Showing posts with label News Articals. Show all posts
Showing posts with label News Articals. Show all posts

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- 6:50 AM - 0 comments

Alpha Bank : Closed for Business

Regulators said late Friday they've closed Alpharetta, Ga.-based Alpha Bank & Trust -- the 16th U.S. bank this year to succumb to the ongoing credit crisis.

    Another day, another American bank collapse. one of Georgia's fastest-growing banks, Alpha Bank & Trust, based in Alpharetta, Georgia, was closed by state regulators yesterday, making it the 16th US bank seized this year amid a collapse in the housing markets that led to a $700-billion rescue plan to unfreeze financial markets.

The Federal Deposit Insurance Corporation said in a statement yesterday, "To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stearns Bank, National Association, St Cloud, Minnesota, to assume the insured deposits of Alpha Bank & Trust," and added that the cost to its Deposit Insurance Fund would be $158.1 million.

Alpha, with $354.1 million in assets and $346.2 million in deposits, was shut by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corp. (FDIC) was named receiver.

Depositors of the failed bank would automatically become depositors of Stearns Bank and the deposits would continue to be insured by the FDIC.Over the weekend, customers can continue accessing their deposits by writing checks or using ATMs and their debit cards. Checks drawn on the bank will continue to be processed.

Apart from taking over Alpha's insured deposits, Stearns Bank will also purchase approximately $38.9 million of Alpha's assets, with the FDIC retaining the rest for disposing-off once the financial system stabilises.

Stearns Bank of St. Cloud, Minnesota, which will assume deposits from Alpha, is a strongly capitalised bank with over $1 billion in asets, and $250 million in capital, amounting to 23-per cent capital in its banking system, or three times the average capital of all commercial banks in the United States, and almost 10 times what some troubled investment banks have or had, Stearns CEO Norman C. Skalicky said in a statement on the bank's website.

"We have a very sound and diversified asset portfolio in about six different financial products. Also, we have no exposure to sub-prime or Fannie Mae / Freddie Mac equity investments," Skalicky said.

The failed bank's two offices will open on 27 October as branches of Stearns Bank, the FDIC said. Over the weekend, Alpha Bank & Trust customers can access their insured deposits by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

Founded in 1879 as the banking department of the J F Costopoulos, Alpha Bank is the second largest bank in Greece, and the largest private bank with a branch network of 450. It becam Alpha Bank in Cyprus in 1998 with the acquisition of Lombard Natwest Bank and was later renamed Alpha Bank Cyprus Ltd.

Alpha Bank opened in the US May 2006, opened in May 2006 at the height of the local bank expansion boom, has been one of metro Atlanta's most aggressive lenders and had acquired nearly $371 million in assets within 19 months of its opening, with a substantial presence in residential real estate loans, the sector hardest hit by the housing collapse, driving its growth.

Even as the as the housing market slowed since December 2006, Alpha Bank's construction loan portfolio continued to expand while its rivals started cutting down their loan business - Alpha's real estate construction and development loans rose a phenomenal 1,700 per cent from $12 million on 30 June 2006, to $218 million by 30 June 2007, according to FDIC data and constitute 79 per cent of the bank's total portfolio.

Those loans typically back lot development and other construction projects, which have been hardest hit by the housing market's ongoing collapse, and may be the slowest to recover.

That period coincides with the end of what bankers now call the most speculative and exuberant period in Atlanta residential development lending.

Alpha Bank has grown considerably over the ten years and managed to establish its presence and claim the position of third largest bank in Cyprus. Beyond providing competitive products and services, the Bank's success was reinforced through continuous and pioneering strategic moves.

In 1999 Metropolitan insurance company was acquired by the Alpha Bank Group and began to operate under the name of Alpha Insurance Ltd.




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- 6:46 AM - 0 comments

RBI leaves rates steady, stocks slump over 10 %

MUMBAI (Reuters) – The Reserve Bank of India (RBI) kept interest rates unchanged as expected on Friday so see if a hefty, surprise cut earlier this week shores up the economy in the face of a global slowdown.

Still, the decision disappointed investors who slammed the the BSE Sensex down more than 10 percent to its lowest level in almost three years in the midst of a broader emerging markets' sell off.

At one point, the Sensex and Nifty were down 12 and 14 percent respectively.

"The market was also expecting some liquidity measures, especially for sectors like real estate that have been hit very badly. The market trend is down and in this situation even if the policy is neutral, it will be taken as negative," said Neeraj Dewan, a director at Quantum Securities. Analysts had predicted rates would be left unchanged because of drastic measures by the RBI in the past two weeks to confront a severe downturn in the global economy.

On Monday, it surprised markets by slashing its repo rate by 1 percentage point to 8 percent, the first cut in over four years. It has also slashed the level of reserves banks must hold by 250 basis points in the past two weeks. Central banks globally have scrambled to fend of the financial storm unleashed in the past month following the collapse of Lehman Brothers.

In its quarterly policy review, the Reserve Bank of India cut its 2008/09 economic growth forecast to between 7.5 percent and 8.0 percent, from around 8 percent and noted the difficulty of policy making.

"This is uncharted territory with no standard or conventional solutions," it said. The RBI said it had to strike an "optimal balance" between financial stability, price stability, anchoring inflation expectations and sustaining growth.  "To manage this challenge the RBI has deployed and will continue to deploy both conventional and unconventional tools," it said. The RBI left the reverse repo rate, the rate at which it absorbs excess cash from banks, steady at 6.0 percent. The bank rate remained at 6.0 percent.

"Policy changes that need to be done have been implemented before the quarterly statement," said Han-Sia Yeo, strategist at Bank of America in Singapore. "The change in bias away from inflation is clear. Managing financial stability risk remains a near-term priority, which means the market will remain flush with liquidity."
Finance Minister Palaniappan Chidambaram said the RBI review endorsed the government's assessment of the economy's fundamentals and financial stability, and said calm and confidence were needed to tide over the global crisis.

STOCKS SLUMP

But investors took a different view, knocking the BSE Sensex down more than 10 percent. The fall accelerated significantly after the rate decision although the market has been swept lower in a global sell off of emerging market assets.

The rupee hit a record low against the dollar in early trading of just over 50 to the dollar before the RBI was suspected of intervening to provide the currency with a prop.

India has been particularly vulnerable to rising risk aversion among foreign investors. They have pulled out more than $12 billion this year from the stock market, which has lost more than half of its value so far in 2008. It rose 47 percent in 2007.

A loss of capital inflows from foreign portfolio investment could add to pressure on the balance of payments because the current account deficit is already running at nearly 2 percent of gross domestic product.
Monday's rate represented a sudden shift for the RBI which had raised the rate in June and July to combat double-digit inflation.

The RBI on Friday said inflation remained a concern and rapid credit growth also needed monitoring. It said it would keep a close vigil on financial markets and enhance liquidity if pressures persisted.

"This could also mean curtailing liquidity if the recent liquidity easing measures are seen to have injected excess liquidity, thereby stoking inflationary pressures," it said. "We cannot afford to let the guard slip on our inflation vigil."

The annual rate of wholesale inflation, India's main measure of price pressures, eased to just over 11 percent in the latest data for early October, down from a peak of 12.91 percent in early August.
Falling oil and commodity prices mean it is expected to moderate further by the end of this year, giving policy makers some room to cater to growth.

Monday's rate cut came after major central banks, including in the United States, Europe and China, cut interest rates in unison to try to restore confidence in the world's shattered financial markets.

In Asia, other central banks have also cut rates, including Taiwan and South Korea.

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- 11:21 AM - 0 comments

Nasdaq Suspends own rule to rescue stocks

NEW YORK: The Nasdaq Stock Market's decision to suspend one of its own listing rules comes as an avalanche of shares tumble below the $1 threshold, and is intended to avoid the mass delistings that followed the burst of the dot-com bubble.

Last week, parent company Nasdaq OMX Group filed a request with the US Securities and Exchange Commission to temporarily suspend the minimum price requirement that protects listed companies from becoming penny stocks.

It said in the filing that "US and world financial markets have faced almost unprecedented turmoil," which has undercut the share prices of companies that would otherwise remain suitable for continued listing.

The SEC endorsed the suspension, which went into effect on Friday and will end Friday Jan 16. Magnus Bocker, Nasdaq's president, told media the measure is "a very natural thing when the market is in disarray like it is right now." "We saw the same things following Sept 11. There is so much uncertainty in the equity markets right now for so many companies, that focusing short-term on that rule is just the wrong focus," he said in an interview.

Nasdaq, traditionally home to technology stocks but now more diversified, said in the filing that the number of stocks falling below $1 has increased "dramatically" from last year, particularly this month. At the end of September, 227 securities were penny stocks, up from 64 at the same time last year, the exchange said.

By Oct 9, the number had jumped to 344. Among the Nasdaq's new penny stocks, satellite radio company Sirius XM Radio Inc said it is considering a reverse stock split, which would double its share price while halving the number of shares.

On the rival New York Stock Exchange, drugstore chain Rite Aid Corp, retailer Circuit City Stores Inc, and Internet-based calling firm Vonage Holdings Corp all recently dipped below the $1 level. They now trade on NYSE's small-cap Arca platform.

Glenn Tyranski, senior vice president of financial compliance at NYSE Regulation, the arm's length regulatory arm at exchange parent NYSE Euronext, said about 20 listings are below the minimum price requirement. But NYSE is not now considering suspending its price requirement, he told media. "It's more than we've had previously, but we don't have that wave of people that are tripping the (requirement) yet."

Another crisis, another suspension

While NYSE has never suspended its price requirements, Nasdaq did so shortly after the Sept 11, 2001 attacks on the United States, in an effort to keep plunging stocks on the public market. That suspension also came amid the stock market downturn caused by tumbling tech stocks, or the bursting of the "dot-com bubble," which swelled to its maximum size in 2000.

Scores of Internet companies were wiped out over the next two years, badly shaking the tech-heavy Nasdaq. Although the current crisis is centered on the financial sector, the exchange wants to avoid a similar exodus of listings, from which it derives about 16 percent of overall revenue.
Diego Perfumo, analyst at Equity Research Desk, a Connecticut-based advisory firm specializing in exchanges, said the rule suspension protects companies with "sound business models that are trading below their fundamental value."

"This measure removes additional selling pressures on the stock from institutional investors that have a positive view of the long term prospects but are only allowed to invest in 'listed' companies," Perfumo said. As of Sept 30, Nasdaq had delisted about twice as many stocks as it had in the same period last year, according to data from the exchange. The two dominant US exchanges have slightly different price requirements.

On the larger NYSE, a listed companies whose average closing price dips below $1 in the last 30 days receives a warning that it must boost its share price within 6 months or face delisting. On the Nasdaq, companies receive the warning when they close below $1 for 30 consecutive days. After the suspension, Nasdaq said it would reevaluate the share prices of its listed companies based on Jan 19, 2009 data.


Date Fetched from Economics Times

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- 11:15 AM - 0 comments

India Carriers, Refiners to meet on Jet Fuel dues

NEW DELHI (Reuters) - Indian airlines, state-run refiners and the government will meet on on Wednesday to try to find a solution to how the oil firms can recover overdue jet fuel bills of more than $400 million.

"We are meeting tomorrow ... I hope we will find a solution. Our oil companies are doing their best to help them," oil minister Murli Deora told reporters on Tuesday, putting the outstanding payments at 20 billion rupees.

"Almost all the airlines haven't paid their dues. If you make a commitment, you must pay, but it doesn't mean that we shouldn't help the airlines."

Last week, Deora had said Jet Airways, Kingfisher Airlines Ltd and National Aviation Company of India Ltd (NACIL), which runs flag carries Air India, had defaulted on payment of their jet fuel bills to state refiners.

Kingfisher and Jet will be among the carriers meeting with Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp on Wednesday, Deora said. Civil aviation minister Praful Patel will also attend.

A senior official of UB Group, which holds a controlling stake in the Kingfisher, said last week the firm was in talks to repay its outstanding dues in phased manner.

Jet and Kingfisher, India's leading private-sector airlines, last week formed an alliance to cut costs through code-sharing and combining ticketing and ground services.

ATF, or aviation turbine fuel, makes up 30 to 45 percent of an Indian airline's operating cost. In August, a kilo-litre of ATF cost 73,600 rupees in Mumbai, compared with 46,500 rupees equivalent in Singapore.

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- 9:39 AM - 0 comments

EXPECT GLOBAL SLOWDOWN - IMF

The world economy is decelerating quickly—buffeted by an extraordinary financial shock and by still-high energy and commodity prices—and many advanced economies are close to or moving into recession, the IMF says in its latest World Economic Outlook (WEO).
                     
 The October 2008 report which was released two days prior to the IMF-World Bank Annual Meetings in Washington, said that growth in emerging economies is also weakening after years of strong growth, though it will still drive global growth.

Speaking at the WEO press conference, IMF Chief Economist Olivier Blanchard emphasized the importance of implementing joint financial and macroeconomic policies at this point "to stem the negative momentum on multiple fronts." On the financial side, "this implies the design of comprehensive programs to deal with systemic problems," while on the macroeconomic side, "this implies the use of monetary and fiscal policies to support growth and break negative feedback loops between the financial and real sectors," he said.

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- 1:41 AM - 0 comments

US will buy $40 bln of SubPrime each month

A story from Bloomberg News on Saturday reported Fannie and Freddie began telling bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, Bloomberg said, citing three unidentified people familiar with the situation.

The purchases would be separate from the U.S. Treasury's $700 billion bailout plan, which was signed into law earlier this month, Bloomberg noted.

Fannie and Freddie were taken over by the U.S. government in early September, in the first of several bailouts the government has launched recently to try to halt the spread of the mortgage-fueled credit crisis.

Regulators initially restricted Fannie and Freddie's growth when they seized control. To "promote stability" and lower mortgage costs to borrowers, Treasury Secretary Henry Paulson said the two companies would be allowed to "modestly increase'' their mortgage portfolios to as much as $1.7 trillion through the end of next year and said they would no longer be run "to maximize shareholder returns."

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Less than two weeks later, Fannie and Freddie were told to ramp up their mortgage bond purchases as the financial crisis deepened and credit activity came to near standstill, Bloomberg said. Fannie and Freddie own or guarantee almost half of all home loans in the U.S., so they're vital to the health of the residential real estate market.

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- 11:13 PM - 0 comments

GM, Chrysler in Merger Talks - source

DETROIT/NEW YORK (Reuters) - General Motors has had talks with smaller rival Chrysler LLC about a merger that would combine the No. 1 and No. 3 American automakers at a time when both are struggling to cut costs and shore up cash, according to a source briefed on the matter.

Separately, Ford Motor Co, plans to shares from its controlling stake in Japan's Mazda Motor Co, a second source said.

Finally, Barron's reported that GM was preparing to approach the U.S. Federal Reserve about borrowing money from the central bank's discount window because of the logjam in credit markets that has shut it out of other kinds of borrowing.

The moves come as all three Detroit-based automakers are struggling with a plunge in U.S. sales to 15-year lows and facing tough questions from investors and creditors about whether they have the cash to ride out a deepening downturn.

Representatives of Cerberus Capital Management, the private equity firm that owns an 80.1-percent stake in Chrysler, were not immediately available for comment.

Chrysler and GM declined comment. Ford representatives could also not be immediately reached.

Cerberus is also in exploratory talks with other parties, including Renault-Nissan, to sell Chrysler, the source said.

But any deal would hinge on the completion of the sale of Daimler AG's remaining 19.9-percent stake in Chrysler to Cerberus, the source said. Cerberus last month said it had approached Daimler to buy that remaining stake.

Chrysler's private owners and GM have had "very early" and "very exploratory" talks about a merger, the source said.

The talks between GM and Cerberus, first reported by the New York Times and the Wall Street Journal, began more than a month ago and are not certain to produce a deal.

The Journal said that Cerberus had proposed a swap of assets with GM that would give the private equity firm full ownership of finance company GMAC.

In exchange, GM would get the loss-making auto operations of Chrysler, the newspaper said.

Cerberus currently owns 51 percent of GMAC, GM's former captive finance company which has been hobbled by its exposure to the U.S. mortgage market. GM owns the remainder of GMAC.


LONG PROCESS

The reported talks between the two sides would revive discussions between Chrysler and GM about a potential merger in early 2007 when Germany's Daimler AG began the process of selling off Chrysler that culminated in a deal later that year to sell the automaker to Cerberus.

GM Chief Executive Rick Wagoner also said last year that he saw some potential for Cerberus to combine GMAC with Chrysler Financial, the finance company affiliated with the No. 3 automaker.

Analysts have questioned Chrysler's ability to survive as a a stand-alone automaker, given its reliance on sales to North America for some 90 percent of its revenue.

But a combination with GM would match two companies with overlapping weaknesses, analysts said when merger talks first emerged.

For one thing, both GM and Chrysler have been hurt by their reliance on sales of trucks and SUVs. For another, both have been struggling to cut union-represented production jobs in reaction to weaker sales.

Chrysler has also had discussions about a tie-up with India's Tata Motors and Italy's Fiat in recent months.

GM shares fell to near a 60-year low this week on fears the global financial crisis could derail its turnaround plans.

GM and Ford both ruled out on Friday seeking bankruptcy protection.

NHK, Japan's public broadcaster, first reported that Ford, which has 33.4 percent of Mazda, plans to sell about most of its stake and has already approached Japanese companies on the sale.

GM shares fell as low as $4 early on Friday, the lowest price for the stock since 1949, but recovered and ended up 13 cents, or 2.7 percent higher, at $4.89 on the New York Stock Exchange.

Credit ratings agency Standard & Poor's said on Thursday that both GM and Ford had adequate liquidity for 2008, but deteriorating industry fundamentals would make liquidity a serious challenge in 2009.

Also on Thursday, industry forecaster J.D. Power and Associates said the global auto markets could be in danger of an "outright collapse" in 2009 as a slowdown that began in North America spills over to other markets.

U.S. auto sales have fallen for three consecutive years to hit 15-year lows in recent months.

Many analysts now expect further declines in 2009 and some slowing in other regions around the world, adding pressure on GM and other U.S. automakers that have been restructuring.

GM, which posted a second-quarter net loss of $15.5 billion, announced plans in July to improve its liquidity by about $15 billion by the end of 2009, about two-thirds through cost cuts and the rest through asset sales and new borrowing.

Ford, which posted a $2.7 billion net loss in the second quarter, went to capital markets to raise more than $23 billion in late 2006. Ford Chief Executive Alan Mulally said earlier on Friday that the company was watching its cash flow carefully.

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- 7:48 AM - 0 comments

Iceland for sale -- Collect in Person

LONDON (Reuters) - Great scenery and wildlife but financial situation in need of repair -- collect in person.

Iceland, which is going cap in hand to Russia for a 4 billion euro ($5.49 billion) loan to bail out its failed banks, was offered for sale as a wholesale lot on eBay on Friday.

Bidding started at 99 pence but had reached 10 million pounds ($17.28 million) by mid-morning on Friday.
Globally renowned singer Bjork was "not included" in the sale, according to the notice, but there were nonetheless 26 anonymous bidders and 84 bids.

"Located in the mid-Atlantic ridge in the North Atlantic Ocean, Iceland will provide the winning bidder with -- a habitable environment, Icelandic Horses and admittedly a somewhat sketchy financial situation," the notice read.

Bidders' questions included: "Do you offer volcano/earthquake insurance?", "Is it possible that my payment will be frozen?", and "Will you accept C.O.D. as a form of payment?"

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- 1:42 AM - 0 comments

World on New War - Financials

Central banks around the world cut interest rates in Unpredictable moment this evening in the first such collective response to the global financial crisis which sent fresh waves of panic through stock markets, including that in India.
But the initial response of the markets was not encouraging: Wall Street turned negative and European stocks sank to a near five-year low, shrugging off the co-ordinated cuts.

Earlier in Mumbai, the sensex plunged below 11000 points for the first time since August 9, 2006 — a helpless, hand-wringing moment for investors who were still groping for answers to why the index had fallen by 10000 points in exactly nine months.

By evening in India, the world was witnessing a dramatic — and desperate — intervention led by the US Federal Reserve which cut a key interest rate — the federal funds rate — by 50 basis points to 1.5 per cent. This is the rate at which US private banks lend money to each other for overnight loans.

In the damburst that followed, China, the European Central Bank (ECB) and the apex banks in Britain, Canada, Sweden and Switzerland also cut key interest rates. Interest rate cuts are an age-old pill that is supposed to stimulate markets because the reductions make it easier for companies to borrow.
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Will the cuts work this time? That was the question playing on the lips of the financial superpowers as Wall Street opened for trading a few hours after the central bank action. But the Dow Jones index fell in see-saw morning trade. In Delhi, late evening by then, the Union cabinet met to consider the global crisis and assess its impact on India. Asserting that India would grow at 8 per cent this year, finance minister P. Chidambaram said the government was watching the global crisis closely and would react swiftly to the needs of the market. He said the RBI had already taken steps to pump funds into the system and would do so again if required.

US officials said this was the first time ever that the Federal Reserve co-ordinated a reduction in interest rates with other central banks. The closest thing to a precedent for today’s action came in November 2001, when the Federal Reserve and the European Central Bank announced a rate reduction on the same day. But those moves were nominally independent, and they did not involve any additional foreign central banks.
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The European Central Bank had been reluctant to lower rates because policy makers there tended to see the meltdown primarily as an American problem with secondary ripple effects in Europe. But any lingering comfort outside the US evaporated last week, as money markets froze around the world and major corporations and banks across Europe began suffocating.

Before the rate cuts, Asian stock markets were clobbered with the Nikkei plunging 9.4 per cent to its biggest one-day fall since 1987.




In Mumbai, investors were groping for answers. “There is blood on the street; cold logic says that’s when you should buy stocks. But what do you do when it’s your own blood on the floor?” asked an investor. On January 10 this year, the sensex had peaked at 21206.77; today it hit a low of 10740.76 — a precipitous slide of 49.4 per cent this year. Even though the index clambered up to close at 11328.36, it was down by 3.14 per cent from Tuesday’s close. Domestic funds started buying stocks aggressively when the sensex toppled by 954 points to the day’s low around noon.

The rupee slid to its lowest level in five years at 48.75 to the dollar. However, the currency hardened on news of the rate cuts and closed at Rs 48. Gold continued to surge and hit an historic peak of Rs 13,820 per 10 grams

Originally posted here - The Telegrpah India

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- 12:13 PM - 0 comments

US Fed to buy commercial paper to jump-start credit

The US Federal Reserve opened up its coffers Tuesday to companies hit by the credit crunch with a new program that will buy up commercial paper, short-term debt critical for many corporate operations.

The latest effort in an all-out war against the credit crunch creates a new "liquidity backstop" for corporate finance and was established after the US Treasury determined it was "necessary to prevent substantial disruptions to the financial markets and the economy," the central bank said.

The Fed gave no estimate of how much money would be devoted to the program but said the US Treasury would "make a special deposit" at the New York Fed to get the program rolling. The effort is aimed at getting banks and other portfolio managers to buy and sell commercial paper, short-term securities issued by companies and banks for payrolls and other day-to-day expenses. The market for commercial paper has been virtually frozen in recent weeks with banks and other financial firms reluctant to take on any risk and pumping their cash into US Treasury bills, which are guaranteed.

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"The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors, themselves often facing liquidity pressures, have become increasingly reluctant to purchase commercial paper, especially longer-dated maturities," the Fed said.

The moves puts the central bank on the line in some cases for unsecured commercial paper from private firms, but the Fed said the loans would be secured by fees and other collateral arrangements "that are satisfactory to the Federal Reserve." The announcement creates a Commercial Paper Funding Facility (CPFF) "that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers," the Fed said.

The Federal Reserve will provide financing to a special entity under the CPFF "and will be secured by all of the assets" of this entity. The Fed said the credit would be available to "eligible issuers," but offered few details. It said it would be open to US companies and other US issuer with a foreign parent firm. Companies will pay up-front fees paid or provide "security acceptable to the Federal Reserve in consultation with market participants."

"The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the Federal Reserve Bank of New York in support of this facility," the Fed said.




The program will buy three-month commercial paper that is either unsecured or asset-backed -- using the company's holdings as collateral that have been rated as investment grade. Commercial paper that is not backed by assets "must be secured to the satisfaction of the Federal Reserve," the Fed said. This may be through an upfront fee or other guarantee or other collateral arrangements.

CREDITS AFP & Yahoo

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- 5:17 AM - 0 comments

Capitol Hill to the Rescue by $700 bl


U.S. Senate approved a revised $700 billion rescue package for the House of Representatives , following the House's rejection on earlier version. This bill , approves government to buy bad assest from financial institution due to record forcloser. Senate passed this vote on 74-25, senators authorized the Treasury secretary Mr. Henry Paulsonto buy bad assets from financial's books, allowed the Federal Deposit Insurance Corp. (FIDC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.

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Republicans changed their mind on Historic fall on DOW of 778 points drop on the reaction of first Vote Out. That bill was defeated on House's. Republcans were opposing that Bill and asking for some modification. One of the House of Representatives said Interviews : " The big drop'' in the Dow Index ``really had a chilling effect on a lot of our members and a lot of their constituents "

The dollar rose against the euro, approaching a one-year high, after the Senate approval, bolstering expectations the U.S. will act faster than Europe to address the seizure in credit markets. The dollar advanced to $1.3880 per euro at 8:51 a.m. in London, from $1.4009 late yesterday in New York.

The most sweeping change is language to raise the limit for insured bank deposits sought by the FDIC, which asked to raise the capital temporarily to $250,000 from $100,000. This was designed to attract votes of some members of Congress who said that little was being done for Main Street.

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The Senate also sweetened the measure for Republicans by authorizing the government's purchase of troubled assets with a $149 billion package of tax breaks. They would spare 24 million households from a $62 billion alternative minimum tax and extend $17 billion in benefits to companies that produce alternative energy.

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- 11:36 PM - 0 comments

Nuclear On. India On

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After a long three years of  Controversial talk on Indo - US Nuclear deal, U.S. Congree finally approved this deal on Wednesday. The motion get 86 votes in favour  and 13 votes against the motion. One of the Congressman quoted on this deal " Historic Vote "  and said this will form a lasting strategic alliance between the United States and the world's largest democracy. The agreement, which the Bush administration considers a significant foreign policy achievement, will open door for India's Civil Nuclear projects. This will end a drought or 'technology denial regime' of 34 year that India was facing ban from U.S and many Nuclear Power Supply countries from late 1974 ( Pokhran-1 ) after the first Nuclear Test. India-US Nuclear Deal Sparks Interest in Doing Business in India.

In last month India has agreed to open its civilian nuclear facilities to international inspection under the Nuclear Non proliferation Treaty, though its eight military nuclear plants would not be subject to scrutiny in NSG brifed meeting. This deal will open $150 billion market to devlope Nuclear Plants and maintain them for both Indian and American plus all devloped nation who have Nuclear facilities. Though the amount is large and will surely helped American companies who are facing cool off in heir home countries.


Bush praised the vote, saying the agreement "will strengthen our global nuclear nonproliferation efforts, protect the environment, create jobs and assist India in meeting its growing energy needs in a responsible manner."


Ron Somers , President of Industries Association - A group of  U.S. top 300 companies who are committed to a long term partnership with India, quoted "The benefits will be many and the impact profound, beckoning a new era in US-India relations."

"By enabling US-India civil nuclear cooperation, India not only joins the international nuclear non-proliferation mainstream, but now has the opportunity to achieve energy security, while protecting the global environment," later he said.

"A massive scope for commercial opportunity between US and Indian companies will also be the result, valued at more than $150 billion over the next 30 years, spurring a revival of the nuclear power industries of both countries that will create as many as a quarter million high-tech US jobs for generations to come," words of Ron Somers.

It would shore up "a durable foundation upon which US-India relations will flourish and America's partnership will deepen with the world's largest free-market democracy," the business advocacy organisation said.



On the day of Gandhi's Jayanti - World know him as Mahatma Gandhi and we know by Bapu. Indo - US deal took place, this Proves that India will always use Nuclear power for its Civil Projects. And U.S also know this fact, thats why it completed on October 2nd , 2008 in IST.

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- 8:48 AM - 0 comments

LawMakers Rejects $700 bn Rescue Plan

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U.S. House of Representatives on Monday votes against the move of $700 billion rescue plan. US President George Bush pleas addressed a speech on House of Representatives to make sure deal will get enough room to clear. Despite of all negotiation before the final trust vote it failed on Monday afternoon’s vote failed by a margin of 228-205.


This bailout plan will allow government instantly to buy upto $350 billion of US distressed debt held by Wall Street banks and investment banks, with a further $350 billion available lto use later.The government would have held on to the debts for several years, possibly until credit markets settled, house prices recovered and it could sell the debt at a profit.

The U.S. government has already provided $900 billion US in relief as part of the financial crisis, including $85 billion US to buy out troubled insurer AIG and $200 billion US to take over mortgage lenders Fannie Mae and Freddie Mac. Critics of the bailout plan said it would have done too much for Wall Street firms, and too little for the average American people. Alternative plans discussed by lawmakers included having the government provide mortgage relief directly to homeowners, as well as loan guarantees for people at risk of losing their houses to stave off or even reverse a foreclosure.

The Dow Effect

Emerging market stocks dumped by Investor and Traders Monday after the U.S. House of Representatives rejected the proposed $700 billion rescue plan for the financial sector.

Stocks in India, Russia and Brazil -- three of the BRIC heavyweights -- were deeply in the red on Morning Session. The markets in mainland China are closed this week for holidays. In Brazil, the Bovespa index tumbled 9.4%. Russia's RTS stock index tumbled 7.1%. However Indian Market smartly recovred and closed in hefty green.
Taking unprecedented steps, the Fed and other major central banks on Monday poured hundreds of billions of dollars of added liquidity into money markets.

Equity strategists at Credit Suisse say $700 billion represents about 12% of mortgages not backed by Freddie Mac or Fannie Mae -- "probably an appropriate amount to ensure markets become more liquid." But they said it was too small, especially compared with the original Resolution Trust Corp. program that rescued savings-and-loans in the late 1980s.




In Europe, financial institutions were also ailing, with the governments of Belgium, the Netherlands and Luxembourg launching a $16.4 billion rescue of Fortis, the Belgian-Dutch bank.  In a unexpected move Belgium, France leading  Leader Dexia get a help of  EU6.4 Billion from the government of Belgium and Franch. This bank was the leading lender on government project. Afer Adding help to Bank the top executives Chairman and CEO was removed from their posts.

The U.K. government said it is nationalizing Bradford & Bingley after investors and lenders lost confidence in the mortgage lender, with its stock market listing canceled shortly before the markets opened.

Also, the Icelandic government said it bought a 75% stake in Glitnir HF, the country's third-largest lender, while a consortium of German financial institutions bailed out real-estate firm Hypo Real Estate.

Credit markets remained under pressure, with the yield on the 3-month Treasury bill -- viewed as the least risky short-term investment, falling to 0.294% from 0.87% late Friday. The yield on the 10-year Treasury note declined to 3.615%.

The dollar rallied against the euro and the British pound, while gold gained and oil futures ended with a loss of more than $10 a barrel.

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- 4:32 AM - 0 comments

Bradford & Bingley on way to Nothern Rock

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Media Report :  A media report stating that one of the UK banks Bradford & Bingley is soon going to be nationlised. "Officials from the Treasury and the  Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future," BBC said.

On Friday , stock quoting to his lowest rates on History . Bradford & Bingley has seen erosion of its share price over 90 per cent this year and it is down more than 60 percent since the beginning of the month. The bank has high dependence on expensive wholesale funding raising doubts over its prospects as an independent lender.


Quoting Bradford & Bingley spokesman Tony McGarahan, BBC said discussions were taking place and an announcement would be made before the stock market opened tomorrow. Bradford & Bingley would be the second British bank to be nationalised this year after Northern Rock, which came into public ownership in February.
BBC said the bank would be nationalised using the special legislation the Treasury had put through when it took Northern Rock into public ownership earlier this year. The measure is expected be announced on Sunday night or Monday morning.


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- 1:10 AM - 0 comments

Question Mark on Wachovia

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Wachovia Corp.'s may face a  accusition like Washington Mutual ( WaMu). Suitors may use a style like JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon did last week: Chase waited for regulators to seize WaMu business and they came &  buy the best assets and let the government sort out the rest. 


Among Suitors Citigroup Inc., Wells Fargo & Co. and Banco Santander SA are in talks with Wachovia, report from the Wall Street Journal reported yesterday. This is the same constorium who was taking to WaMu to buy its entire system. But Unfortunetly regulators seized the bank two days ago and Chase purchased the best assest in $1.9 billion  which is a fraction amount what they were paying in March.


Analysts of Goldman Sachs and some other leading Ratings Co beleives that soon North Carolina based -  Wachovia  will join the league. Regulators may help suitors to purchase the bank by seizing its assest. Later a press release from Regulator desk stated that -  " U.S. benefited from seizing and selling WaMu because the Federal Deposit Insurance Corp. didn't have to tap its $45 billion insurance fund.  "

Views on WaMu Failure


``WaMu's takeover has proven that there's an easy way, if the FDIC is involved,'' said Sean Egan, president of Egan-Jones in Haverford, Pennsylvania. ``You kick the hell out of the equity holders and bondholders. That may be the new model for bank takeovers.''

Christina Pretto, a spokeswoman for New York-based Citigroup, declined to comment on the Journal's report, as did Santander's Peter Greiff, spokesman for the Spanish bank, and Wells Fargo's Julia Tunis Bernard in San Francisco. Wachovia's Christy Phillips Brown wouldn't comment on the news accounts or on analysts' reports.

Limited Risk


After WaMu's failure -- the biggest in U.S. history -- Dimon said in an interview that the New York-based bank gained ``a fabulous franchise'' while limiting the risk. ``We got this at a price that protects us, where if we were wrong, it still protects us,'' said Dimon, 52.

Wachovia has more resources to draw upon than WaMu did, including its market capitalization of $21.6 billion and assets that rank sixth among U.S. lenders. CEO Robert Steel, 57, the former Treasury official hired this summer to replace Kennedy Thompson, told employees in an e-mail yesterday that Wachovia was ``strong and performing well.'' The bank is more diversified than WaMu, owning the third-biggest U.S. brokerage, plus units in wealth management and corporate and commercial banking, he wrote.

Credit Ratings

The bank also has better credit than WaMu, which was cut to junk levels by credit rating firms before its collapse. Wachovia carries investment-grade ratings from Moody's Investors Service, Standard & Poor's Corp. and Fitch Ratings. Moody's and Fitch have a negative outlook, indicating a possible downgrade.

Wachovia dropped $3.70 to $10 in New York Stock Exchange composite trading yesterday and lost $1.50 more in extended hours. Yields on Wachovia's bonds soared to 24 percent, from 7.5 percent on Sept. 5, an indication that investors are concerned about default.

Analysts questioned Wachovia's ability to stay independent after seeing loan losses tied to WaMu. JPMorgan is taking on $176 billion in mortgage-related assets and taking writedowns of about $31 billion, the New York bank said. Some of those were option ARM loans, which are prone to default because they let borrowers defer some interest and add it to the principal.






JPMorgan concluded that losses on the loans may equal up to 20 percent of their value, said Sean Ryan, an analyst at Sterne Agee & Leach in New York. Wachovia has $122 billion in option adjustable-rate mortgages.

``If we apply marks similar to those used by JPMorgan in the recent WaMu acquisition, the levels of potential losses would bring Wachovia very close to the threshold of being considered `well-capitalized,' '' Goldman analyst Louise Pitt wrote in a note to investors yesterday. Banks that are less than well-capitalized face curbs on their activities by regulators.

Those potential losses may discourage immediate bids for Wachovia, said Larry Carroll, president of Carroll Financial Associates Inc. in Charlotte, which oversees $1.3 billion.

``If you just wait, it may get you at a much cheaper price and not have to take all the bad stuff,'' he said.

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- 11:50 PM - 0 comments

Rally of 1987. Part - 2 (Europe)

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 FTSE makes a biggest gain since 1987

Posted by abhishek . On Sept 21 , 2008 @ 12.51 PM IST
 
This Friday FTSE ( London Financial Times Index ) , one of the premier exchange of world, surged by 8.84 % after continuous 4 days loss.This is the maximum gain in a single day since 21 Oct ,1987 ( US aftermath ). FTSE faces 10% downward journey from Monday to Thursday. 

Index soars on the news of US Government planing to save the financial world by tackling the situation. Further Financial Services Authority ( FSA ) a regulatory body who controls the exchanges in UK , put 29 securities on Do - Not- Short - Sell list until January 16 , 2009. All of the 29 stocks are Financial Stock.  After this news FTSE bounced sharply in Friday trade , closed by 8.84% or 431 points . 

Read the Part 1 story on US market ... Click here

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- 11:04 PM - 0 comments

Rally of 1987 .... Part - 1 ( US )

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US post its biggest gain on 2 day since 1987 (termed as aftermath year)

Posted by Abhishek , on 21st Sept  2008 . @ 12.13 PM IST

American market posted its rally of 2 day since the crisis of 1987 as government introduced some plans to save world largest economy and market. This week financial dominated S&P 500 Index make the biggest loss in seven year. Financial shares in the S&P 500 plunged 13% in the first three days of the week as Lehman Brothers Holdings Inc. filed for bankruptcy, Merrill Lynch & Co. sold itself and the government seized American International Group Inc., sending the market to its steepest declines since the 2001 terrorist attacks. But during the last two trading day as Government decided to safe the market and retail stakeholder by adding more measures like 
 
* SEC imposes temporary ban on short sales on 799 stocks
* US Treasury to back money market mutual funds . 

US Market rallied to covering its losses that is made in the beginning of this week to close in FLAT to the extent. On Thursday ,Wall Street posted its biggest one-day percentage gain since October 2002 -- when the last bull market was born -- after a congressional aide said U.S. Treasury Secretary Henry Paulson has been circulating a proposal to lawmakers that would create an entity to deal with the billions of dollars of bad debt still clogging the financial system.


Biggest Bankruptcy of World

1) Lehman was the fourth-largest U.S. investment bank before it filed the biggest bankruptcy in U.S. history on Sept. 15, smashed to the sub prime-mortgage crisis that this financial gaint helped to create. The firm was forced into bankruptcy after Barclay Plc and Bank of America Corp. abandoned takeover talks and the company lost 94 percent of its market value this year.

2) Merrill Lynch agreed to be bought by Bank of America after its shares plunged 36 percent the prior week. Merrill led gains in the in the S&P 500, climbing 73 percent to $29.50.

3) Goldman Sachs Group Inc. and Morgan Stanley, the only remaining independent brokerages on Wall Street after Lehman's bankruptcy and Merrill's sale, climbed after earlier enduring their steepest one-day sell-offs ever as the nation's three largest pension funds stopped loaning shares to investors betting on the firms' declines. Goldman dropped 16 percent to $129.80 for the week and Morgan Stanley fell 27 percent to $27.21.

4) Washington Mutual - Financial stocks gained 7.4 percent overall. Washington Mutual Inc., the largest U.S. thrift, surged 56 percent to $4.25 on the government's rescue plans and reports four potential bidders may be interested in buying pieces of the company. . We got a report that CITI Financial is also intrested to buy this troubled firm.

5) AIG fell the most in the S&P 500, losing 68 percent to $3.84. The biggest U.S. insurance company was taken over by the government after mortgage-related losses led to credit-rating downgrades that drove the company to the brink of insolvency. The government said it will receive a 79.9 percent stake in return for an $85 billion loan that analysts said may be repaid by liquidating the company. Analyst believe that this amount of $85 billion is not enough and government is need to inject further money on this Insurance Gaint.

The Federal Reserve kept its benchmark interest rate at 2 percent on Sept. 16, citing risks to growth and inflation. The central bank agreed to the AIG loan hours after the decision. 

Please refer to our next Article of Rally of 1987 - Part -2 ( EUROPE )