Goldman Sachs seeks a NY Bank Charter. This move sets GS apart from its closest rivals, such as Morgan Stanly, JP Morgan Chase and Citigroup. The other banks have national charters, meaning that they can open branches across states without separate applications.
An unsurprising move, after the something similar was announced in the US and the UK. Germany will inject up to $536 billion. The initial plan calls for $50 to $100 billion. Norway is going to spend $58 billion. France will pledge less than Germany. Britain is spending $255 billion and the US $700 billion.
Mitsubishi and Morgan Stanley are renegotiating their deal. MS was supposed to get an infusion of $9 billion from the Japanese giant. MS stock has hit $9.68. It was valued at $25.38 when they announce part of the deal. Mitsubishi still wants 21% of MS, but at a far lower price than last month.
This article suggests that it’s time to buy stocks. The stocks haven’t yet hit rock bottom, so it’s not the actual time yet. But it’s coming. The trick is to distinguish between the companies that are going to go bankrupt and the ones which will survive healthily, unless you are short-selling of course. Still, you’d better hedge your bets by doing both.
The credit squeeze hits Europe. Business credit lines are starting to be frozen, chopped into smaller pieces or just plain canceled as a response to the credit crunch. Businesses needing revolving credit in order to do their daily operations are going to have to find alternative financing, which if it isn’t found, will shut them down.
Iceland is going bankrupt. Since they are already part of the European Economic Area, adopting the euro would be a way to get themselves out of trouble, since the krona is completely devaluated and they’ve stopped trading in it since Thursday.
The latest Reckoning article is up. Greenspan was all for not regulating the derivatives market, which is at the heart of the current financial crisis. If he would have been for regulating it, things might have been different. Then again, the main fault lies with greedy Wall Street and London investment banks, who exploited the contracts to their utmost limits.
AIG is best known for selling conventional products like insurance polices and annuities, products that are overseen by state and federal regulators. The problem is that AIG is also deeply involved in the risky, opaque market for financial derivatives and other complicated financial instruments, which are unregulated.
“It’s pure crisis management,” Mr. Chernow said. “It’s the Treasury and the Federal Reserve lurching from crisis to crisis without a clear statement on how financial failures will be handled in the future. They’re afraid to articulate such a policy. The safety net they are spreading seems to widen every day with no end in sight.”
Credit default swaps are a type of credit insurance contract in which one party pays another party to protect it from the risk of default on a particular debt instrument. If that debt instrument (a bond, a bank loan, a mortgage) defaults, the insurer compensates the insured for his loss.