Bailout shifts again; floodgates could open

WASHINGTON - In another about-face, the Bush administration says Congress needs to free up the second half of the $700 billion federal bailout. And now that automakers are getting a share, the floodgates are almost certain to open for other nonfinancial industries that want government help.

Wobbling insurance companies would likely be among the first to ask for help. Whether they actually get the money will probably be determined only after Barack Obama is sworn in as president.

State and local governments, also facing hard times in what is already the longest recession in decades, are expected to make some appeals. They'll probably keep their primary focus on a likely economic stimulus package next year.

The $17 billion loan to the automakers is another makeover for the bailout, which began as a plan to buy up bad mortgage debt instead of direct cash infusions, and with only banks as customers.

Treasury Secretary Henry Paulson said Friday that using the financial bailout package for loans to automakers basically means the administration has used up the first $350 billion of the fund.

Earlier, Paulson had said he expected to leave the remaining $350 billion to Obama's team. But he said Friday that having Congress free up what's left of the money now was important "to support financial market stability."

The original plan was to buy up bad debt from banks, but Paulson abandoned that approach, in favor of having the government directly buy stock in the banks. Paulson said the first way would have taken too long.

Paulson's statement came out as President George W. Bush ordered an emergency bailout of General Motors and Chrysler. Ford was not expected to seek short-term help.

Paulson said he would consult with congressional leaders and Obama's economic team to determine how to proceed. But he and other Treasury officials did not offer any specific date for when the administration might formally request release of the second half of the bailout fund. Bush leaves office in one month.

The legislation that set up the rescue fund on Oct. 3 requires the administration to submit a report to Congress when it determines it needs the second $350 billion, and to spell out how it will use the money.

Analysts said they saw Paulson's announcement as an effort to assure financial markets that should the second part of the fund be needed, the current administration would move quickly to have it approved by Congress.

But given that a Democratic president and new Congress will take office next month, analysts said the current administration is unlikely to push for full approval to spend the second half of the rescue effort.

"I can't imagine that Congress will actually go through hearings and doing all that needs to be done to get the money released before the next administration is in office," said Mark Zandi, chief economist at Moody's Economy.com.

Representatives of Obama's transition team declined comment.

A request for the second half of the bailout money would run into resistance on Capitol Hill, with key Democrats vowing to block the release of more money unless the administration includes greater efforts to help homeowners threatened with foreclosure.

quote from www.msnbc.com

Bank of Japan may hold rates.

Financeroll.com (21/11) -- The Bank of Japan may consider more measures to soothe frazzled money markets at a meeting this week and keep interest rates steady until a shrinking economy or the global financial crisis demand a more drastic response.
The central bank cut its benchmark rate by 20 basis points to 0.3 percent last month, and economists say it may consider another cut either next month or early next year.


But with its benchmark already the lowest among the Group of Seven rich nations and the economy in its first recession in seven years, the BOJ has little room to manoeuvre on monetary policy.



Last week Seiji Nakamura, a member of the BOJ's rate-setting board, said he did not see an immediate need for a rate cut and warned that very low rates could disrupt money markets.(RTR/hqm)

Obama pick Geithner as Treasury Secretary.

Financeroll.com (22/11) -- President-elect Barack Obama picked Timothy Geithner, head of the Federal Reserve Bank of New York, to be his Treasury secretary, with Lawrence Summers getting a senior White House role, as released in Bloomberg.
Geithner helped lead the U.S. response to the deepest financial crisis in seven decades, including the takeover of American International Group Inc. and Bear Stearns Cos. rescue, and decision to let Lehman Brothers Holdings Inc. fail. The U.S. stock market’s benchmark index climbed from an 11-year low after news of Obama’s pick.

Both Geithner and Summers are veterans of managing financial turmoil, working together on the Asian financial crisis of 1997- 98 and staving off a Mexican default earlier that decade. They will be charged with shepherding Obama’s plans for a fiscal stimulus to cushion an economy that analysts say is in its deepest recession in a quarter century.


Summers, Bill Clinton’s last Treasury secretary and now a professor at Harvard University, would have a post that positions him to succeed Ben S. Bernanke as Fed chairman.

Obama is also likely to nominate New Mexico Governor Bill Richardson as Commerce Secretary, and to announce his picks on Nov. 24, the person said on condition of anonymity. Richardson was Clinton’s Energy secretary and former ambassador to the United Nations.

The Standard & Poor’s 500 Stock index jumped 6.3 percent to 800.03 at the close in New York. The gauge is still heading for its biggest annual decline since 1931.(BLB)

I Will Find out Why Lehman Bankrupt

Washington - U.S. investment bank Lehman Brothers one of the companies that ignored by the U.S. government. That left bankrupt companies have assets, although large and influential on the U.S. financial industry.

CEO of Lehman Brothers, which insulted many people because of bankruptcy Lehman, Richard Fuld is not out of mind. Fuld continues to repeatedly ask why the U.S. government does not save Lehman Brothers

Fuld in a panel discussion with the U.S. Congress, on Monday local time, said that he is responsible for the bankruptcy Lehman, but he wondered why the government does not save Lehman, which is aged 158 years.

Even regulators in the U.S. market is difficult to know the situation faced by Lehman speaking before Lehman months kebangkrutannya submit to the court.

"I want to clarify again, I am responsible for the decisions I take. Until I die I will find out, I do not know why but we are not saved," Fuld said as cited by Reuters, on Tuesday (7/10/2008).

A day after Lehman to bankruptcy on 15 September 2008, the U.S. government offers a direct step to save the insurance company AIG. U.S. government debt to provide up to U.S. $ 85 billion to save AIG from bankruptcy.

In the Congress itself, other than blame Fuld, who also questioned why the government directly save AIG, while Lehman left bankrupt. (Ddn / ir)