credit crisis

Three Cheers for Chapter 11

Lee Blum — Mon, 24 Nov 2008 15:35:30 -0500

This week the CEO’s of the Big Three (GM, Ford and Chrysler) begged Congress for money, as they flew into Washington on their private jets. Congress has correctly denied funding and now the Big Three are left on their own. However, Congress should help out U.S. auto manufacturers, but not by providing them money outright. Congress should promote Chapter 11 bankruptcy by the automakers, encourage them to revamp their business models and provide adequate funding and programs for any employees adversely affected by the bankruptcy.

Stephen Ashley ’62 Talks Fannie Mae, Capital Campaign

Emily Cohn — Fri, 17 Oct 2008 00:00:00 -0400

With the Board of Trustees convening in Ithaca this weekend for their annual meeting, The Sun sat down with Stephen Ashley ’62, MBA ’64 to discuss his role as co-chair of the $4 billion capital campaign. Ashley is currently the chairman and CEO of The Ashley Group, a collection of real estate, brokerage and investment companies. In September, Ashley resigned as chairman of the mortgage giant Fannie Mae, after the government-sponsored enterprise was placed into conservatorship by the U.S. Treasury.

The Sun: The Capital Campaign has raised an impressive $2.29 billion to date. How would you describe your role with the campaign as co-chair?

Pollin' Pollin' Pollin'

Thu, 16 Oct 2008 00:00:00 -0400

“Don’t try to understand ’em, just rope, pull and brand ’em.”

So goes the theme song to the classic early television show Rawhide, about a seemingly endless cattle drive through the Old West, which included a young Clint Eastwood as drover Rowdy Yates.

A maverick, of course, is a term originally applied to an unbranded cattle, or a person unbought, unbossed and unbeholden to anyone but his or herself. The term dates to Sam Maverick, a 19th century Texas rancher, and his decision to buck tradition and leave his cattle unbranded.

Retail Sales Plunge 1.2 Percent in September

The Associated Press — Wed, 15 Oct 2008 14:47:30 -0400

WASHINGTON (AP) — Retail sales fell off a cliff in September, plunging by the largest amount in three years as worried consumers shunned the malls and auto showrooms in the midst of the country's financial meltdown.

The Commerce Department reported Wednesday retail sales decreased 1.2 percent last month, nearly double the 0.7 percent drop that had been expected. It was the biggest decline since retail sales fell by 1.4 percent in August 2005.

The bigger-than-expected decline significantly increased the risks of a recession because consumer spending is two-thirds of total economic activity.

The weakness was led by a 3.8 percent drop in auto sales. Sales dropped below 1 million units as consumers struggled to find financing.

Demanding a Re-bate

Laura Temel — Wed, 15 Oct 2008 00:00:00 -0400

We are less than three weeks away from Election Day. In the longest presidential campaign in American history, 15 primary candidates became two presidential hopefuls: Sen. Barack Obama and Sen. John McCain. At this point in time, a typical campaign analyst would presume both platforms would have been well articulated, challenged, and disseminated in the presidential debates. But this is not a typical campaign, and that does not seem to be the case. In the midst of bemused moderators and citizens it is important to ask, what have we learned from Obama and McCain in the debates?

Dow Roars Back with 936-Point Gain

The Associated Press — Mon, 13 Oct 2008 17:44:14 -0400

NEW YORK (AP) — Wall Street stormed back after its worst week ever and staged the biggest single-day stock rally since the Great Depression on Monday, catapulting the Dow Jones industrials to a 936-point gain and finally offering relief from eight consecutive days of stock market carnage.

While no one was saying the worst was over for the staggering financial system or troubled economy, buyers returned to the stock market with gusto, with some saying stocks had been driven down to fire-sale prices.

Selloff Drives Dow Down 679 Points

The Associated Press — Fri, 10 Oct 2008 01:07:08 -0400

NEW YORK (AP) — A stampede of selling that began in the waning minutes of trading on Wall Street spread to Asia on Friday, deepening a financial crisis that has defied all efforts to stop it.

Thursday's anniversary of the stock market peak turned into one of the worst days in Wall Street history, with the Dow Jones industrials loosing a breathtaking 679 points.

U.S. stocks lost more than 7 percent, $872 billion of investments evaporated, and the Dow fell to 8,579. When the average crashed through the 9,000 level for the first time in five years in the final hour of trading, sellers had only begun to hit the gas pedal.

Dow Closes Under 10,000 for First Time Since 2004

The Associated Press — Mon, 06 Oct 2008 18:15:26 -0400

NEW YORK (AP) — Wall Street suffered through another extraordinary and traumatic session Monday, with the Dow Jones industrials plunging as much as 800 points — their largest one-day point drop — before recovering to close with a loss of 370. The catalyst for the selling, which also took the Dow below 10,000 for the first time in four years, was investors' growing despair that the spreading credit crisis will take a heavy toll around the world.

Investors have come to the realization that the Bush administration's $700 billion rescue plan and steps taken by other governments won't work quickly to unfreeze the credit markets.

Future Wall Streeters of the World, Unite!

Yevgeniy Feldman — Mon, 06 Oct 2008 00:00:00 -0400

You know what really grinds my gears? People. People who say, “Do you hear me, local representative?! I will not re-elect you. Be afraid. Be very afraid.”

First off, saying, “local representative” instead of, “Kucinich” or whomever is generally a good indication that you don’t know who your local representative is. Second off, who votes for local representatives? Did you vote for your local representative last year? Do you know whether or not he voted for the bailout bill? Were there actually local elections last year? Did he hear your voice? If you did not have a representative, would you even know the difference? All valid questions.

Bailout Becomes Law, but Effects Remain to be Seen

The Associated Press — Sun, 05 Oct 2008 12:43:34 -0400

WASHINGTON (AP) — Getting the financial rescue through Congress may have been the easy part. Getting it to work may prove the tougher task.

After two weeks of anguishing debate, Congress passed and President Bush signed the enormous plan to save the financial industry and prop up the economy in hopes of avoiding an unthinkable free fall with Election Day just a month away.

Treasury Secretary Henry Paulson, at a meeting last month, had shocked congressional leaders into action by warning of pending economic collapse without immediate federal intervention. After the climatic House vote on Friday, he said aides already were working out details and lining up advisers from outside the government so the money could start flowing. The goal is to unfreeze credit markets.

Wells Fargo to Acquire Wachovia in $15.1b Deal

The Associated Press — Fri, 03 Oct 2008 11:21:34 -0400

NEW YORK (AP) — In an abrupt change of course, Wachovia Corp. said Friday it agreed to be acquired by Wells Fargo & Co. in a $15.1 billion all-stock deal, wiping out Wachovia's previous plan to sell its banking operations to rival suitor Citigroup Inc.

A key difference is that the Wachovia deal will be done without government assistance, while the Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp.

"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Robert Steel, Wachovia's president and chief executive, said in a statement.

Senate Passes New Bailout Plan as House Foes Soften

The Associated Press — Wed, 01 Oct 2008 22:16:31 -0400

WASHINGTON (AP) — After one spectacular failure, the $700 billion financial industry bailout found a second life Wednesday, winning lopsided passage in the Senate and gaining ground in the House, where Republicans opposition softened.

Senators loaded the economic rescue bill with tax breaks and other sweeteners before passing it by a wide margin, 74-25, a month before the presidential and congressional elections.

In the House, leaders were working feverishly to convert enough opponents of the bill to push it through by Friday, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.

Beating a Dead Horse, and by Horse I Mean Economy

Shaun Werbelow — Wed, 01 Oct 2008 00:00:00 -0400

Hoping to read something exhilarating, enchanting, or provocative? Unfortunately, or fortunately, depending on how you look at it, I have little to no experience when it comes to sex, drugs, or even rock ‘n’ roll. In searching for a column topic this week, I thought long and hard about which unique, intriguing, and fresh topics I could discuss. However, amongst prelims, the return of stereotypical Ithaca weather, and the statistical elimination of both the Mets and the Yankees, I came up void of creativity. If you are looking for a mystical story or a revealing memoir, I encourage you to pick up a daily horoscope, or simply take a trip to the Ithaca Commons.

Demystifying Health Insurance

Laura Temel — Wed, 01 Oct 2008 00:00:00 -0400

While healthy young adults may appear to be the least at risk for health problems, make no mistake — many young adults are uninsured. The current system of health insurance in the United States has placed college students in an incredible bind. Over 13.7 million young adults in the U.S. today do not have health insurance specifically, those between the ages of 19 and 29, according to the Commonwealth Fund, a healthcare think tank. With young adults comprise one of the largest segments of America’s uninsured, we can be certain this is a serious domestic issue.

The Vocabulary of the Economy

Donial Dastgir and Elizabeth Manapsal — Tue, 30 Sep 2008 22:05:10 -0400

Stick and stones may break my bones, but words can never hurt me. So goes the tune we were all taught as 7-year-olds to make ourselves feel better after getting mercilessly teased by the school bully. But flash forward to 2008 and it seems like the pen has come back with a mighty vengeance.

Scramble Begins for New Bailout Plan

The Associated Press — Tue, 30 Sep 2008 08:12:48 -0400

WASHINGTON (AP) — Top congressional and White House officials, stunned when the House rejected a massive rescue plan for the nation's economy, scrambled to structure a new bailout proposal that would attract reluctant lawmakers and still soothe the unnerved financial markets.

"Doing nothing is not an option," House Majority Leader Steny Hoyer, D-Md., said after seeing the $700 billion emergency package for the nation's financial systems fail 228-205 on Monday.

With the House not scheduled to meet again until Thursday, congressional leaders and Bush administration officials promptly sought to assess what types of changes could win over enough votes to guarantee success. President Bush planned to make a statement on the rescue plan at 8:45 a.m. EDT Tuesday.

Congress Rejects Bailout Plan

Sam Cross — Tue, 30 Sep 2008 00:00:00 -0400

With Congress’ refusal to pass the $700 billion financial bailout bill, the government has yet to come to the rescue of Wall Street.

The failed legislation aimed to help banks by buying up their bad mortgages so that the banks would be more inclined to lend. Many financial firms instructed their employees to lobby to their politicians to pass a solution that would improve their economic condition. As a result of Congress’ failure to pass legislation to alleviate the situation, the Dow Jones industrials had its worst day in two decades, dropping 777 points.

Leaders of the financial market were livid with the government’s decision. Since the immediate effect was drastic, long-term effects of the government’s inaction could be devastating.

Bailout Plan Fails to Pass House

The Associated Press — Mon, 29 Sep 2008 14:45:44 -0400

WASHINGTON (AP) — The House on Monday defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.

Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.

When the critical vote was tallied, too few members of the House were willing to support the unpopular measure with elections just five weeks away. Ample no votes came from both the Democratic and Republican sides of the aisle.

Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home.

Deal Reached on Market Bailout

The Associated Press — Sun, 28 Sep 2008 00:51:31 -0400

WASHINGTON (AP) — Congressional leaders and the Bush administration have reached a tentative deal on a bailout of imperiled financial markets that could cost taxpayers hundreds of billions of dollars.

The House could vote on it Sunday and the Senate on Monday. House Speaker Nancy Pelosi announced the accord just after midnight Saturday and said it still has to be put on paper. Treasury Secretary Henry Paulson talked of finalizing the deal but added: "I think we're there."

The plan would spend up to $700 billion, most of it on buying deeply devalued mortgages from the housing market's collapse and other bad loans held by tottering banks and other investors.

The aim is to prevent credit from drying up and causing a meltdown of the U.S. economy.

WaMu Becomes Largest Bank to Fail in US History

The Associated Press — Fri, 26 Sep 2008 15:55:42 -0400

NEW YORK (AP) — As the debate over a $700 billion bank bailout rages on in Washington, one of the nation's largest banks — Washington Mutual Inc. — has collapsed under the weight of its enormous bad bets on the mortgage market.

The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.

Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country's history. Its $307 billion in assets eclipse those of Continental Illinois National Bank, which failed in 1984 with $40 billion in assets; adjusted for 2008 dollars, its assets totaled $67.7 billion. IndyMac, seized in July, had $32 billion in assets.