credit market chaos

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Borrowers Ditch Banks, Turn to Peer Loans

Once modest industry will soon lend more than $5 billion annually

(Newser) - As the banking pendulum swings from reckless lending to impossible-to-get credit, people are increasingly turning away from institutions and toward each other for loans, reports the Washington Post. The shaky stock market has made the peer-to-peer market ideal for investors, while borrowers happily trade credit card debt for interest rates... More »

BofA Loaned Insiders $624M as Credit Froze Up

(Newser) - While credit markets were frozen last year, forcing thousands of Americans out of business, Bank of America lent insiders more than $624 million—more than doubling the amount loaned to insiders the previous year, the Charlotte Observer reports. Recipients' names were not disclosed, but most of the money likely went... More »

Fed Bailout Spawns More 'Zombie' Banks

Fed lifelines preserve banks that, frankly, are better off dead

(Newser) - The Federal Reserve’s aggressive lending to banks has helped avert financial collapse, but it may have created some monsters as well, the Wall Street Journal reports. A research paper from the University of Chicago suggests that while federal aid has succeeded some in thawing frozen credit markets, it has... More »

Consumer Confidence Finds a New Low in January

Conference Board's index at half its year-ago value

(Newser) - Americans' mood about the economy darkened even more in January, sending a widely watched barometer of consumer sentiment to yet another new low as people worry about their jobs and watch their retirement funds dwindle. The Conference Board said its Consumer Confidence Index edged down to 37.7 from a... More »

Germany Moves to Rein In Future Borrowing

Constitution will be changed to ban excess borrowing: Merkel

(Newser) - As Berlin rolls out a record $65 billion stimulus package, it's also making excessive government borrowing a constitutional crime. The new amendment—which will limit the national deficit to .5% of GDP "in normal economic times"—is a sign of the government's discomfort with its new stimulus, which... More »

Chrysler Idling US Plants for 30 Days

Supply to be slowed so it meets lowered demand, company says

(Newser) - Ominous news on the auto front: Chrysler will idle all its North American plants for at least 30 days beginning Friday, a move meant to realign the company's supply with plummeting demand, the Detroit News reports. Ford, meanwhile, will close 10 assembly plants for an extra week in January, the... More »

Yes, It's a Crisis: But We Still Need a Catchy Name

(Newser) - Though it's no secret the country is weathering a financial calamity, the crisis still lacks a catchy handle. The New York Times takes a look at news organizations' so-far unsuccessful efforts to find one: Some obvious contenders such as “credit crunch” and “Wall Street crisis” have popped up,... More »

US Pushes Banks for More Lending, Less Spending

Officials drafting guidelines to encourage banks to loan their bailout cash

(Newser) - Officials from several US banking regulators are finalizing guidelines for financial firms that will encourage them to lend more and curb executive pay, the Washington Post reports. The Treasury is taking $250 billion in equity stakes in various financial firms, but critics complain the firms are passing the taxpayer money... More »

Citi to Aid Homeowners by Modifying $20B in Mortgages

The bank will amend mortgages to assist 130,000 borrowers

(Newser) - Citigroup will modify up to $20 billion in mortgages for borrowers current on their payments but at risk of falling behind, the bank announced this morning, mirroring similar moves by Bank of America and JPMorgan Chase. Citi will reach out to half a million borrowers, ultimately reducing monthly payments for... More »

Feds Aim to Push Bailout Beyond Traditional Banks

Finance-related firms working with Treasury, which also has eye on Obama transition

(Newser) - After taking ownership stakes in banks totaling $250 billion, the Treasury is preparing to broaden rescue efforts to include companies outside the banking sector, the Washington Post reports. Hundreds of billions of the $700 billion bailout package could go to relieve some institutions that, though not chartered as banks, borrow... More »

Even Oil-Rich Gulf States Hit by Financial Storm

Global woes descend on Persian Gulf oil economies with a fury

(Newser) - The financial crisis has finally struck the Persian Gulf—the one area of the world that had seemed immune—as a 50% plunge in oil prices since July and a raft of currency trades gone bad has led to the first bank bailout in the area. Kuwait’s central bank... More »

Economic Crisis Turned McCain Into a Bystander

This election ended when economy tanked; the rest is shouting

(Newser) - John McCain isn’t losing because he’s running an incompetent campaign, Michael Gerson writes in the Washington Post. Rather, his campaign only looks incompetent because the economy doomed him to lose. When a campaign is sinking, pundits weigh in with their pet suggestions, while insisting that “the candidate... More »

Credit Markets Show Signs of Thaw

But experts warn that the credit market remains tight, and may not ease for months

(Newser) - The government’s move to take stakes in major banks has finally succeeded in easing some of the panic that’s locked up credit markets, reports the Wall Street Journal. Corporate-bond values rose and commercial paper began trading at lower rates, giving hope that the intervention is working, though experts... More »

Hitchens: We're Now a Banana Republic

Accountability is nil, the president useless

(Newser) - The credit crisis has laid bare the failings of US government, writes Christopher Hitchens in Vanity Fair, putting us on par with other banana republics such as Zimbabwe and Venezuela. How else to describe this "collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can... More »

The Maverick Will Rise Again

Conservatives may have turned against him, but the National Review hasn't

(Newser) - Wall Street is reeling, but the real depression has set in among Republicans who seem resigned to losing the White House. "Yet for all the gloom, there are several reasons why this race is by no means over," Victor David Hanson writes for the National Review. The neocon... More »

Global Economy Needs Shelter From the Storm

Think of it as a bankruptcy; with help, it can recover and thrive

(Newser) - The global economy is in such chaos that it needs the equivalent of bankruptcy protection, David Ignatius writes in the Washington Post. "Bankruptcy, if properly managed, is a workout process that provides a pathway back to solvency," he argues. "Companies often reemerge from bankruptcy healthier than before;... More »

Revised Bailout Bill Easily Clears House, 263-171

(Newser) - The House passed the revised $700 billion buyout plan this afternoon, 263-171, raising hopes that the economy will be able to fend off a recession, reports the Washington Post. After 5 days of arm-twisting, 26 Republicans switched their no votes; a total of 91 joined 172 Democrats in backing the... More »

Employers Cut Payrolls at Fastest Rate in 5 Years

Some 159,000 positions disappear

(Newser) - Employers slashed payrolls by 159,000 in September, the most in more than 5 years and a worrisome sign that the economy is hurtling toward a deep recession. Today's snapshot also showed the nation's unemployment rate held steady at 6.1% as hundreds of thousands of people streamed out of... More »

Senate Version of Bailout Grows Sweeter, Fatter

(Newser) - The Senate version of the bailout bill has ballooned to more than 400 pages as legislators flesh out details in hopes of gaining passage as soon as tonight, Politico reports. The marquee measure boosts FDIC coverage of individual accounts from $100,000 to $250,000, with numerous lower-profile provisions intended... More »

Hedge Funds in Hot Seat After Market Plunge

Plunging stock prices, redemptions coincide to deal industry a one-two punch

(Newser) - At a time when markets need their money more than ever, the $2-trillion hedge fund industry could fall victim to bad timing, as yesterday's plunge coincides with today’s deadline for many investors to withdraw before year’s end, the Wall Street Journal reports. Funds may be forced to sell... More »

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