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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (81952)	10/13/2008 8:58:22 PM
From: Qualified Opinion	Respond to of 94695

U.S. Treasury Said to Invest in Nine Major U.S. Banks (Update2) By Robert Schmidt and Peter Cook Oct. 13 (Bloomberg) -- The Bush administration will announce a plan to rescue frozen credit markets that includes spending about half of a total of $250 billion for preferred shares of nine major banks, people briefed on the matter said. The companies are Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley, State Street Corp., and Bank of New York Mellon Corp., the people said. One of the people also said Merrill Lynch & Co. will receive an investment. The injections represent a new approach for Treasury Secretary Henry Paulson's attempts to prevent a financial market meltdown from sending the U.S. economy into a prolonged recession. He's following similar interventions by European leaders and using broad powers Congress gave him earlier this month to save the country's banking system. ``They've decided they need to do something drastic and this is drastic,'' said Gerard Cassidy, a bank analyst at RBC Capital Markets in Portland, Maine. None of banks getting government money was given a choice about it, said one of the people familiar with the plans. All of the banks involved will have to submit to compensation restrictions, said the person. The government will also guarantee the banks' newly issued senior unsecured debt, making it easier for them to refinance their liabilities, the person said. Allocating Money The Treasury plans to spend $25 billion each for stakes in Citigroup and JPMorgan, people said. Another $25 billion will be divided between Bank of America and Merrill, which agreed last month to be acquired by Bank of America. Goldman and Morgan Stanley will each get $10 billion, while State Street and Bank of New York will get injections of about $3 billion each, people said. Financial institutions are struggling to regain the confidence of investors, counterparties and clients after bad loans caused more than $635 billion of writedowns across the industry. Falling share prices have made it harder to raise equity while surging borrowing costs have made debt refinancing harder. Paulson, Federal Reserve Chairman Ben S. Bernanke and FDIC Chairman Sheila Bair scheduled at 8:30 a.m. press conference tomorrow in Washington. Paulson's initiative follows an announcement in Europe that France, Germany, Spain, the Netherlands and Austria committed $1.8 trillion to guarantee bank loans and take stakes in lenders. The press conference at Treasury will address ``a series of comprehensive actions to strengthen public confidence in our financial institutions and restore functioning of our credit markets,'' the department said in a e-mailed statement. Chief executive officers of major U.S. banks met with Paulson to discuss the options for helping markets. Stocks in the U.S. earlier today rallied the most in seven decades, pushing the Standard & Poor's 500 Index up 11.6 percent. To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net. Last Updated: October 13, 2008 20:41 EDT Link: bloomberg.com

To: GROUND ZERO™ who wrote (81952)	10/13/2008 9:06:50 PM
From: Real Man	1 Recommendation Read Replies (1) \| Respond to of 94695

200 SP points in 24 market hours. WOW. -g-

To: GROUND ZERO™ who wrote (81952)	10/13/2008 10:25:42 PM
From: Qualified Opinion	Read Replies (2) \| Respond to of 94695

U.S. Investing $250 Billion in Banks By MARK LANDLER Published: October 13, 2008 WASHINGTON — The Treasury Department, in its boldest move yet, is expected to announce a plan Tuesday to invest up to $250 billion in large and small banks, according to officials. The United States is also expected to guarantee new debt issued by banks for a period of three years, officials said. And the Federal Deposit Insurance Corporation will offer an unlimited guarantee on bank deposits in accounts that do not bear interest — typically those of businesses — bringing the United States in line with several European countries, which have adopted such blanket guarantees. Treasury Secretary Henry M. Paulson Jr. outlined the plan on Monday to nine of the nation’s leading bankers at an afternoon meeting, officials said, in which he essentially told the participants that they would have to accept government investment for the good of the American financial system. This capital injection plan will use a huge chunk of the money authorized for Troubled Assets Relief Program. Citigroup and JPMorgan Chase were told they would each get $25 billion; Bank of America and Wells Fargo, $20 billion each (plus an additional $5 billion for their recent acquisitions); Goldman Sachs and Morgan Stanley, $10 billion each, with Bank of New York Mellon and State Street each receiving $2 to 3 billion. Wells Fargo will get $5 billion for its acquisition of Wachovia, and Bank of America the same for amount for its purchase of Merrill Lynch. The goal is to inject massive liquidity into the banking system. The government will purchase perpectual preferred shares in all the largest U.S. banking companies. The shares will notbe dilutive to current shareholders, a concern to banking chie executives, because perpetual preferred stock holders are paid a dividend, not a portion of earnings. The capital injections are not voluntary, with Mr. Paulson making it clear this was a one-time offer that everyone at the meeting should accept. The government is not planning to inject capital in foreign banks, and Paulson did not discuss if he would do so for smaller regional banks like National City. Among the banking chiefs attending the meeting were Richard M. Kovacevich (Wells Fargo), Kenneth D. Lewis (Bank of America), John J. Mack (Morgan Stanley), John A. Thain (Merrill Lynch), Lloyd C. Blankfein (Goldman), James L. Dimon (JPMorgan), Vikram S. Pandit (Citi) and Robert P. Kelly (Bank of New York Mellon) President Bush plans to announce the measures on Tuesday morning, following a harrowing week in which confidence vanished in financial markets as the crisis spread around the world, and government leaders engaged in a desperate search for remedies to the spreading contagion. Buoyed by mammoth new commitments of public money by the United States and Europe to shore up banks and steady the traumatized global financial system, stock markets around the world staged one of the most powerful one-day rallies in history on Monday. The Dow Jones industrial average gained 936 points, or 11 percent, the largest single-day gain in the American stock market since the 1930s. The surge stretched around the globe: in Paris and Frankfurt, stocks also had their biggest one-day gains ever, responding to news of similar multi-billion-dollar rescue packages by the French and German governments. Link: nytimes.com