U.S. Consumers Face `Liquidity Squeeze' as Banks Stop Loans: Chart of Day Dec 2, 2008
The CHART OF THE DAY displays two indicators of consumer indebtedness, the amount of mortgage loans outstanding and credit-card lines from commercial banks. Both reached plateaus this year as housing prices dropped and unemployment rose. (Bloomberg)
20 comments Dec 2, 2008
President Franklin Delano Roosevelt, whose New Deal policies Obama wants to mirror, signed it into law to prevent commercial banks from engaging in investment banking. Investment banking, the kind of work done by Wall Street titans such as Lehman Brothers and Bear Stearns, raises money to package and sell securities such as the now-discredited "toxic" mortgage and mortgage-backed derivatives. (Human Events Online)
World stocks tumble as economic fears deepen Dec 2, 2008
Japan's central bank meanwhile outlined new measures to make it easier for commercial banks to borrow money using corporate debt as collateral, aiming to unclog credit markets that are vital to the economy. In the 15-nation eurozone, an index of manufacturing activity hit a record low of 35. (Sydney Morning Herald -- World)
Bank of Japan eases access to cash Dec 2, 2008
The central bank will begin accepting BBB or higher-rated corporate debt as collateral from commercial banks on December 9, it said in a statement after an emergency board meeting today in Tokyo. The bank kept its overnight lending rate at 0. (Sydney Morning Herald -- Business)
News Analysis: End of era on Wall Street Dec 2, 2008
In contrast, leverage ratios at commercial banks such as Bank of America are pretty low, staying at about 11 ... Therefore, investment banks are more fragile than commercial banks in the face of losses ... They would likely to plunge into the red because investment banks have no access to deposits as commercial banks do. (Xinhuanet, China)
Round two for credit crisis Dec 2, 2008
Japan's central bank meanwhile outlined new measures to make it easier for commercial banks to borrow money using corporate debt as collateral, hoping to free up frozen credit channels at the heart of the current crisis. "Financial conditions in Japan have become less accommodative on the whole, as the financial positions of small firms have deteriorated and an increasing number of large firms have faced a worsening in funding conditions," it said. (Business Report, South Africa)
After another sell-off, nations try again on credit crunch Dec 2, 2008
Japan's central bank meanwhile outlined new measures to make it easier for commercial banks to borrow money using corporate debt as collateral, hoping to free up frozen credit channels at the heart of the current crisis. ADVERTISEMENT. (Yahoo! Asia News)
Government Bonds Advance on Speculation Bank of Japan Will Buy Back Debt Dec 2, 2008
The central bank also announced that it will start accepting BBB or higher-rated corporate debt as collateral from commercial banks on Dec. 9 to encourage them to increase loans to companies. The bank will hold a regular two-day policy meeting on Dec. 18. (Bloomberg -- Japan)
Yen Trades Near Five-Week High Versus Dollar on Signs Slowdown Deepening Dec 2, 2008
The central bank will begin accepting BBB or higher-rated corporate debt on Dec. 9 and will start a new lending facility for commercial banks in January, it said in a statement after an emergency meeting today in Tokyo. Japanese importers are likely to find these levels attractive to buy dollars to meet their year-end financing needs, said , chief treasury dealer in Tokyo at Chuo Mitsui Trust & Banking Co., Japans seventh-largest publicly listed lender. (Bloomberg -- Japan)
Uncle Sam needs to go shopping. Not us Dec 2, 2008
A number of respected economic voices, including and made the provocative case that we should be thankful for the repeal of Glass-Steagall's separation of commercial banks and investment banks, because at that time, the big commercial banks, including Citigroup, JPMorgan Chase, and Bank of America, seemed relatively immune to the credit crunch. Who else would have had the capacity to swallow up Merrill Lynch and Bear Stearns, if not for these liberated giants. (Salon)
Shirakawa Says BOJ Preparing Steps to Expand Corporate Funding Dec 1, 2008
The policy board will discuss allowing commercial banks to use corporate bonds with lower credit ratings as collateral for obtaining cash from the central bank, NHK reported, without saying where it got the information ... Commercial banks remain reluctant to lend to each other as long as they are worried about counterparty risks in financial markets, which is the core of the ongoing problem, said , an economist at RBS Securities Japan Ltd. in Tokyo. (Bloomberg)
CIC Energy Selects Shanghai Electric Group as Preferred EPC Contractor for Mmamabula Energy Project (MEP) Dec 1, 2008
" The finalization of the EPC contract for the MEP is key to concluding agreements with electricity offtakers, lenders and others. Subject to conclusion of all project agreements (including the EPC contract) and the execution of definitive loan agreements ("Financial Close") by mid-2009, commercial operation of the power station is expected in late 2012 or early 2013. "Shanghai Electric is delighted to be appointed as the preferred EPC contractor for the Mmamabula Energy Project and looks... (Canada Newswire)
Iceland considers adopting the euro Dec 1, 2008
Iceland is not in the EU, but Haarde's party pledged to re-evaluate the merits of membership after the financial crisis hobbled the once-booming North Atlantic island economy, forcing the government to take over the top three commercial banks and limit capital flows to keep the crown from weakening further. Recent opinion polls show Icelanders warming toward EU membership and, in even greater numbers, backing adoption of the euro. (International Herald Tribune -- Business)
With markets in turmoil, how to buy gold bars Dec 1, 2008
In essence, when it makes money available to commercial banks, it is temporarily swapping its safe securities for the riskier ones the banks are putting up as collateral ... " Iceland's president said his country could face "national bankruptcy" because of the credit crisis. Can a country actually go bankrupt? Countries can't go bankrupt in the same way that companies do - closing their doors, sending everyone home, and having their remaining assets seized. But they can become insolvent if they... (Globe and Mail)
U.S. Rethinking Roles of Fannie, Freddie Dec 1, 2008
Congress also may tinker with the 12 regional Federal Home Loan Banks, which lend money to more than 8,000 commercial banks, thrifts, credit unions and insurers. These loans are a big source of funding for mortgages. (SmartMoney)
Team Obama ready to roll Dec 1, 2008
Rubin also helped negotiate legislation to repeal Glass-Steagall, a Depression-era law that limited commercial banks to taking deposits and making loans. As Rubin's deputy and then successor at the Treasury, Summers helped shepherd the repeal into law, leading to the creation of megabanks such as Citigroup Inc. that could create and trade securities. (Republican-American)
Fed Commercial Paper Holdings Rise to $295.1 Billion (Update2) Nov 30, 2008
6 billion a week before, while loans to commercial banks slipped ... The Feds to commercial banks fell to $91. (Bloomberg)
The Fed Boosted Emergency Loans to Banks and Firms Nov 30, 2008
The Federal Reserve boosted its lending to commercial banks and investment firms over the past week, indicating that a severe credit crisis was still squeezing the financial system. The Fed released a report Friday saying commercial banks averaged $93. (ABC News -- Wire)
Iceland PM Defies Calls to Resign Amid Crisis Nov 30, 2008
But last month Iceland's three major commercial banks collapsed under the weight of huge debts amassed during years of rapid economic growth. Since then the value of Iceland's currency, the krona, has plummeted, businesses have gone bankrupt and hundreds of people are losing their jobs each week in this nation of 320,000 people. (ABC News -- Wire)
RBI steps in to improve credit flow to exporters Nov 30, 2008
RBI clarified that the facility under which all scheduled commercial banks (excluding Regional Rural Banks) are provided refinance from the Reserve Bank equivalent to up to 1. 0 per cent of each bank s NDTL as on October 24, 2008 at the LAF repo rate up to a maximum period of 90 days could be rolled over. (Hindu Business Line)
Change can save shaky banks Nov 29, 2008
But it's the chance to gather deposits a good source of funding right now and possibly get an investment through the government's Temporary Assets Relief Program, which at this point is only available to commercial banks. Copyright 2008 Associated Press. (Albany Times Union)
Iceland's PM defies calls to resign over meltdown Nov 29, 2008
Anti-government protests began in early October after Iceland's three main commercial banks capsized, and have grown larger and angrier each week ... Iceland's three major commercial banks collapsed last month under the weight of huge debts amassed during years of rapid economic growth that made tiny Iceland one of the world's richest countries. (International Herald Tribune -- Travel)
Factoring firms gaining ground Nov 28, 2008
Factoring, asset-based lending and purchase-order financing companies are seeing an increase in demand as commercial banks retract from the market. DiPiero says. (San Antonio Business Journal, TX)
Iceland changes foreign exchange rules Nov 28, 2008
The central bank, Sedlabanki, had modified its currency outflow in the wake of the collapse of Iceland's three major commercial banks and a subsequent plunge in the value of its currency, the krona. As supplies of foreign currency dried up on the tiny Nordic island nation in early October, Sedlabanki began trading foreign currency from its foreign exchange reserves to facilitate transactions that had been blocked by the freezing of assets of its collapsed banks. (International Herald Tribune -- Travel)
Ottawa balances books — barely Nov 28, 2008
It is also making legislative changes to give it leeway to bail out commercial banks if need be ... 1-billion from commercial banks that partake in Ottawa's recent moves to buy back mortgage securities. (Globe and Mail)
China's Interest Rate Cut to Squeeze Bank Margins Further, Analysts Say Nov 27, 2008
The central bank also reduced the interest rate that it pays on reserves deposited by commercial banks to encourage lending. These moves are incrementally positive for reducing the macro headwind, asset quality pressures and property lending risks, Goldman Sachs Group Inc. analysts led by wrote in a note published today. (Bloomberg -- Asia)
China's central bank slashes interest rate Nov 27, 2008
Also Wednesday, the central bank cut the amount of money commercial banks must set aside as reserves, expanding the pool available for lending. The moves are meant to "promote stable credit growth," the People's Bank of said on its Web site. (CNN -- International)
Once vilified, Volcker gains Obama's respect Nov 27, 2008
As chairman, he refused to loosen the boundaries between investment and commercial banks, as later occurred under Greenspan. "Simply stated, the bright new financial system, for all its talented participants, for all its rich rewards, has failed the test of the marketplace," Volcker said during a scathing attack on Greenspan's approach earlier this year. (San Francisco Chronicle -- Politics)
Montana banks remain strong Nov 27, 2008
commercial banks and ... "All in all, Montana's commercial banks look good," said Steve Turkiewicz, chief executive officer of the Montana Bankers Association ... The assets of Montana's 74 commercial banks were worth 18. (Montana Standard, MT)
American economy suffers triple-whammy of bad news Nov 27, 2008
The FDIC also said that commercial banks and savings institutions suffered a 94 percent drop in third-quarter profits to $1. 7 billion. (Honolulu Advertiser)
Florida financial institutions losses grow Nov 27, 2008
The state s 275 commercial banks had a combined loss of $151 million in the three months ended Sept. 30, and have lost $159 million in the first nine months of 2008, a report from the said ... In the third quarter of 2007, 278 commercial banks in Florida had combined net income of $138 million ... Nationally, commercial banks and savings institutions reported net income of $1. (Tampa Bay Business Journal, FL)
Construction money available, but reviews, appraisals tighter Nov 27, 2008
After a four-year building boom, Hawaii s commercial banks still are willing to lend money to developers seeking construction loans ... The tight guidelines come as local, commercial banks, the majority of which are well-capitalized, fill a financial void left by major investment banks that exited the state after heavily investing in Hawaii s building industry. (Pacific Business News, HI)
Federated States of Micronesia--2008 Article IV Consultation, Concluding Statement Nov 27, 2008
With the rise in nonperforming loans, commercial banks may tighten their lending standards and cut back on credit ... Public enterprises that have borrowed from commercial banks may face higher interest payments when refinancing ... Commercial banks in the FSM continue to primarily invest in safe U.S. Treasuries or other overseas securities (almost of their assets), rather than lend to new businesses. (IMF News)
FDIC to allow bids for troubled banks Nov 27, 2008
But it's the chance to gather deposits - a good source of funding right now - and possibly get an investment through the government's Temporary Assets Relief Program, which at this point is only available to commercial banks ... Credit card lender American Express Co. and investment banks Morgan Stanley and Goldman Sachs Group Inc. are companies that have decided to become deposit-gathering commercial banks in recent months. (AZCentral -- Business)
Managing the crisis Nov 27, 2008
Three of the five big investment banks in the US no longer exist and the other two are de-leveraging and changing their status to commercial banks. The extent of the Feds proposed bail-out (US$700-billion) is unprecedented. (iAfrica.com)
Great Depression taught lasting life lessons Nov 27, 2008
From 1929 to 1933, about 11,000 of the nearly 25,000 commercial banks in the United States failed. People lost their homes and their farms. (AZCentral -- News)
Banner Corporation Announces Officer Promotions Nov 27, 2008
6 billion bank holding company operating two commercial banks in Washington, Oregon and Idaho. Banner serves the Pacific Northwest region with a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. (Primezone Releases)
China's total social investment is predicted to reach 18 trillion yuan (2.64 trillion U.S. dollars) in 2009, the National Development and Reform Committee announced Thursday.• China's central bank cuts interest rates Nov 27, 2008
BEIJING, Sept. 15 (Xinhua) -- China's central bank said on Monday it would reduce the benchmark loan interest rate and the reserve requirement ratio for commercial banks to ensure a steady and rapid economic growth. The benchmark interest rate for one year yuan denominated loans will be adjusted down 0. (Xinhuanet, China)
Gov't Still Lacks Clear Crisis Plan Nov 27, 2008
"It's anybody's guess but I don't see any other" big commercial banks going under. Copyright 2000-2008 Investor's Business Daily, Inc.. (Investors Business Daily)
IMF's double-edged rescue for Pakistan Nov 26, 2008
According to the report, the loan terms would include the fund's intervention in central bank affairs, provision to the IMF of details of foreign exchange reserves, remittances and flow of foreign exchange through commercial banks, the imposition of a 7% tax on wheat production and a 3. 5% levy on other crops, and IMF monitoring of preparations of the federal budget. (Asia Times Online)
FDIC: 14% of Texas banks unprofitable Nov 26, 2008
About 14 percent of Texas commercial banks insured by the are unprofitable, according to the FDIC's quarterly banking profile report published Tuesday. Of Texas 598 banks, 14. (Austin Business Journal, TX)
Nigeria: Country Must Develop Credit-Based Economy-CBN Nov 26, 2008
In his remarks, the Country Director, World Bank, Onno Ruhl who noted that credit for growth in Nigeria must come from commercial banks as they dominate the financial sector of the economy, said the World Bank in its support for MSME project through the setting up of new Micro finance institutions has committed $7. 25 million in six grants, adding that micro-finance has a potential to eradicate poverty. (allAfrica.com)
Colorado banks earnings plunge Nov 26, 2008
Net income for Colorado s commercial banks plummeted in the third quarter, according to data released Tuesday by the. The state s 145 commercial banks earned a collective $15 million in the quarter ended Sept. 30. (Denver Business Journal, CO)
FDIC banks 3Q income down 94 percent Nov 26, 2008
Savings institutions and commercial banks insured by the generated a total of $1. 7 billion in income in the third quarter of 2008, a 94 percent drop from $28. (Pacific Business News, HI)
FDIC: Troubled assets hammer U.S. banks Nov 26, 2008
7 billion from $27 billion last year, caused by mounting troubled assets at insured commercial banks and savings institutions, the FDIC said Tuesday. In its report on the third-quarter performance of FDIC-insured banks, the agency said its list of problem institutions during the quarter shot up to 171, compared with 117 last year. (Wichita Business Journal, KS)
For banks, a quarter to forget Nov 26, 2008
Net income for the first nine months of 2008 was $443 million for Minnesota s 410 commercial banks, compared to $980 million for the first nine months of 2007. While about two-thirds of the Twin Cities 119 banks were profitable in the third quarter, seven Twin Cities banks lost more than $2 million in the third quarter. (Twin Cities Business Journal, MN)
Transcript of a Conference Call on Pakistan With Juan Carlos Di Tata, Senior Advisor, Middle East and Central Asia Department Nov 26, 2008
And in order to eliminate this borrowing from the central bank, what is important is that in the auctions of Treasury bills, the interest rates will have to be sufficiently attractive for commercial banks to purchase enough Treasury bills, so that the domestic borrowing requirements of the government is covered through commercial bank sources, and also from other non-bank sources like Pakistan investment bonds, for instance, and the national savings scheme. QUESTIONER: My question earlier was... (IMF News)
Governor warns banks on lending Nov 26, 2008
Mervyn King has warned that the UK economy will go into "a steep recession" if the commercial banks don't resume normal lending levels. Speaking to the Treasury Select Committee, the governor of the Bank of England said "this was more important than anything else at present". (BBC News -- Business)
The Humpty Dumpty Economy Nov 26, 2008
The list of handouts could be long -- commercial banks, insurance companies, auto makers, credit card issuers, states and municipalities. The new Obama administration and the Democratically-controlled Congress probably can t say no to the "Big Three" auto makers, since a bailout is really a payback to the UAW. Expect the government to pay for the legacy costs of retiree s pensions and medical expenses and to get back into the business of running businesses too big to fail. (Human Events Online)
More US banks on problem list as profits slump 94% Nov 26, 2008
The 171 banks on the FDIC's "problem list'' encompass only about 2% of the nearly 8,500 FDIC-insured institutions. The increase from 117 in the second quarter is sharp, and the current tally is the highest since late 1995. "We've had profound problems in our financial markets that are taking a rising toll on the real economy,'' said FDIC Chairman Sheila Bair in a statement, adding that Tuesday's report "reflects these challenges.'' Banks across the US have been hurt - and in some cases,... (Sydney Morning Herald -- Business)
Financial Crisis: How It Happened, Why Agriculture Is in Better Shape Nov 26, 2008
Agriculture s primary lenders are commercial banks, the Farm Credit System, insurance companies, the Farm Service Agency and captive finance companies ... Commercial banks have the highest market share of non-real-estate farm debt (53 percent), while lending 38 percent of farm real-estate loans ... Commercial banks lending to agriculture are generally small, community banks that use local deposits as their primary source of funds. (Agri-View, WI)
Profits plummet for FDIC-insured banks Nov 26, 2008
7 billion for commercial banks and savings institutions for the quarter ended Sept. 30, compared to $28. 7 billion during the same period last year. (Birmingham Business Journal, AL)
FDIC-insured banks earnings drop 94% Nov 26, 2008
All commercial banks and savings institutions insured by the reported earning a combined $1. 7 billion in the third quarter of 2008, a decline of a whopping 94 percent from earnings of $28. (San Jose Business Journal, CA)
SICK ECONOMY THREATENS AMERICAN EXPRESS Nov 26, 2008
Earlier this month, Chenault applied and received bank-holding company status, enabling AmEx to access the Federal Reserve discount window that is open to commercial banks. The move also allows AmEx to compete for bank deposits. (New York Post -- Business)
Financial Future Nov 25, 2008
If you had that rule in the 1990's, most major commercial banks would have gone down when we last had a banking crisis. STEELE: So how much free hand will President Obama allow his secretary Geithner to use in creating the market that we need in order to grow jobs, grow prosperity just so they can be taxed. (Fox News)
* The Big Three: too big to fall Nov 25, 2008
The opposition of the Federal Reserve and Treasury to hands-on intervention meant that they were slow to understand that merely ring-fencing the commercial banks could not save the financial system. Now, they are failing to understand the financial significance of the Big Three. (Taipei Times, Taiwan -- World)
Bank industry analysts fall prey to the shrinkage Nov 25, 2008
At many banks there were separate analysts who covered commercial banks and investment banks. Now the lone surviving investment banks - Goldman and Morgan Stanley - have become commercial banks. (International Herald Tribune -- Business)
Press Release: IMF Executive Board Approves US$7.6 Billion Stand-By Arrangement for Pakistan Nov 25, 2008
2/Excluding gold and foreign deposits of commercial banks held with the State Bank of Pakistan. IMF EXTERNAL RELATIONS DEPARTMENT. (IMF News)
Hungary cuts key interest rate as inflation falls Nov 25, 2008
The base rate is the interest paid by the central bank to commercial banks using its two-week bill facility, the main instrument used by the NBH to manage liquidity on the interbank market. On Oct. 22, the central bank carried out an emergency rate hike of 3 percentage points, to an annual 11. (AZCentral -- Business)
Fed Pledges Exceed $7.4 Trillion in Rescue of Companies With Frozen Credit Nov 25, 2008
After Bear Stearnss collapse in March, the central bank started making direct loans to securities firms at the same discount rate it charges commercial banks, which take customer deposits. In the three years before the crisis, such average weekly borrowing by banks was $48 million, according to the central bank. (Bloomberg)
Obama Mulls Delays to Tax Hikes Nov 24, 2008
4 billion into a proposed $7 billion fund to buy bonds from cash-strapped companies and commercial banks. 1. (ABC News -- Wire)
U.S. government steps in to save Citi Nov 24, 2008
4 billion into a proposed $7 billion fund to buy bonds from cash-strapped companies and commercial banks. Members of the 21 nation Asia-Pacific Economic Cooperation (APEC) forum pledged to take quick and decisive action to help the global economy. (International Herald Tribune)
Rates to go retro with lowest level since '60s Nov 24, 2008
And if the commercial banks opt to pass on the reduction in full to their standard variable mortgage rates, monthly home loan repayments could be slashed by 23% by Easter. Debt futures markets also expect the RBA to cut the cash rate by a massive 125 basis points after its next board meeting on December 2. (The Age, Australia -- Business)
Global credit crunch hits microfinance Nov 24, 2008
If commercial banks are affected, then the expansion of the microfinance program will be affected, said Mahabub Hossain, an executive director at BRAC, adding that its donor-dependent efforts in education, health care and family planning are at risk. I am deeply worried, said village health worker Hosne Ara, who works on programs for tuberculosis and family planning. (Globe and Mail -- Business)
China to establish 3-billion-yuan fund for troubled SMEs Nov 24, 2008
The central bank raised the loan quota of both national and regional commercial banks by 5 and 10 percent respectively in the second half to ease the financial pressures on the private companies. Premier Wen Jiabao also pledged to attach great importance to the difficulties and challenges the companies faced during an inspection of enterprises in eastern Shanghai and Zhejiang Province from Friday to Sunday. (Xinhuanet, China)
