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Dodd: US financial system near meltdownWorst of Crisis Ahead, More
Worst of Crisis Ahead, More Banks May Hit Trouble: IMFThe worst of the financial crisis may still lie ahead and more major financial institutions may face trouble in coming months, IMF director general Dominique Strauss-Kahn said on Wednesday.The crisis risks weighing on the world economy, he said, though both developing and developed countries were showing signs of resilience, Strauss-Kahn told reporters after a meeting with Gulf Arab finance ministers and central bank governors."It is a very serious financial crisis," he said. "The consequences for some financial institutions are still in front of us. We have to expect that there may be in the coming weeks and coming months other financial institutions with some problems," he said.Strauss-Kahn spoke the day after U.S. authorities engineered an $85 billion rescue American International Group [AIG 3.85 1.16 (+43.12%) ], staving off bankruptcy for the insurance giant and bringing a measure of calm to shell-shocked global markets."What we are experiencing these days is an increase in the downside risk and uncertainty, but we still believe that the world economy will recover in 2009," Strauss-Kahn said. "What is important to see is that it has an influence on the real economy but that the real economy is very resilient both in developed and emerging countries."Slideshow: Biggest Chapter 11 Cases in US HistoryThe AIG bailout came just two days after U.S. authorities refused to rescue investment bank Lehman Brothers [LEH 0.2151 0.1631 (+313.65%) ], forcing it into bankruptcy protection despite pleas from Wall Street's chiefs.The Fed stepped in amid worries that a collapse of AIG could cause far-reaching damage to the global financial system, although some market players argued that the government's move brings just a short-term respite and could do long-term harm.http://www.cnbc.com/id/26752681 |
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Is it really so bad for the US economy now? Is the financial system meltdown just right around the corner? Any idea?
Dodd: US financial system near meltdown
Sat, 20 Sep 2008 09:24:42 GMT Christopher Dodd, Chairman of the US Banking CommitteeThe US may be days away from a complete catastrophic meltdown of its financial system, says Senate Banking Committee chairman Chris Dodd. "I've been here 28 years. To listen to the language of last evening, we maybe days away from a complete meltdown of our financial system," AFP quoted Dodd as saying while referring to the late Thursday meeting of the US Congressional leaders with the US Treasury Secretary Henry Paulson and the Federal Reserve Chairman Ben Bernanke. Senator Dodd noted it was "one of the rare moments, certainly rare in my experience here, that Democrats and Republicans decided we needed to work together, quickly." "We're talking hundreds of billions," Paulson said ahead of talks with Congress on details of the massive rescue effort, unveiled initially late Thursday. Stunned by the depth of the economic meltdown of the US financial institutions, Congressional leaders pledged a quick vote on the rescue plan. "I figure it will be at least half a trillion," Richard Shelby, the Ranking member of the Banking Committee, Housing and Urban Affairs Committee, told ABC news network. "But if you look at what the Fed has already done, and the extension of power to Treasury to deal with Fannie Mae and Freddie Mac, I believe we're talking about a trillion dollars," he added. US President George W. Bush has admitted confidence in the US economy has been shaken as he promised more tax dollars to save Wall Street from bad debt. "Confidence in our financial system and in its institutions is essential to the smooth operation of our economy, and recently that confidence has been shaken," he said The government plan provides an immediate $50 billion to shore up strained financial markets. A state-sponsored organization will then be given hundreds of billions more in government money to buy up bad debt accumulated over years of unregulated lending by the US financial services sector. The Fed has spent hundreds of billions of dollars in the past year to stabilize the financial markets, including $180 billion swap lines extended Thursday to five other major central banks. Early September, the Treasury Secretary announced that the government was seizing control of ailing mortgage finance giants Fannie Mae and Freddie Mac that supply almost half of all mortgages in America to prevent a collapse that would have seriously damaged the world economy. Last year these two mortgage companies' sustained losses of more than $14 billion, as so called 'sub-prime' homeowners defaulted on their mortgage repayments. The bailout of these two financial institutions could cost up to $200 billion. MMM/CW/DT http://www.presstv.ir/detail.aspx?id=70011§ionid=3510203