- Oil spikes with record $25 jump on bailout anxiety- AP
- Congress, Bush team agree on bailout terms- AP
- Goldman, Morgan change status to bank holding cos.- AP
- Morgan Stanley to sell 20 pct stake in itself to MUFG- AP
- Dollar plunges amid bailout plan concern- CNNMoney.com
- Microsoft, HP, Nike unveil $53 billion of buybacks- Reuters
- Citigroup's Krawcheck to leave: report- Reuters
- Govt. Action Prevented Disaster, Doesn't Fix Economy, Schwab's Sonders says- Tech Ticker
- End of Wall Street as We Know It- Tech Ticker
Common Ground Common Sense > Issues that Affect Our Lives > Job Market, Fiscal, and Economic Policies > Job Market, Fiscal, & Economic Issues Archive
Stocks Tumble, Oil Skyrockets as Investors Await Bailout Plan- APVolatility again swept the financial markets Monday as investors grew nervous about an amorphous government plan to buy $700 billion in banks' mortgage debt. Stocks fell sharply, taking the Dow Jones industrials down more than 370 points, while investors sought safety in hard assets such as gold and oil, which at one point shot up more than $25 a barrel.
- Briefing.com
The major indices were pummeled on Monday due to uncertainty over the details regarding the U.S. government’s $700 billion plan to fix the financial market... » Read more
The major indices were pummeled on Monday due to uncertainty over the details regarding the U.S. government’s $700 billion plan to fix the financial market... » Read more
U.S. Widens Scope of Bad-Debt Plan Beyond Home Loans to Cover Credit Cards The Bush administration widened the scope of its $700 billion plan to avert a financial meltdown by including assets other than mortgage-related securities.
Treasuries Prove Irresistible as Deflation Bet Outweighs Paulson's Bailout As details of Treasury Secretary Henry Paulson's plan to revive the U.S. financial system by pumping as much as $700 billion into the markets emerged Sept. 19, bond investor Michael Cheah was reminded of Japan.
Stocks May Find `Floor' in Paulson Plan, Ban on Short Sales; Futures Drop The biggest declines in the U.S. stock market in seven years may slow after the government said it would bail out the nation's banks and crack down on speculators battering financial companies.
Treasuries Prove Irresistible as Deflation Bet Outweighs Paulson's Bailout As details of Treasury Secretary Henry Paulson's plan to revive the U.S. financial system by pumping as much as $700 billion into the markets emerged Sept. 19, bond investor Michael Cheah was reminded of Japan.
Stocks May Find `Floor' in Paulson Plan, Ban on Short Sales; Futures Drop The biggest declines in the U.S. stock market in seven years may slow after the government said it would bail out the nation's banks and crack down on speculators battering financial companies.
MICHAEL R. SESIT
Dollar Ready for Second Wind When Dust Clears Missed the recent dollar rally? Too bad; it was a whopper.
MORE MICHAEL R. SESIT 
JOE MYSAK
Bond Traders Didn't Care If Muni Deals Were Illegal Municipal bond underwriters and traders were asking a lot of questions about how aggressively some banks were bidding for short-term deals in 2003 and 2004. MORE JOE MYSAK
JOHN F. WASIK
Five Financial Truths Defy Wall Street Madness The duality of human nature embraces the idea of debt. It delights when it helps us buy homes, investments, entertainment appliances and vacation condos. It's a demon when it consumes us.
Dollar Ready for Second Wind When Dust Clears Missed the recent dollar rally? Too bad; it was a whopper.
MORE MICHAEL R. SESIT JOE MYSAK Bond Traders Didn't Care If Muni Deals Were Illegal Municipal bond underwriters and traders were asking a lot of questions about how aggressively some banks were bidding for short-term deals in 2003 and 2004.
MORE JOE MYSAK JOHN F. WASIK Five Financial Truths Defy Wall Street Madness The duality of human nature embraces the idea of debt. It delights when it helps us buy homes, investments, entertainment appliances and vacation condos. It's a demon when it consumes us.
JONATHAN WEIL
Morgan Stanley's Mack Seeks Protection From You Here's the truth about why Treasury Secretary Hank Paulson wants $700 billion of your money to bail out stupid financial companies. It's not about protecting you, the unwitting American. It's about protecting people like him. 
MARK GILBERT
Now Uncle Sam Is Hedge-Fund Guy, AAA Needs Review As Uncle Sam transmogrifies into Hedge-Fund Guy, gorging on debt to buy $700 billion of toxic assets to keep the financial system afloat, the U.S. government's AAA status has to be deemed unsafe. It just has to. 
JOHN M. BERRY
Bank Rescue a Political, Bureaucratic Nightmare Dealing with the disaster in U.S. financial markets requires extreme measures, and cleaning up the mess will cause a mess of another kind.
Morgan Stanley's Mack Seeks Protection From You Here's the truth about why Treasury Secretary Hank Paulson wants $700 billion of your money to bail out stupid financial companies. It's not about protecting you, the unwitting American. It's about protecting people like him.
MARK GILBERT
Now Uncle Sam Is Hedge-Fund Guy, AAA Needs Review As Uncle Sam transmogrifies into Hedge-Fund Guy, gorging on debt to buy $700 billion of toxic assets to keep the financial system afloat, the U.S. government's AAA status has to be deemed unsafe. It just has to.
JOHN M. BERRY
Bank Rescue a Political, Bureaucratic Nightmare Dealing with the disaster in U.S. financial markets requires extreme measures, and cleaning up the mess will cause a mess of another kind.
Democrats Will Use Likely Congressional Gains to Push New Rules on Markets No matter who's elected president in November, Democrats are poised to expand their congressional majority. And that means they will have a leading role next year in pushing through tough new regulation of U.S. financial markets.
Dodd, Democrats Question Paulson Rescue Plan For Barring Judicial Review Democrats proposed revising a provision in the Bush administration's financial rescue plan that would bar judicial scrutiny of the U.S. Treasury Department's acquisition of up to $700 billion in troubled assets.
McCain Says New York Attorney-General Cuomo Could Replace SEC's Chief Cox New York Attorney General Andrew Cuomo, a Democrat, should be considered to replace Christopher Cox as chairman of the U.S. Securities and Exchange Commission, Republican John McCain said.
Frank, Dodd Seek Outside Auditor to Monitor Paulson's Asset Purchase Plan Congressional Democrats are pushing for independent auditors to monitor the Bush administration's $700 billion plan to buy bad investments from financial institutions, without threatening to block a measure they say must pass soon to avoid economic disaster.
Stevens Bid for New U.S. Senate Term May Be Decided by Jury in Washington U.S. Senator Ted Stevens's bid for a seventh term may be decided by 12 people he has never met in a courthouse thousands of miles away from his home state of Alaska.
Obama Urges Bush, Congress to Act Quickly to Avert Economic `Catastrophe' Barack Obama urged the Bush administration and lawmakers to work quickly to craft a bipartisan plan to ease the country's financial crisis and avert economic ``catastrophe.''
Dodd, Democrats Question Paulson Rescue Plan For Barring Judicial Review Democrats proposed revising a provision in the Bush administration's financial rescue plan that would bar judicial scrutiny of the U.S. Treasury Department's acquisition of up to $700 billion in troubled assets.
McCain Says New York Attorney-General Cuomo Could Replace SEC's Chief Cox New York Attorney General Andrew Cuomo, a Democrat, should be considered to replace Christopher Cox as chairman of the U.S. Securities and Exchange Commission, Republican John McCain said.
Frank, Dodd Seek Outside Auditor to Monitor Paulson's Asset Purchase Plan Congressional Democrats are pushing for independent auditors to monitor the Bush administration's $700 billion plan to buy bad investments from financial institutions, without threatening to block a measure they say must pass soon to avoid economic disaster.
Stevens Bid for New U.S. Senate Term May Be Decided by Jury in Washington U.S. Senator Ted Stevens's bid for a seventh term may be decided by 12 people he has never met in a courthouse thousands of miles away from his home state of Alaska.
Obama Urges Bush, Congress to Act Quickly to Avert Economic `Catastrophe' Barack Obama urged the Bush administration and lawmakers to work quickly to craft a bipartisan plan to ease the country's financial crisis and avert economic ``catastrophe.''
MARGARET CARLSON
Market Meltdown Makes Palin Look Even Scarier It takes a lot to reinsert reality into a presidential campaign once it devolves into the wholly trivial. Remember when America decided that a sighing Al Gore was as stiff as his Secret Service name -- Redwood -- and could neither tell nor take a joke, and that George W. Bush, the class clown, won the debate, sort of?
Market Meltdown Makes Palin Look Even Scarier It takes a lot to reinsert reality into a presidential campaign once it devolves into the wholly trivial. Remember when America decided that a sighing Al Gore was as stiff as his Secret Service name -- Redwood -- and could neither tell nor take a joke, and that George W. Bush, the class clown, won the debate, sort of?
AMITY SHLAES
Recovery Without Bailout, Even for General Motors Recovery without federal bailout? Impossible.
Recovery Without Bailout, Even for General Motors Recovery without federal bailout? Impossible.
AIG, Brinker, General Growth, GM, Sovereign: U.S. Equity Movers
By Whitney Kisling
Sept. 22 (Bloomberg) -- The following companies had unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 4 p.m. in New York.
Gold producers gained as the precious metal rose 5.1 percent to $909 an ounce in New York. Harmony Gold Mining Co. American depositary receipts (HMY US) rose 12 percent to $10.46. Randgold Resources Ltd. ADRs (GOLD US) jumped 16 percent to $46.52. Gold Fields Ltd. ADRs (GFI US) advanced 14 percent to $9.72. Goldcorp Inc. (GG US) added 13 percent to $36.29.
Regional banks dropped after JPMorgan Chase & Co. advised investors sell the shares, saying ``easy money has been made'' in smaller lenders. Merrill Lynch & Co. recommended selling ``most'' small and mid-cap banks and said the U.S. Treasury's bailout could ``hurt, not help'' the group. Regions Financial Corp. (RF US), Alabama's biggest bank, slid 21 percent to $15.60. Marshall & Ilsley Corp. (MI US), Wisconsin's largest, lost 23 percent to $22.82. Huntington Bancshares Inc. (HBAN US), an Ohio-based lender, tumbled 23 percent to $9.81.
Wells Fargo & Co. (WFC US) lost the most since October 1987, falling 12 percent to $35.18. The biggest U.S. bank on the West Coast was among 18 lenders downgraded by Sandler O'Neill & Partners LP, which said the government's bailout plan may lead to more writedowns.
American International Group Inc. (AIG US) rose the most in the Standard & Poor's 500 Index, gaining 23 percent to $4.72. Shareholders opposing the insurer's $85 billion Federal Reserve takeover because it will dilute their stakes plan to meet to discuss alternatives.
Brinker International Inc. (EAT US) lost 9.5 percent, the most since January, to $18.86. Bank of America Corp. cut the owner of Chili's Grill & Bar to ``neutral'' from ``buy,'' saying consumers are slowing their visits to restaurants.
Brookfield Properties Inc. (BPO US) dropped the most since at least June 1999, falling 22 percent to $17.13. The biggest office landlord in lower Manhattan was cut to ``hold'' from ``buy'' by Stifel Nicolaus & Co. analyst John Guinee, who said Manhattan's office vacancy rate will rise ``and the market will quickly transition from a landlord to a tenant market.''
Federal Agricultural Mortgage Corp. (AGM US) plunged 59 percent to $7.40, the biggest drop since trading began in 1994. The government-sponsored enterprise known as Farmer Mac plans to record an impairment charge on debt securities issued by Lehman Brothers Holdings Inc., according to a regulatory filing. The company said it ``cannot give assurances'' it will be compliance with minimum capital requirements as of Sept. 30.
Ford Motor Co. (F US) fell 6.4 percent to $4.95, the steepest decline since July 24. Chairman William Clay Ford Jr. sold 1 million of the automaker's shares for an average of $5.05 each, according to a Sept. 19 U.S. regulatory filing.
General Growth Properties Inc. (GGP US) slid the most since trading began in April 1993, losing 25 percent to $16.08. The second-largest U.S. mall owner said it may sell assets or equity to raise capital after a stock slump. The company also said it will consider ``strategic business combinations.''
General Motors Corp. (GM US) slumped the most in a week, losing 11 percent to $11.58. Analysts said the automaker's plan to draw the remaining $3.5 billion from a revolving credit line indicates it may be using up available funds at a rapid pace.
Lloyds TSB Group Plc ADRs (LYG US) fell 8.8 percent, the most in a week, to $20.53. The bank that bought U.K. mortgage lender HBOS Plc last week was cut to ``underweight'' from ``neutral'' and had its price estimate cut to 180 pence from 480 pence at JPMorgan Chase & Co. The bank may need to raise 16 billion pounds, the analysts led by Carla Antunes da Silva wrote.
Microsoft Corp. (MSFT US) rose the most in the Dow Jones Industrial Average, gaining 1 percent to $25.40. The world's largest software maker increased its divided by 18 percent, said it plans to buy back up to $40 billion in stock, and will issue its first commercial paper.
NetApp Inc. (NTAP US) dropped the most since August 2007, declining 11 percent to $18.73, the most since August 2007. The provider of storage management hardware and software was cut to ``market perform'' from ``outperform'' at Wachovia Corp.
Nobel Learning Communities Inc. (NLCI US) rose the most since March 2002, climbing 26 percent to $16. The operator of private nursery and elementary schools received a $17-a-share buyout offer from Knowledge Learning Corp.
Phoenix Cos. (PNX US) dropped the most since November 2002, losing 21 percent to $11.09. The insurer and money manager that caters to wealthy clients disclosed debt holdings in Lehman, AIG, Washington Mutual Inc. (WM US), Fannie Mae (FNM US) and Freddie Mac (FRE US), according to a Sept. 19 regulatory filing.
Secure Computing Corp. (SCUR US) rose the most since February 2007, adding 23 percent to $5.58. McAfee Inc. (MFE US) agreed to buy the maker of Internet security software for $5.75 a share, or $465 million. McAfee lost 4.3 percent to $35.71.
Sovereign Bancorp Inc. (SOV US) fell the most in at least 22 years, tumbling 23 percent to $7.90. The second-largest U.S. savings and loan was cut to ``underperform'' from ``market perform'' by Friedman, Billings, Ramsey & Co. analyst James Abbott.
Verso Paper Corp. (VRS US) had the biggest drop since going public in May, falling 21 percent to $3.10. Merrill Lynch & Co. cut the second-largest maker of coated paper in North America to ``underperform'' from ``buy,'' saying demand from magazine publishers is weaker than expected.
Wachovia Corp. (WB US) declined 11 percent to $16.60. Investors speculated that any chance of a merger with Morgan Stanley (MS US) is dead. Morgan Stanley said it plans to become a bank holding company, while Mitsubishi UFJ Financial Group Inc. (MTU US) agreed to buy up to 20 percent of the firm.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net
Last Updated: September 22, 2008 16:31 EDT
U.S. Stocks Fall on Oil's Rally, Concern Bank Bailout Won't Halt Recession U.S. stocks tumbled, led by banks, retailers and technology companies, as oil jumped 16 percent and investors speculated the Treasury's plan to buy toxic mortgage assets will fail to prevent a recession.
AIG, Brinker, General Growth Properties, GM, Sovereign: U.S. Equity Movers The following companies had unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 4 p.m. in New York.
Brazilian Stocks Fall, Led by Homebuilders, Banks, Retailers; Mexico Drops Brazilian stocks fell for the first time in three days, led by retailers and banks, on concern that tighter credit and slowing global growth may reduce earnings.
Canadian Stocks Fall, Led by Royal Bank, Research In Motion; Barrick Gains Canadian stocks fell for the first time in three days, led by financial and technology companies, on concern that the economy will slow while the U.S. bails out the financial system.
Microsoft, HP, Nike Plan $53 Billion of Buybacks After Stock Market Slump Microsoft Corp., Hewlett-Packard Co. and Nike Inc. said they will buy back a combined $53 billion of shares after the stock market's 16 percent decline this year pushed down valuations and companies sought ways to invest growing piles of cash.
AIG, Brinker, General Growth Properties, GM, Sovereign: U.S. Equity Movers The following companies had unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 4 p.m. in New York.
Brazilian Stocks Fall, Led by Homebuilders, Banks, Retailers; Mexico Drops Brazilian stocks fell for the first time in three days, led by retailers and banks, on concern that tighter credit and slowing global growth may reduce earnings.
Canadian Stocks Fall, Led by Royal Bank, Research In Motion; Barrick Gains Canadian stocks fell for the first time in three days, led by financial and technology companies, on concern that the economy will slow while the U.S. bails out the financial system.
Microsoft, HP, Nike Plan $53 Billion of Buybacks After Stock Market Slump Microsoft Corp., Hewlett-Packard Co. and Nike Inc. said they will buy back a combined $53 billion of shares after the stock market's 16 percent decline this year pushed down valuations and companies sought ways to invest growing piles of cash.
Treasuries Prove Irresistible as Deflation Bet Outweighs Paulson's Bailout As details of Treasury Secretary Henry Paulson's plan to revive the U.S. financial system by pumping as much as $700 billion into the markets emerged Sept. 19, bond investor Michael Cheah was reminded of Japan.
Treasuries Little Changed Amid Concern Bank Bailout Will Boost Issuance Two-year Treasury notes rose for the first time in three days as stocks tumbled, bolstering demand for the relative safety of government debt while lawmakers consider a bailout of the U.S. banking sector.
Bonds Backed by N.Y. Offices May Fall After Lehman Collapse, Merrill Sale Rising vacancy rates and falling rents in New York City office buildings caused by the collapse of Lehman Brothers Holdings Inc. and the sale of Merrill Lynch & Co. may damage the value of bonds backed by commercial real estate, Merrill analysts said.
`Exaggerated' Swings in Swaps Likely as Lehman Unwinds, JPMorgan Says Price fluctuations for exchanging fixed- and floating-rate interest payments and on Treasury yields will be ``exaggerated'' as investors replace swaps and options trades terminated because of the bankruptcy of Lehman Brothers Holdings Inc., according to JPMorgan Chase & Co.
Treasuries Little Changed Amid Concern Bank Bailout Will Boost Issuance Two-year Treasury notes rose for the first time in three days as stocks tumbled, bolstering demand for the relative safety of government debt while lawmakers consider a bailout of the U.S. banking sector.
Bonds Backed by N.Y. Offices May Fall After Lehman Collapse, Merrill Sale Rising vacancy rates and falling rents in New York City office buildings caused by the collapse of Lehman Brothers Holdings Inc. and the sale of Merrill Lynch & Co. may damage the value of bonds backed by commercial real estate, Merrill analysts said.
`Exaggerated' Swings in Swaps Likely as Lehman Unwinds, JPMorgan Says Price fluctuations for exchanging fixed- and floating-rate interest payments and on Treasury yields will be ``exaggerated'' as investors replace swaps and options trades terminated because of the bankruptcy of Lehman Brothers Holdings Inc., according to JPMorgan Chase & Co.
Crude Oil Soars More Than $25 on `Squeeze Play' as October Futures Expire Crude oil climbed more than $25 a barrel, the biggest gain ever, as traders scrambled to unwind positions on the October contract's last day of trading. The more-active November contract rose $6.62.
Gold Rises, Extending Gains, on Demand for a Haven Asset; Silver Advances Gold rose above $900 an ounce, extending a rally after its biggest weekly gain in almost nine years, as investors shifted assets into precious metals as a haven from market turmoil. Silver gained more than 7 percent.
Platinum Jumps Most Since 2000 in N.Y. as Dollar Falls, Fuels Hedge Demand Platinum climbed the most in eight years as the dollar took its biggest drop against the euro since January 2001, spurring demand for the precious metal as an alternative to the U.S. currency. Palladium also rose.
Cocoa Rises to 3-Week High in New York as Dollar Weakens, Commodities Gain Cocoa reached the highest in three weeks amid a commodity rally spurred by the sliding dollar and on speculation that disease may harm West African crops.
Cotton Futures Rise to 1-Week High as Dollar's Decline Boosts Commodities Cotton rose to a one-week high in New York as the weaker U.S. dollar made commodities cheaper for buyers holding other currencies.
Orange Juice Rises Most in Two Weeks as Dollar Falls, Storm Threat to Crop Orange juice rose the most in two weeks as a weaker dollar made commodities cheaper for buyers holding other currencies and on concern a storm over Puerto Rico may threaten citrus groves in Florida.
Gold Rises, Extending Gains, on Demand for a Haven Asset; Silver Advances Gold rose above $900 an ounce, extending a rally after its biggest weekly gain in almost nine years, as investors shifted assets into precious metals as a haven from market turmoil. Silver gained more than 7 percent.
Platinum Jumps Most Since 2000 in N.Y. as Dollar Falls, Fuels Hedge Demand Platinum climbed the most in eight years as the dollar took its biggest drop against the euro since January 2001, spurring demand for the precious metal as an alternative to the U.S. currency. Palladium also rose.
Cocoa Rises to 3-Week High in New York as Dollar Weakens, Commodities Gain Cocoa reached the highest in three weeks amid a commodity rally spurred by the sliding dollar and on speculation that disease may harm West African crops.
Cotton Futures Rise to 1-Week High as Dollar's Decline Boosts Commodities Cotton rose to a one-week high in New York as the weaker U.S. dollar made commodities cheaper for buyers holding other currencies.
Orange Juice Rises Most in Two Weeks as Dollar Falls, Storm Threat to Crop Orange juice rose the most in two weeks as a weaker dollar made commodities cheaper for buyers holding other currencies and on concern a storm over Puerto Rico may threaten citrus groves in Florida.
Dollar Slides Most Since Euro's 1999 Debut on U.S. Budget Deficit Concern The dollar weakened the most against the euro since the European currency's 1999 debut on concern a U.S. proposal to buy $700 billion of troubled assets from financial firms will inflate the budget deficit.
Dollar May Get `Crushed' as Traders Weigh $1 Trillion Cost of Bailout Plan Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.
Dollar May Get `Crushed' as Traders Weigh $1 Trillion Cost of Bailout Plan Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.
Goldman Sachs, Morgan Stanley Become Banks, Ending an Era for Wall Street The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
Stocks plunge amid bail-out fears
By Frrancesco Guerrera, Henny Sender and Michael Mackenzie in New York and Krishna Guha in Washington
Published: September 22 2008 20:05 | Last updated: September 22 2008 21:38
The US financial system was shaken by fears that a $700bn government rescue plan might not be enough to end the financial crisis on Monday as stock prices and the dollar tumbled, oil soared and once mighty Wall Street names turned to Japan to safeguard their future.
Morgan Stanley said it was to sell a stake of 10-20 per cent to the Mitsubishi UFJ Financial Group (MUFG) in a deal worth up to $9bn. The news came just hours after Nomura, Japan's largest broker, confirmed it was buying Lehman Brothers' operations in Asia and was in exclusive talks to secure parts of its business in Europe
Full coverage: Global financial crisis - Sep-16
Video: John Authers on market response - Sep-16
Other G7 members have no plans to follow US - Sep-22
Gillian Tett: The era of leverage is over - Sep-22
Comment: Washington must heed alarm bell - Sep-22
Editorial Comment: Paulson's plan still needs some work - Sep-22
Investors' negative reaction to the plans for a $700bn government fund to buy toxic assets from banks and Morgan Stanley's Japanese gambit underline the fragile state of the US economy and its banking sector.
The prospect that the cost of the bail-out plan– revealed at the weekend by Hank Paulson, Treasury secretary – will add to the huge US national debt put pressure on the dollar and sent prices for commodities priced in the US currency soaring.
The dollar fell 2 per cent against a basket of major currencies, with the euro rising 2.6 per cent to above $1.48. Crude oil prices jumped more than $25 a barrel during the day – the largest one-day rise in dollars terms ever – as investors were forced to cover positions before the expiry of benchmark futures contracts. Crude closed at $120.92, up $16.37.
The S&P 500 fell 3.8 per cent, giving back nearly all the gains registered on Friday, the first full day of trading after Mr Paulson revealed his bail-out idea during a dramatic Capitol Hill meeting.
The market reaction came as high-stakes negotiations continued in Washington over the bail-out plan. President George W. Bush called on Congress to "keep the rescue bill focused on solving the crisis in our financial markets". Democrats made it clear they wanted tougher oversight of the programme than Treasury had proposed. Chris Dodd, chairman of the Senate banking committee, began circulating a proposal involving tighter supervision, including the creation of a board to review the programme chaired by the Federal Reserve. He is proposing the government be allowed to take stakes in the financial groups participating in the programme, curbs on the compensation of executives who sell troubled mortgage assets to the government, and more help for homeowners. Mr Paulson is strongly resisting curbs on executive pay.
After a conference call of finance ministers, the Group of Seven industrialised nations said its members "strongly welcome the extraordinary actions taken by the US to enhance the stability of financial markets".
On Sunday, Morgan Stanley and Goldman Sachs gave up on attempts to remain as the only two standalone investment banks and became "bank holding" companies to gain permanent access to Federal Reserve funds.
The move is the most radical change for Wall Street investment banks for 75 years and is a sign of the widespread fears that, after the demise of Lehman and Bear Stearns, further market convulsions might have destroyed Morgan Stanley and Goldman.
Analysts said the speed with which Morgan Stanley turned to Asia for a capital lifeline underscored how quickly the world's wealth is moving from the US.
As the deal with MUFG was sealed, Morgan Stanley ended merger talks with Wachovia, a regional lender, and called off talks to sell China Investment Corp a large stake.
Copyright The Financial Times Limited 2008
By Frrancesco Guerrera, Henny Sender and Michael Mackenzie in New York and Krishna Guha in Washington
Published: September 22 2008 20:05 | Last updated: September 22 2008 21:38
The US financial system was shaken by fears that a $700bn government rescue plan might not be enough to end the financial crisis on Monday as stock prices and the dollar tumbled, oil soared and once mighty Wall Street names turned to Japan to safeguard their future.
Morgan Stanley said it was to sell a stake of 10-20 per cent to the Mitsubishi UFJ Financial Group (MUFG) in a deal worth up to $9bn. The news came just hours after Nomura, Japan's largest broker, confirmed it was buying Lehman Brothers' operations in Asia and was in exclusive talks to secure parts of its business in Europe
Full coverage: Global financial crisis - Sep-16
Video: John Authers on market response - Sep-16
Other G7 members have no plans to follow US - Sep-22
Gillian Tett: The era of leverage is over - Sep-22
Comment: Washington must heed alarm bell - Sep-22
Editorial Comment: Paulson's plan still needs some work - Sep-22
Investors' negative reaction to the plans for a $700bn government fund to buy toxic assets from banks and Morgan Stanley's Japanese gambit underline the fragile state of the US economy and its banking sector.
The prospect that the cost of the bail-out plan– revealed at the weekend by Hank Paulson, Treasury secretary – will add to the huge US national debt put pressure on the dollar and sent prices for commodities priced in the US currency soaring.
The dollar fell 2 per cent against a basket of major currencies, with the euro rising 2.6 per cent to above $1.48. Crude oil prices jumped more than $25 a barrel during the day – the largest one-day rise in dollars terms ever – as investors were forced to cover positions before the expiry of benchmark futures contracts. Crude closed at $120.92, up $16.37.
The S&P 500 fell 3.8 per cent, giving back nearly all the gains registered on Friday, the first full day of trading after Mr Paulson revealed his bail-out idea during a dramatic Capitol Hill meeting.
The market reaction came as high-stakes negotiations continued in Washington over the bail-out plan. President George W. Bush called on Congress to "keep the rescue bill focused on solving the crisis in our financial markets". Democrats made it clear they wanted tougher oversight of the programme than Treasury had proposed. Chris Dodd, chairman of the Senate banking committee, began circulating a proposal involving tighter supervision, including the creation of a board to review the programme chaired by the Federal Reserve. He is proposing the government be allowed to take stakes in the financial groups participating in the programme, curbs on the compensation of executives who sell troubled mortgage assets to the government, and more help for homeowners. Mr Paulson is strongly resisting curbs on executive pay.
After a conference call of finance ministers, the Group of Seven industrialised nations said its members "strongly welcome the extraordinary actions taken by the US to enhance the stability of financial markets".
On Sunday, Morgan Stanley and Goldman Sachs gave up on attempts to remain as the only two standalone investment banks and became "bank holding" companies to gain permanent access to Federal Reserve funds.
The move is the most radical change for Wall Street investment banks for 75 years and is a sign of the widespread fears that, after the demise of Lehman and Bear Stearns, further market convulsions might have destroyed Morgan Stanley and Goldman.
Analysts said the speed with which Morgan Stanley turned to Asia for a capital lifeline underscored how quickly the world's wealth is moving from the US.
As the deal with MUFG was sealed, Morgan Stanley ended merger talks with Wachovia, a regional lender, and called off talks to sell China Investment Corp a large stake.
Copyright The Financial Times Limited 2008
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