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Archive for February, 2009

The US government unveiled details of a new aid plan for struggling banks on Monday, leading to gains in banking shares despite concerns for the fallen giant Citigroup.

A joint statement from the US Treasury, Federal Reserve and banking regulators said the new plan could lead to bigger government stakes but with a “strong presumption” that banks “remain in private hands.”

Amid growing speculation about nationalization, authorities said the Capital Assistance Program would offer “mandatory convertible preferred shares,” that could be turned into common shares “only as needed over time to keep banks in a well-capitalized position.”

“The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth,” said a joint statement from the US Treasury, Federal Reserve and banking regulators.…..Continue Reading

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Credit-card issuers,are drawing jeers from customers and lawmakers alike for passing their financial burdens on to good-paying borrowers by slamming them with higher interest rates regardless of their credit profiles.

The practice, dubbed “rate-jacking,” is impacting cardholders across the board, including those who’ve been considered historically low-risk borrowers.

Consumers who make their payments on time say they’re seeing rates spike by several percentage points and their credit limits suddenly pared back. But critics charge that the moves are just more examples of federally rescued banks passing the buck to already hard-hit consumers who have been slammed by a tanking stock market and falling housing prices.….Continue Reading

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There’s no script for running a company in this historic downturn. So what the heck do you do? Here are ten ways to weather the storm.Exciting as it is to be living through historic economic drama, you can’t just stand by and watch. You have to act – yet you have no script.

So much of today’s turmoil is unprecedented that we can’t find much guidance by looking to the past. For managers across the global economy, as well as for Team Obama on its way to Washington, today’s great question is, What do we do now?

Managing in any recession is difficult; managing through this one is especially hard because it’s different from previous ones in multiple ways. Most immediately significant, employment is plunging more steeply than in a long time – by more than two million jobs last year, more than during the previous two recessions, and this one is far from over.….Continue Reading

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A majority of U.S. banks made it tougher for consumers and businesses to get credit in the past three months even as lenders received infusions of taxpayer funds, a Federal Reserve report showed today.

“About 65 percent of domestic banks reported having tightened lending standards on commercial and industrial loans to large and middle-market firms,” the Fed said in its quarterly Senior Loan Officer survey. “Large fractions of domestic banks continued to report a tightening of policies on both credit-card and other consumer loans.” …..continue reading

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Government broadens Temporary Liquidity Guarantee Program to guarantee secured bank debt until 2019, hoping to encourage new lending.
Federal banking regulators are considering a plan to dramatically expand a lesser-known bailout program that provides government guarantees to hundreds of billions of dollars of corporate debt.

The Federal Deposit Insurance Corp. will likely change its so-called Temporary Liquidity Guarantee Program later this month, by extending the maximum maturity of its payment guarantee on new “covered” bonds issued by banks to 10 years from three years.
Covered bonds are issued by banks, backed by collateral, like a mortgage or a consumer loan, that exists on the bank’s balance sheet. It is different than an asset-backed security, which does not require banks to actually own the asset they use to back the debt issuance. The bonds are popular in Europe, but have only been offered on a limited basis in the United States. ….  Continue Reading

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Citi issued its first quarterly progress report detailing the deployment of the $45 billion of capital the U.S. Treasury invested in the company as part of the federal government’s Troubled Asset Relief Program (TARP). The report, which covers the fourth quarter of 2008, is titled, “What Citi is Doing to Expand the Flow of Credit, Support Homeowners and Help the U.S. Economy.”

In the first stage of primary lending and secondary market activities directly linked to the TARP investments, Citi said it is putting capital to work in five major areas as follows:   Continue reading

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