 billion in government capital injections reportedly owe their executives more than $40 billion in compensation and pension packages year to date, complicating U.S. Treasury stipulations that the banks strictly use capital infusions to boost lending. (WSJ)
Barclays Secures $12B Capital Injection ·
Barclays finalized an $11.8 billion capital injection Friday – including a $9.4 billion investment from private investors in Qatar and Abu Dhabi – in a move that will allow it to meet new capital ratios mandated by the U.K. government for Britain's largest banks. (FT)
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)
Sarkozy: Strategic Fund To Start Within Weeks ·
French President Nicolas Sarkozy said late Thursday that his government will establish a strategic fund in three weeks' time to protect domestic industries battered by the financial crisis. The government could potentially inject $130 billion into the fund. (Reuters)
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)
“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)
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)
Motorola Laying Off 3,000, Delaying Cell Division Split ·
Motorola will delay its plan to break up into two companies -- cellphones and infrastructure -- primarily because of "the macro-economic environment" and unstable financial markets. (InformationWeek)
Roubini: Get Ready For ‘Stag-Deflation’ [OPINION] ·
Economist Nouriel Roubini cautions that goods, labor, commodity, financial and bond markets are all sending the same message: deflation or"stag-deflation" looms ahead. (Forbes)
Legg Mason To Reduce Staff As Assets Plummet ·
Legg Mason confirmed Thursday it will cut one-third of the staff at its investment unit, Legg Mason Capital Management, after assets dropped to $28 billion from $59.7 billion at the start of the year. (Bloomberg)
The Financial Crisis: Parallels To The 1930s [VIDEO] ·
Henry Farrell of George Washington University and Daniel Drezner of Tufts University discuss the parallels between the current financial crisis and that of the 1930s as well as examine the role of China in a global economic recovery. (bloggingheads.tv)