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In the past two weeks, the Federal Reserve, long the guardian of the nation's banks, has redefined its role to also become protector and overseer of Wall Street. With its March 14 decision to make a special loan to Bear Stearns and a decision two days later to become an emergency lender to all of the major investment firms, the central bank abandoned 75 years of precedent under which it offered direct backing only to traditional banks. Inside the Fed and out, there is a realization that those moves amounted to crossing the Rubicon, setting the stage for deeper involvement...

WASHINGTON - The Bush administration is proposing a sweeping overhaul of the way the U.S. financial industry is regulated. In an effort to deal with the problems highlighted by the current severe credit crisis, the new plan would give major new powers to the Federal Reserve,SNIP The plan would shut down the Office of Thrift Supervision, which supervises thrift institutions, and transfer its functions to the Office of the Comptroller of the Currency, which regulates banks. The plan would eliminate the distinction between banks and thrift institutions. The Fed would become the government's "market stability regulator," given sweeping powers to...

The Great Unwind has begun, Citigroup warns Avoid leveraged companies, countries and consumers, bank's strategists say By Alistair Barr, MarketWatch Last update: 9:51 p.m. EDT March 19, 2008 SAN FRANCISCO (MarketWatch) -- The Great Unwind has begun, Citigroup Inc. strategists warned on Wednesday. As markets and economies de-leverage across the globe, investors should avoid companies and countries that have grown to rely too much on borrowed money, they said. That means favoring public-equity markets over hedge funds, private-equity and real estate, while leaning toward emerging market countries and away from developed nations like the U.S., the bank's global equity strategy...

Pressure is mounting on central banks in the Gulf to fight surging inflation when they meet on Wednesday by severing the link between their currencies and the tumbling US dollar. Officials in Qatar and the United Arab Emirates have denied rumours of an imminent decoupling, but investors are betting on reform and are rushing to buy local currencies as investment banks issue fresh calls for revaluation. Analysts said that, despite the momentum, the Gulf states were unlikely to decouple suddenly from the dollar. They predicted more measured moves towards links to a basket of currencies. “The feeling is [that] unilateral...

Calls for 1-point rate reduction grow louder Bear Stearns shocker triggers forecasts for whopper cut to 2% By Laura Mandaro, MarketWatch Last Update: 7:52 PM ET Mar 14, 2008 SAN FRANCISCO (Menafn - MarketWatch) -- Expectations that Federal Reserve next week will cut rates by a full percentage point, to 2%, gained traction among economists and traders Friday after a bailout of Bear Stearns Cos. revealed more fault lines in the U.S. financial system. Citigroup economists said they anticipate Fed policy-makers will lower the federal funds rate by a point to 2% next week from the current 3%, "and more...

U.S. Treasury Secretary Henry Paulson did the rounds of America's Sunday morning TV shows to talk up the U.S. economy, promote confidence that financial markets would get through their present troubles and reassure a skeptical American public that the Bush administration was on top of the situation. Speaking on ABC's "This Week," "Fox News Sunday" and "Late Edition" on CNN, Paulson defended the Federal Reserve's decision Friday to come to the rescue of Bear Stearns (nyse: BSC - news - people ), the Wall Street investment bank most hurt by losses on trading in mortgage-related securities (See " Bear On...

As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures. Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed." The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the...

NEW YORK - JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks. JPMorgan Chase & Co. said the $2 a share, all-stock deal has received the required approvals from the federal government and the Federal Reserve. Bear Stearns shares close Friday at $30 a share. The Fed will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets. At...

NEW YORK: What are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in? Will the consequences in the United States be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year? Or all of the above? Stick around, because we'll soon find out. And it's not going to be pretty. Agreeing to guarantee a 28-day credit line to Bear Stearns, by way of JPMorgan Chase, the Federal Reserve...

Efforts by the Federal Reserve to restore order to financial markets are about to enter a new and potentially dangerous phase. The Fed is expected to cut US interest rates by 75 basis points to 2.25 per cent, following its recent, more aggressive policy moves to improve liquidity conditions. There re-mains a clear possibility that interest rates will only be reduced by 50 basis points as policymakers attempt to evaluate the impact of their earlier efforts to restore confidence to financial markets. Joachim Fels of Morgan Stanley says the Fed is about to enter a new phase in the easing...

WASHINGTON (MarketWatch) -- Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before. he extraordinary weekend moves came as J.P. Morgan Chase sealed a deal to buy Bear Stearns Cos. for just $2 a share backed by funds borrowed from the Fed. The Fed board gave its approval to that unique funding arrangement, which guarantees JP Morgan against losses from buying Bear. See full story. The Fed board also approved the...

If things continue this way, St. Pats day will be remembered as the crash day. Hope for better but with the Asian markets down 2-5%, it is hard to imagine a good day tomorrow.