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Federal regulators today proposed doubling the amount banks pay to insure their deposits, reflecting the hit the government's insurance fund has taken by the failure of Pasadena-based IndyMac Bank and 12 other institutions this year -- and projections of more failures to come. The board of the Federal Deposit Insurance Corp. gave unanimous initial approval to a five-year plan to replenish the Deposit Insurance Fund, which has fallen below its mandated level. The fund had $45.2 billion as of June 30, representing 1.01% of insured domestic deposits. It is not supposed to fall below 1.15%, and the FDIC prefers it...

We are being told loudly and repeatedly that the gargantuan mortgage bail-out package is necessary because illiquid mortgage-backed securities are clogging our financial arteries, threatening the economic equivalent of cardiac arrest. The idea of the plan is to transfer these supposedly valuable, but currently unmarketable, assets to the government so that private institutions can freely lend once more. The monumental flaw in this argument is that the mortgage backed securities are in fact highly liquid, just not at the prices the owners would like to receive. Mortgage bonds are just like houses. They won’t sell if the owners stubbornly refuse...

Credit-card holders, you’re in for a rough ride. As the financial crisis deepens, some experts say card issuers will be even quicker to raise interest rates, drop people’s spending limits and tighten up credit. “You can definitely expect that banks will tighten up the credit-card market,” said Bill Hardekopf, chief executive officer of LowCards.com. “We’ve now moved into a more risky and tenuous financial environment.” Even consumers who have good credit habits are expected to suffer some as credit-card issuers move to minimize their exposure and maximize revenue. “What’s happening—and will continue happening until things get better—is credit-card companies are...

MOSCOW: The Russian president said in a speech Thursday that the financial crisis in the United States should be taken as a sign that America's global economic leadership is drawing to a close, reiterating an argument that leaders here have been making for some time, though investors in recent weeks have been fleeing Russia and depositing money in U.S. Treasury bills.

Europe’s leading central banks announced further emergency liquidity operations on Friday as the deep freeze in money markets continued without any sign of a thaw. All week, central bank officials have been evolving into the provider of all finance to the European banking system. They are now planning for that position to continue for a long time. The Bank of England announced a dramatic increase in its three-month lending to British banks on Friday, saying it was willing to offer cash against a wider range of collateral in an effort to ease the strains in wholesale money markets. “In these...

No one wants to talk about who is most to blame for the financial crisis that now threatens the U.S. economy, though there is plenty of blame to go around. It is far easier to blame other people -- greedy Wall Street executives, predatory lenders, President Bush, federal regulators, members of Congress --than it is to look at ourselves. For too long, Americans have been living on borrowed money they could never pay back. We've bought houses we couldn't afford and taken out loans on home equity that didn't materialize, assuming housing values would continually move upward. We've paid for...

"...Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits...In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

Several of the most vulnerable House incumbents on Friday changed their votes in favor of the latest version of a $700 billion bailout package for the economy. A few Democratic freshmen and veteran GOP incumbents fighting for their political lives over the next month made what might be a courageous vote, even as their phones and e-mail inboxes were flooded with pleas to vote no and their opponents readied attacks. Among those flipping were top-targeted Reps. Vern Buchanan (R-Fla.), Gabrielle Giffords (D-Ariz.), Joe Knollenberg (R-Mich.), Randy Kuhl (R-N.Y.), Harry Mitchell (D-Ariz.), Jean Schmidt (R-Ohio) and John Yarmuth (D-Ky.). Those facing potentially...

While the market was busy looking at all of those "For Sale" signs around most neighborhoods, it forgot that people also put three or four expensive cars in their driveways and bought $5,000 home entertainment centers. Someone has to pay for all of that hardware, but it is not going to be the people who bought it. They are broke and jobless. The repo men are being sent from car loan companies and Best Buy to get the stuff back. Unfortunately, used cars and consumer electronics have not held their value.

Since the credit crisis began gripping the financial world, Silicon Valley has watched from the sidelines, secure in the faith that it was insulated from the coming storm. That faith is now being seriously undermined. High-tech entrepreneurs, investors and executives now believe the question is when, not if, the financial chaos will hurt the country’s cradle of innovation. From San Francisco to San Jose, the effects are already palpable. This week, Apple, one of the Valley’s high-fliers, lost 16.3 percent of its value as investors reasonably concluded that consumers would shun expensive gadgets over the holidays in favor of lower-ticket...

This time around, House leaders aren’t taking anything for granted. Heading into Friday’s sequel to the historic Wall Street bailout vote, both Democratic and Republican House leaders were furiously counting votes, twisting arms, counting again and desperately trying to wrangle — and hold together — the necessary 218 votes on the Senate-amended bill. And while leaders on both sides tried to project confidence, there were signs that trouble is still lingering on the horizon. With the world watching, the House can ill afford to fail a second time in passing legislation giving the Treasury Department some $700 billion to buy...

DALLAS (Reuters) - Conservative U.S. Christians say the culture has gone to hell and it has taken the economy and Wall Street down with it. It is a view which outsiders may find puzzling but has wide resonance in the U.S. heartland: the notion that moral decay and a lost sense of responsibility has brought on the worst banking and credit crisis since the Great Depression. Such a view helps explain the unpopularity in conservative Christian circles -- which have a big influence on the Republican Party -- of a $700 billion bailout plan which the U.S. House of Representatives...

In the boom years the financial world, which we call Wall Street, reaped rewards to satisfy King Midas. In just one recent year, 2006, its firms paid out an astonishing $62 billion in bonuses (no, this is not a typo). The "masters of the universe" created not one bubble, but two: a housing bubble and then a credit bubble, and now that both have burst we face a growing danger of a global financial panic. Every day that passes without a remedy multiplies the risk of a complete freeze up of the financial and credit markets. This threatens a crash...

Meeting in New York on the occasion of the 63rd session of the U.N. General Assembly, members of the Socialist International (SI) called for the establishment of a World Financial Organization to provide “global stability” and regulate the financial systems of the nations of the world. This will be the inevitable result of the U.S. Congress passing a socialist-style takeover of the U.S. financial sector. This centralization of power will make it easier to integrate the U.S. into a global socialist system. The SI, which shares the same basic economic goals as international Communism, is an association of 170 political...

..snip... This tells you that people with money to lend (such as corporate treasuries and various kinds of investors) are not making those funds available to private borrowers. So businesses are choosing to borrow less, which means they're also working to conserve cash. This has an immediate impact on economic activity, as companies slow down their projects and their spending, freeze hiring, and do other things that are more characteristic of deep recessionary periods than of the slow-growth period we're in. ...snip... And as consumers get scared, they pull in their horns too. The rate of new-car sales just dropped...

Republican presidential nominee John McCain on Thursday reversed course and claimed credit for bringing House Republicans back to the negotiating table as Congress worked on a Wall Street bailout. The Arizona senator told Fox News that he was “very helpful in getting the House Republicans at the table that had not been there,” adding that he is “proud to have played a role in this.” McCain’s comments stand in contrast with what he said Sunday on ABC’s “This Week with George Stephanopoulos.” At the time, he indicated that it was not his involvement that brought GOP lawmakers to the negotiating...

WASHINGTON (Reuters) - Major automakers reported plunging U.S. sales for September -- led by a 34 percent slide at Ford Motor Co -- as an escalating credit crisis hit the slumping industry and raised new doubts about when the world's largest auto market would stabilize. The 26-percent drop in industry-wide U.S. auto sales was sharper than expected and coincided with a crisis on Wall Street that automakers said both rocked consumer confidence and made it harder for remaining shoppers to finance vehicles. Sales were down 24 percent at Honda Motor Co Ltd, 32 percent at Toyota Motor Corp and 37...

WHEN SANDY CORSO launched PeacefulCompany, a web site that sells products to soothe the mind, body and spirit, in 2002 her friends and family were skeptical. And so, too, were potential lenders. "The banks thought I was crazy, and they would not give me a loan," says Corso, of Madison, Conn. Now, six years later, Corso's company posts $1.3 million in annual sales (her current best seller is the "neti pot," a container that cleanses sinus cavities), enough to win the respect of her former naysayers. But banks? Still a no-go, which Corso attributes to two factors: the credit crunch,...

Bakersfield residents — qualified ones — can still get home, car and business loans, local lenders say, despite Wall Street’s throes. “We are open for lending in Kern County,” said Neil Marshall, chief financial officer at Kern Federal Credit Union. As with other credit unions, home and car loans are a staple for Kern Federal, a $270 million-asset institution that opened in 1949. San Joaquin Bank, meanwhile, a business bank headquartered in Bakersfield, is also making loans and maintaining lines of credit. “We’re accommodating all of the credit requests of our customers,” said Bart Hill, chief executive officer of the...

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

The other night on CNBC my friend Barry Ritholtz told a good story. He said that for the time in credit market history loans between 2002 and 2006 were made on the basis of the ability to cut up and syndicate the debt, as opposed to lenders' ability to pay. It's a good story. But is it true? No, other than in the most superficial sense. I'm assuming Barry was really saying that it was the first time loans were made because there was an external appetite for the loans as byproducts, instead of lender concern about prudently putting out...

The financial crisis has put a spotlight on the obscure world of credit default swaps - which trade in a vast, unregulated market that most people haven't heard of and even fewer understand. Will this be the next disaster? If Hieronymus Bosch were alive today to paint a triptych called "The Garden of Mortgage Delights," we'd recognize most of the characters in the bacchanalia and its hellish aftermath. Looming largest, of course, would be the Luciferian figures of Greed and Excessive Debt. Scurrying throughout would be the Wall Street bankers who turned these burgeoning debts into exotic securities with tangled...

The process of this bailout reminds me of a panic-stricken swimmer thrashing in the water only making his situation worse. Even a “bipartisan deal”—whatever that is supposed to mean— will not stop the Congress from thrashing about. The beneficiaries of the corrupt monetary system of the last three decades are now desperately looking for victims to stick with the bill after they have reaped decades of profit and privilege. The difficulties in our economy will continue because the Legislative and the Executive branches have not yet begun to address the real problems. The housing bubble’s collapse, as was the Dot...

For the Federal Reserve and the Treasury Department, the crisis continues. Without the broad bailout plan they invented and lobbied hard for, the two agencies are once again forced to careen from one desperate path to another, and to dig deep into their toolkits to rescue the global financial system. Even before the House stunned the world on Monday by rejecting the Bush administration’s bailout bill, the Fed was already resorting to the oldest action in its book: printing money. With money markets around the world seizing in fear, the Fed on Monday announced that it would provide an extra...

Our wretched economy of false valuations cannot continue much longer. It is the domestic counterpart of President Bush’s past friendship with Vladimir Putin. It is the fantasy world of an everlasting bull market and “successful” government bailouts. The political leadership in America has demonstrated that it doesn’t understand economics. They cannot solve the present crisis unless they go back to school and consult the wisdom they have so long neglected. They have built their post- Cold War world on a false boom, on false “partnerships” with enemies. They have permitted a policy of credit expansion without end. “Credit expansion,” wrote...

Oil prices tumbled more than $6 a barrel Monday, briefly slipping below the $100 level as traders bet that global demand for petroleum products will keep falling despite a planned $700 billion U.S. financial bailout. A stronger dollar also weighed on crude prices as investors who bought oil and other commodities as a hedge against inflation sold their contracts. Light, sweet crude for November delivery fell as low as $99.80 a barrel in morning trading on the New York Mercantile Exchange before edging up slightly to $100.28, down $6.61. The contract fell Friday $1.13 to settle at $106.89. Crude has...

A hurricane of bad credit card debt will start crashing ashore in the United States in the first quarter of next year, even as the mortgage crisis continues, analysts at New York research firm Innovest Strategic Value Advisors warned Monday. “A combination of a 10-year steady drip of deteriorating personal finances and a tidal wave . . . brought on by the mortgage and credit crisis leads us to believe that credit cards are going to implode in the near term,” Gregory Larkin, Innovest's senior banking analysts said during an online seminar on the topic. So far, credit-card “charge-offs” –...

[snip] Although certain financial institutions are undeniably in deep trouble—difficulties of their own making, we might add—the problems in particular financial circles should be kept in perspective. Note especially that credit markets in general have NOT ceased to operate. Moreover, lenders are extending credit in historically great amounts. To see this reality, however, we must break away from anecdotes in the financial press, which is eager to attract readers, and from fear-mongering by the political class, which is eager to seize more power, and examine the data that describe wider market transactions. For this purpose, the St. Louis Fed’s Web...

Since this country seems to have largely abandoned the true use of the constitution and the looters are getting closer by the day, I thought I'd do a where's waldo kind of thing. If you had to start over in a country other than the USA, where would you think that it would be most likely that you could live the kind of life that the original intent of the constitution would have afforded you, and where do you think that John is hiding...? Also, if there does happen to be a crash, how are you preparing?

September 29, 2008 In Times of Crisis, Trust Capitalism By Joseph Calhoun The US government is executing a coup d’etat of capitalism and I fear that we will pay the price for many years to come. Hank Paulson, Ben Bernanke and a host of others tell us the credit market is not working and the only way to get it working again is for the government to intervene. They claim this intervention is urgently needed and if we don’t act, the consequences are dire. Dire, as in New Depression dire. Have these supposed experts on capitalism forgotten how it really...

The US Congress went into labor this weekend, and gave birth to a gnat. With some cosmetic adjustments, Treasury Secretary Henry Paulson's US$700 billion bank bailout plan will be adopted this week. Markets barely budged on the news, which was punctuated by government bailouts of two giant banks - America's Washington Mutual and Belgium's giant Fortis group. A third rescue, of Britain's Bradford and Bingley, sees it taken over by the government. Paulson's plan likely will provide temporary relief to the stockholders of some American banks, whose balance sheets do not look all that different from Washington Mutual's. But this...

From the front page of itulip.com, comes this unsubstantiated rumor: BoA to close credit cards for approximately 60% of customers? “I work in Credit Department at BoA (Senior Level Credit Analysist Boa Bldg 3rd fl, Char, NC). We just received memo indicating that all BoA credit cards are being closed as of 10/1. Credit score and income do not matter, all accounts are closed as of 10/1.” Executive VP Bank of America“This is true, but not as bad as he/she says. We are closing accounts, but only ones with credit scores under 750. We will reopen cards within a year...

To: Washington, D.C. From: Wall Street Re: Credit Crisis Dear D.C., WOW, WE'VE MADE QUITE A MESS OF THINGS here on Wall Street: Fannie and Freddie in conservatorship, investment banks in the tank, AIG nationalized. Thanks for sending us your new trillion-dollar bailout. We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy,...

Welcome to Lesson 3 of ‘The Basics of Credit Derivatives’. For this lesson I will be referencing the following article: The Ballooning Credit Derivatives Market: Easing Risk or Making It Worse?, which was published in November 2005 by the Wharton School at the University of Pennsylvania. My comments will be in Red. Let’s get started: The Ballooning Credit Derivatives Market: Easing Risk or Making It Worse? (continued) Published: November 02, 2005 in Knowledge@Wharton Short Squeeze Rosen estimated there are $25 billion in credit derivatives riding on $2 billion in Delphi bonds. Just as any catastrophe triggers insurance claims, Delphi's problems...

I was just watching Fox News and they have looks at the latest Fed Data and it turns out that 92% of Banks are fine and issuing credit to safe and moderately safe credit applicants. This is a bailout for business and consumers with Bad credit! This is a bailout to encourage the issuing of more loans and credit to HIGH RISK individuals and businesses. Isn't that what got us into this mess in the first place?

1. The Federal Reserve cut interest rates to as low as 1% so that after inflation we had negative interest rates.

And the debate continues, "Is the bailout the right way to end this economic crisis?" If the trend continues true to form, never once will the media allow a deeper probe of what actually caused the current problem. "We can argue later whether it was the Republicans or the Democrats who bore most of the responsibility for this problem... which developed during the last 8 years of the Bush Administration, nudge,nudge,wink,wink.." And of course that defines the boundaries of thought which will be allowed to be aired. Enough rhetoric will saturate the airways about the proper way to solve the...

With a deal struck on how to address the financial crisis, Democratic and GOP leaders face a two-tiered challenge: selling the compromise to rank-and-file members and, more importantly, a skeptical public. For most of the past week, Treasury Secretary Henry Paulson’s plan to fix the nation’s financial crisis had been referred to as a “bailout” for Wall Street. That label was a major reason why constituents flooded Capitol Hill offices with phone calls and e-mails, overwhelmingly urging lawmakers to reject it. Facets of the Paulson proposal are still intact, evidenced by his endorsement of the revised plan. Now, members have...

BELGIUM’s Fortis is this weekend poised to become the first large continental bank to fall victim to the credit crunch, as the global chaos continues with Bradford & Bingley and American savings giant Wachovia both teetering on the brink. The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a £540 billion balance sheet and a market value of £12 billion. In Britain, the fate of Bradford & Bingley will be decided today. Fren-etic talks between the Bank of England, the Financial Services Authority and the...

Lesson 1 can be found here: Lesson 1 Welcome to Lesson 2 of ‘The Basics of Credit Derivatives’. For this lesson I will be referencing the following article: The Ballooning Credit Derivatives Market: Easing Risk or Making It Worse? , which was published in November 2005 by the Wharton School at the University of Pennsylvania. My comments will be in Red. Let’s get started: The Ballooning Credit Derivatives Market: Easing Risk or Making It Worse? (continued) Published: November 02, 2005 in Knowledge@Wharton Credit Default Swaps Credit derivatives are contracts that go up or down to track the fortunes of underlying...

Welcome to Lesson 1 of ‘The Basics of Credit Derivatives’. For this lesson I will be referencing the following article: The Ballooning Credit Derivatives Market: Easing Risk or Making It Worse?, which was published in November 2005 by the Wharton School at the University of Pennsylvania. My comments will be in Red. Let’s get started: The Ballooning Credit Derivatives Market: Easing Risk or Making It Worse? Published: November 02, 2005 in Knowledge@Wharton When Delphi filed for bankruptcy October 8, investors had to start assessing their losses on more than $2 billion in the auto parts maker's bonds, which have recently...

Just when it looked like relief was on its way, lending seized up again Friday. With the Treasury's $700 billion financial industry bailout proposal in jeopardy, and with Thursday night's collapse of an agreement and subsequent JPMorgan Chase takeover of Washington Mutual - the largest bank failure in the nation's history - credit markets have again stalled. "Things have frozen over again," said Steve Van Order, chief fixed income strategist with Calvert Funds. "Banks are nervous about lending to each other, and the commercial paper market has come to a standstill." Market gauges of lending showed higher prices for loans...

... Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. ...

Blame the economy, and some proposed regs that would limit hikes going forward When John Dykstra got his September credit card bill from Advanta, a small-business card issuer, he was shocked: Dykstra says he has a good credit score and has never missed a payment, but his interest rate had jumped from 7.99% to 26%. He was even more shocked by the explanation: A brochure in the mail told him he needed to be aware of the "continually changing business environment." He's not alone. Card issuers from Bank of America to Capital One are using the economic crisis as a...

Posted: 09/25/08 04:58 PM [ET] Congress would send $250 billion to Wall Street immediately, with the balance of the $700 billion bailout coming later, according to a tentative agreement of principles hashed out Thursday by a group of bipartisan lawmakers. Another $100 billion would be released upon at the discretion of the Treasury secretary, and the final $350 billion would be subject to a congressional join resolution of disapproval, according to a copy of the principles obtained by The Hill. Democratic and Republican negotiators announced at a Thursday press conference that they have reached a deal on a set of...

The subprime mortgage crisis rocked Wall Street again last week, spurring federal bailouts and takeovers of several large financial institutions - including Fannie Mae, Freddie Mac, AIG Insurance, Lehman Brothers and Bear Stearns. Americans are asking the tough questions -- how will this affect me? and, where do I get my bailout check?  To help understand the issues Dave travels to TGIFriday's Happy Hour for a spirited roundtable debate with guest financial expert Linda Mustaine from First Coralville Mortgage, and next-door neighbor Craig Evers. DAVE BURGE, IOWAHAWKLinda, we both know that credit is the lifeblood of the American economy. But...

As you can imagine, there are many questions about what the effect of this crisis will be, but some aspect of our economic future are already set is stone. So I’d like to take a moment to tell you about some of the more certain consequences of our current circumstance, and how they will change the economic condition of New Jersey in future weeks and months.

Bill Heard Enterprises, which was the 11th largest automotive dealership group in the country in 2007, will close the doors of all its locations today. Thirteen Chevy dealerships in Alabama, Florida, Georgia, Nevada, Tennessee and Texas will close today... The company — which dubbed itself “Mr. Big Volume” — points to credit problems and the down economy for the closings. After clearing more than $2 billion in revenues in 2007, the group’s CEO, Bill Heard Jr., pointed to customers’ inability to secure loans.

The headlines scream doom. There are endless references to the economic situation being "the worst since The Great Depression." Immense names in finance have collapsed and sunk beneath the waves of the financial crisis. Please allow me to try to explain a bit of what's going on. First of all, all you have to do is look around you to see that in terms of daily life, we are not anywhere near The Great Depression. Unemployment is barely about six percent. It was 25 percent at the nadir of The Great Depression. Real per capita incomes adjusted for inflation are...

... "These Credit Default Swaps have been written (as insurance is written) as private contracts. There is nil government regulation of them. Who writes these policies? Banks. Investment banks. Insurance companies. They now owe the buyers of these Credit Default Swaps on junk mortgage debt trillions of dollars. It is this liability that is the bottomless pit of liability for the financial institutions of America." ...