The chief executives of Morgan Stanley and Merrill Lynch & Co. are going without bonuses for a year that has seen Wall Street ravaged by staggering losses, mass layoffs and the collapse of storied firms.
Morgan Stanley’s CEO John J Mack is giving up a bonus for the second straight year, while Merrill Lynch & Co. said its CEO John Thain also asked to go without the extra compensation for 2008 after reports surfaced he had sought as much as $10 million.
Mack told employees Monday in a memo that he and the firm’s two presidents, James Gorman and Walid Chammah, informed the board’s compensation committee of their decision to forgo 2008 bonuses, and the committee accepted.
Mack who did not receive a bonus for 2007, either said the company is changing year-end compensation for other employees, too.
The executives, however, are still being paid. Last year, Mack earned a salary of $800,000 as well as nearly $400,000 in other compensation, including personal use of a corporate jet.
Compensation for the 14 members of the firm’s operating committee will be down an average of 75%, and down 65% for the 35 members of the management committee.
Morgan Stanley plans to tie compensation for all employees eligible for bonuses more closely to performance. It will also allow for “clawbacks” where the company could reclaim any bonus paid to an employee if his or her actions led to “the need for a restatement of results, a significant financial loss or other reputational harm,” the memo said.
The CEO compensation debate comes as global banks have lost billions of dollars amid a credit crisis that still has yet to be contained. In the last few months, major US banks have taken advantage of a $700 billion government bailout program to help them avoid fates similar to that of investment bank Lehman Brothers Holdings Inc., which declared Chapter 11 bankruptcy in October.
Goldman Sachs CEO Lloyd Blankfein _ and six of his top lieutenants _ announced last month that they won’t take cash or stock bonuses for 2008.
Merrill Lynch said Thain and four other top executives President and COO Greg Fleming, Chief Financial Officer Nelson Chai, President of Global Wealth Management Robert McCann, and General Counsel Rosemary Berkery have all requested that they do not receive bonuses for 2008. According to a statement by the bank, the executives cited “current economic and market conditions” for their request. Directors at the regularly scheduled board meeting Monday accepted the offer.
The Wall Street Journal reported that Thain previously sought a multimillion dollar bonus, which raised the ire of some regulators.
New York State Attorney General Andrew Cuomo, who is conducting an ongoing inquiry into executive compensation at Wall Street firms, has been asking firms to scrap their bonuses this year.
Merrill Lynch shareholders on Friday approved the brokerage’s acquisition by Bank of America Corp., creating the largest US financial services company. Thain ushered through the combination in September at fire sale prices to avoid a collapse similar to that of Lehman Brothers.
Showing posts with label Merrill Lynch. Show all posts
Showing posts with label Merrill Lynch. Show all posts
Tuesday, December 9, 2008
Tuesday, September 30, 2008
House rejects $700B bailout in stunning defeat, driving stocks down; Treasury vows more work
WASHINGTON (AP) -- In a vote that shook the government, Wall Street and markets around the world, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, leaving both parties' lawmakers and the Bush administration scrambling to pick up the pieces. Dismayed investors sent the Dow Jones industrials plunging 777 points, the most ever for a single day.
"We need to put something back together that works," a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve Chairman Ben Bernanke joined in an emergency strategy session at the White House. On Capitol Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility that it could salvage a reworked version.
Senate leaders showed no inclination to try to bring the measure to a vote before they could determine its fate in the House. President Bush, meanwhile, was scheduled to make a statement on the rescue plan Tuesday morning, the White House said.
All sides agreed the effort to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression, could not be abandoned.
But in a remarkable display on Monday, a majority of House members slapped aside the best version their leaders and the administration had been able to come up with, bucking presidential speeches, pleading visits from Paulson and Federal Reserve Chairman Ben Bernanke and urgent warnings that the economy could nosedive without the legislation.
In the face of thousands of phone calls and e-mails fiercely opposing the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections.
The bill went down, 228-205.
The House Web site was overwhelmed as millions of people sought information about the measure through the day.
The legislation the administration promoted would have allowed the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions. Getting those debts off their books should bolster those companies' balance sheets, making them more inclined to lend and ease one of the biggest choke points in a national credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy, which is already sputtering.
Hoping to pick up enough GOP votes for the next try, Republicans floated several ideas. One would double the $100,000 ceiling on federal deposit insurance. Another would end rules that require companies to devalue assets on their books to reflect the price they could get in the market.
In the meantime, Paulson said he would work with other regulators "to use all the tools available to protect our financial system and our economy."
"Our tool kit is substantial but insufficient," he said, indicating the government intended to continue piecemeal fixes while pressing Congress for broader action.
Stocks started plummeting on Wall Street even before Monday's vote was over, as traders watched the rescue measure going down on television. Meanwhile, lawmakers were watching them back.
As a digital screen in the House chamber recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward.
The final stock carnage far surpassed the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.
In the House, "no" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. Several Democrats in close election fights waited until the last moment, then went against the bill as it became clear the vast majority of Republicans were opposing it.
Thirteen of the 19 most vulnerable Republicans and Democrats in an Associated Press analysis voted against the bill despite the pleas from Bush and their party leaders to pass it.
In all, 65 Republicans joined 140 Democrats in voting "yes," while 133 Republicans and 95 Democrats voted "no."
The overriding question was what to do next.
"The legislation may have failed; the crisis is still with us," said House Speaker Nancy Pelosi, D-Calif., in a news conference after the defeat. "What happened today cannot stand."
Republican leader John Boehner, R-Ohio, the minority leader, said he and other Republicans were pained to back the measure, but in light of the potential consequences for the economy and all Americans, "We need to renew our efforts to find a solution that Congress can support."
Sen. Chris Dodd, D-Conn., said there was scant time to reopen legislation that was the product of hard-fought bipartisan negotiations.
"What happened today was not a failure of a bill, it was a failure of will," said Dodd, the Banking Committee chairman. "Our hope is that cooler heads will prevail, people will think about what they did today and recognize that this is not just scare tactics -- it's reality."
A brutal round of partisan finger-pointing followed the vote.
Republicans blamed Pelosi's scathing speech near the close of the debate -- which assailed Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets -- for the defeat. It was not much different from her usual tough words against the president and his party.
"We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House," Boehner said.
Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.
That amounted to an appalling accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee: "Because somebody hurt their feelings, they decide to punish the country."
More than a repudiation of Democrats, Frank said, Republicans' refusal to vote for the bailout was a rejection of their own president.
Indeed, many GOP lawmakers spurned Bush's urgent calls for action. "We have a gun to our head," said Rep. Ginny Brown-Waite, R-Fla., who opposed the bill. "This isn't legislation -- it's extortion."
The two men campaigning to replace Bush watched the situation closely -- from afar -- and demanded action.
In Iowa, Republican John McCain said his rival Barack Obama and congressional Democrats "infused unnecessary partisanship into the process. Now is not the time to fix the blame; it's time to fix the problem."
Obama said, "Democrats, Republicans, step up to the plate, get it done."
Lawmakers were under extraordinary pressure from powerful outside groups, which gave notice they considered the legislation a "key vote" -- one they would consider when rating members of Congress.
The U.S. Chamber of Commerce said opponents of the bailout would pay for their stance.
"Make no mistake: When the aftermath of congressional inaction becomes clear, Americans will not tolerate those who stood by and let the calamity happen," said R. Bruce Josten, the Chamber's top lobbyist, in a letter to members.
The conservative Club for Growth made a similar threat to supporters of the bailout.
"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it -- not me.'"
"We're in this moment, and if we fail to do the right thing, Heaven help us," he said.
If Congress doesn't come around on a bailout, more pressure would fall on the Federal Reserve.
The Fed, which has been providing billions in short-term loans to squeezed banks to help them overcome credit stresses, could keep expanding those loans to encourage lending. And, it could keep working with other central banks to inject billions into financial markets overseas.
It also has the power to expand emergency lending to other types of companies and even to individuals if they are unable to secure adequate credit.
"We need to put something back together that works," a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve Chairman Ben Bernanke joined in an emergency strategy session at the White House. On Capitol Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility that it could salvage a reworked version.
Senate leaders showed no inclination to try to bring the measure to a vote before they could determine its fate in the House. President Bush, meanwhile, was scheduled to make a statement on the rescue plan Tuesday morning, the White House said.
All sides agreed the effort to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression, could not be abandoned.
But in a remarkable display on Monday, a majority of House members slapped aside the best version their leaders and the administration had been able to come up with, bucking presidential speeches, pleading visits from Paulson and Federal Reserve Chairman Ben Bernanke and urgent warnings that the economy could nosedive without the legislation.
In the face of thousands of phone calls and e-mails fiercely opposing the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections.
The bill went down, 228-205.
The House Web site was overwhelmed as millions of people sought information about the measure through the day.
The legislation the administration promoted would have allowed the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions. Getting those debts off their books should bolster those companies' balance sheets, making them more inclined to lend and ease one of the biggest choke points in a national credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy, which is already sputtering.
Hoping to pick up enough GOP votes for the next try, Republicans floated several ideas. One would double the $100,000 ceiling on federal deposit insurance. Another would end rules that require companies to devalue assets on their books to reflect the price they could get in the market.
In the meantime, Paulson said he would work with other regulators "to use all the tools available to protect our financial system and our economy."
"Our tool kit is substantial but insufficient," he said, indicating the government intended to continue piecemeal fixes while pressing Congress for broader action.
Stocks started plummeting on Wall Street even before Monday's vote was over, as traders watched the rescue measure going down on television. Meanwhile, lawmakers were watching them back.
As a digital screen in the House chamber recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward.
The final stock carnage far surpassed the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.
In the House, "no" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill. Several Democrats in close election fights waited until the last moment, then went against the bill as it became clear the vast majority of Republicans were opposing it.
Thirteen of the 19 most vulnerable Republicans and Democrats in an Associated Press analysis voted against the bill despite the pleas from Bush and their party leaders to pass it.
In all, 65 Republicans joined 140 Democrats in voting "yes," while 133 Republicans and 95 Democrats voted "no."
The overriding question was what to do next.
"The legislation may have failed; the crisis is still with us," said House Speaker Nancy Pelosi, D-Calif., in a news conference after the defeat. "What happened today cannot stand."
Republican leader John Boehner, R-Ohio, the minority leader, said he and other Republicans were pained to back the measure, but in light of the potential consequences for the economy and all Americans, "We need to renew our efforts to find a solution that Congress can support."
Sen. Chris Dodd, D-Conn., said there was scant time to reopen legislation that was the product of hard-fought bipartisan negotiations.
"What happened today was not a failure of a bill, it was a failure of will," said Dodd, the Banking Committee chairman. "Our hope is that cooler heads will prevail, people will think about what they did today and recognize that this is not just scare tactics -- it's reality."
A brutal round of partisan finger-pointing followed the vote.
Republicans blamed Pelosi's scathing speech near the close of the debate -- which assailed Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets -- for the defeat. It was not much different from her usual tough words against the president and his party.
"We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House," Boehner said.
Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.
That amounted to an appalling accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee: "Because somebody hurt their feelings, they decide to punish the country."
More than a repudiation of Democrats, Frank said, Republicans' refusal to vote for the bailout was a rejection of their own president.
Indeed, many GOP lawmakers spurned Bush's urgent calls for action. "We have a gun to our head," said Rep. Ginny Brown-Waite, R-Fla., who opposed the bill. "This isn't legislation -- it's extortion."
The two men campaigning to replace Bush watched the situation closely -- from afar -- and demanded action.
In Iowa, Republican John McCain said his rival Barack Obama and congressional Democrats "infused unnecessary partisanship into the process. Now is not the time to fix the blame; it's time to fix the problem."
Obama said, "Democrats, Republicans, step up to the plate, get it done."
Lawmakers were under extraordinary pressure from powerful outside groups, which gave notice they considered the legislation a "key vote" -- one they would consider when rating members of Congress.
The U.S. Chamber of Commerce said opponents of the bailout would pay for their stance.
"Make no mistake: When the aftermath of congressional inaction becomes clear, Americans will not tolerate those who stood by and let the calamity happen," said R. Bruce Josten, the Chamber's top lobbyist, in a letter to members.
The conservative Club for Growth made a similar threat to supporters of the bailout.
"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it -- not me.'"
"We're in this moment, and if we fail to do the right thing, Heaven help us," he said.
If Congress doesn't come around on a bailout, more pressure would fall on the Federal Reserve.
The Fed, which has been providing billions in short-term loans to squeezed banks to help them overcome credit stresses, could keep expanding those loans to encourage lending. And, it could keep working with other central banks to inject billions into financial markets overseas.
It also has the power to expand emergency lending to other types of companies and even to individuals if they are unable to secure adequate credit.
Thursday, September 25, 2008
Bush warns 'entire economy is in danger'
WASHINGTON (AP) -- President Bush said Wednesday that lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses if they fail to act on a massive financial rescue plan. "Our entire economy is in danger," he said.
"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address delivered from the White House East Room that he hoped would help rescue his tough-sell bailout package. "Ultimately, our country could experience a long and painful recession."
Said Bush: "We must not let this happen."
The unprecedented $700 billion bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own Republican Party who are revolting at the high price tag and massive private-sector intervention by government. Though there is general agreement that something must be done to address the spiraling economic problems, Bush has been forced to accept changes almost daily, based on demands from the right and left.
Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded, while warning he would draw the line at regulations he determined would hamper economic growth.
"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said.
The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade.
But while generally acknowledging risky and poorly thought-out financial decisions at many levels of society, Bush never assigned blame to any specific entity, such as his administration, the quasi-independent mortgage giants Fannie Mae and Freddie Mac or the Wall Street firms that built rising profits on increasingly speculative mortgage-backed securities. Instead, he spoke in terms of investment banks that "found themselves saddled with" the toxic assets the government is now proposing to buy and banks that "found themselves" with questionable balance sheets.
Intensive, personal lobbying of lawmakers is not usually Bush's style as president, unlike some predecessors. He does not often make calls or twist arms on behalf of a legislative priority.
But with the nation facing the biggest financial meltdown in decades, Bush took the unusual step of asking Democrat Barack Obama and Republican John McCain, one of whom will inherit the financial mess in four months, and key congressional leaders of both parties to a White House meeting on Thursday to work on a compromise.
Obama spokesman Bill Burton said the senator would attend the meeting scheduled for the afternoon, and senior McCain advisers said he would, too. The plans of the other invitees were unknown. The White House said that the idea for the joint meeting was McCain's and that aides went about setting it up after Bush and McCain spoke Wednesday afternoon.
In another move welcome at the White House, Obama and McCain issued a joint statement using their own dire language to urge lawmakers to act. The two candidates -- bitterly fighting each other for the White House but coming together over this issue -- said the situation offers a chance for politicians to prove Washington's worth.
"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."
However, the Oval Office rivals were not putting politics aside entirely. McCain asked Obama to agree to delay their first debate, scheduled for Friday, while Obama said it should go ahead.
White House and administration officials have warned repeatedly in recent days of a coming "financial calamity."
But that has not closed the deal, which for many recalls previous warnings of grave threats from Bush -- such as before the Iraq war -- that did not materialize. So Bush's goal with his speech, his first prime-time address in 377 days, was to frame the debate in layman's terms to show the depths of the crisis, explain how it affects the people's daily lives and inspire the public to demand action from Washington.
He said that more banks could fail, the stock market could plummet and erase retirement accounts, businesses could find it hard to get credit and be forced to close, wiping out jobs for millions of Americans.
He ended on a positive note, predicting lawmakers would "rise to the occasion" and that the nation's economy will overcome "a moment of great challenge."
With so many crises hitting the United States at once, the presidential race has taken a back seat and so has Bush's involvement in politics. Bush canceled a campaign trip to Florida on Wednesday to deal with the problem, the third time in a week that he has scrapped his attendance at out-of-town fundraisers, either because of the market turmoil or Hurricane Ike.
The economic crisis also is almost certain to overshadow the rest of Bush's four months left in office and could hugely impact his legacy. It has been assumed that the long-term view of Bush's presidency was to be shaped largely by Iraq, Hurricane Katrina and the Sept. 11, 2001, attacks. Now, the dire economic problems and the aftermath of the government's attempted solution will certainly be added to that list.
"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address delivered from the White House East Room that he hoped would help rescue his tough-sell bailout package. "Ultimately, our country could experience a long and painful recession."
Said Bush: "We must not let this happen."
The unprecedented $700 billion bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own Republican Party who are revolting at the high price tag and massive private-sector intervention by government. Though there is general agreement that something must be done to address the spiraling economic problems, Bush has been forced to accept changes almost daily, based on demands from the right and left.
Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded, while warning he would draw the line at regulations he determined would hamper economic growth.
"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said.
The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade.
But while generally acknowledging risky and poorly thought-out financial decisions at many levels of society, Bush never assigned blame to any specific entity, such as his administration, the quasi-independent mortgage giants Fannie Mae and Freddie Mac or the Wall Street firms that built rising profits on increasingly speculative mortgage-backed securities. Instead, he spoke in terms of investment banks that "found themselves saddled with" the toxic assets the government is now proposing to buy and banks that "found themselves" with questionable balance sheets.
Intensive, personal lobbying of lawmakers is not usually Bush's style as president, unlike some predecessors. He does not often make calls or twist arms on behalf of a legislative priority.
But with the nation facing the biggest financial meltdown in decades, Bush took the unusual step of asking Democrat Barack Obama and Republican John McCain, one of whom will inherit the financial mess in four months, and key congressional leaders of both parties to a White House meeting on Thursday to work on a compromise.
Obama spokesman Bill Burton said the senator would attend the meeting scheduled for the afternoon, and senior McCain advisers said he would, too. The plans of the other invitees were unknown. The White House said that the idea for the joint meeting was McCain's and that aides went about setting it up after Bush and McCain spoke Wednesday afternoon.
In another move welcome at the White House, Obama and McCain issued a joint statement using their own dire language to urge lawmakers to act. The two candidates -- bitterly fighting each other for the White House but coming together over this issue -- said the situation offers a chance for politicians to prove Washington's worth.
"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."
However, the Oval Office rivals were not putting politics aside entirely. McCain asked Obama to agree to delay their first debate, scheduled for Friday, while Obama said it should go ahead.
White House and administration officials have warned repeatedly in recent days of a coming "financial calamity."
But that has not closed the deal, which for many recalls previous warnings of grave threats from Bush -- such as before the Iraq war -- that did not materialize. So Bush's goal with his speech, his first prime-time address in 377 days, was to frame the debate in layman's terms to show the depths of the crisis, explain how it affects the people's daily lives and inspire the public to demand action from Washington.
He said that more banks could fail, the stock market could plummet and erase retirement accounts, businesses could find it hard to get credit and be forced to close, wiping out jobs for millions of Americans.
He ended on a positive note, predicting lawmakers would "rise to the occasion" and that the nation's economy will overcome "a moment of great challenge."
With so many crises hitting the United States at once, the presidential race has taken a back seat and so has Bush's involvement in politics. Bush canceled a campaign trip to Florida on Wednesday to deal with the problem, the third time in a week that he has scrapped his attendance at out-of-town fundraisers, either because of the market turmoil or Hurricane Ike.
The economic crisis also is almost certain to overshadow the rest of Bush's four months left in office and could hugely impact his legacy. It has been assumed that the long-term view of Bush's presidency was to be shaped largely by Iraq, Hurricane Katrina and the Sept. 11, 2001, attacks. Now, the dire economic problems and the aftermath of the government's attempted solution will certainly be added to that list.
Wednesday, September 24, 2008
Ahead of the US Bell: Bernanke briefing
WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke is scheduled to return to Capitol Hill Wednesday to provide lawmakers an up-to-date assessment of the economy, and again make the case for Congress to speedily enact the $700 billion financial bailout package.
Bernanke's first stop will be Congress' Joint Economic Committee, where he'll discuss the economy, which has been badly bruised by the housing and credit debacles. That hearing is slated to begin at 10 a.m. EDT.
Unemployment has climbed to a five-year high of 6.1 percent as nervous employers cut jobs, and consumers are hunkering down as the bracing tonic of the government's tax rebates disappears.
Oil prices are up about $15 in the past week, momentarily halting a precipitous two-month slide from the all-time high of $147.27 a barrel reached in mid July.
Appearing Tuesday before the Senate Banking Committee, Bernanke warned that the economy could face grave consequences if credit problems persist because Congress doesn't step in and enact the financial bailout. More jobs would be lost, more homes would fall into foreclosure and the economy will contract, he said.
The plan would let the government buy bad mortgages and other troubled assets held by banks and other financial institutions. Getting those debts off their books, should make them more inclined to lend, breaking through the credit jam and reviving the economy. Congressional leaders predict passage but want significant changes to better protect taxpayers.
Later on Wednesday, Bernanke is scheduled to appear before the House Financial Services Committee, along with Treasury Secretary Henry Paulson, to talk about the state of financial markets and make a fresh pitch for the Bush administration's bailout package. That hearing is slated to begin at noon EDT.
Bernanke's first stop will be Congress' Joint Economic Committee, where he'll discuss the economy, which has been badly bruised by the housing and credit debacles. That hearing is slated to begin at 10 a.m. EDT.
Unemployment has climbed to a five-year high of 6.1 percent as nervous employers cut jobs, and consumers are hunkering down as the bracing tonic of the government's tax rebates disappears.
Oil prices are up about $15 in the past week, momentarily halting a precipitous two-month slide from the all-time high of $147.27 a barrel reached in mid July.
Appearing Tuesday before the Senate Banking Committee, Bernanke warned that the economy could face grave consequences if credit problems persist because Congress doesn't step in and enact the financial bailout. More jobs would be lost, more homes would fall into foreclosure and the economy will contract, he said.
The plan would let the government buy bad mortgages and other troubled assets held by banks and other financial institutions. Getting those debts off their books, should make them more inclined to lend, breaking through the credit jam and reviving the economy. Congressional leaders predict passage but want significant changes to better protect taxpayers.
Later on Wednesday, Bernanke is scheduled to appear before the House Financial Services Committee, along with Treasury Secretary Henry Paulson, to talk about the state of financial markets and make a fresh pitch for the Bush administration's bailout package. That hearing is slated to begin at noon EDT.
US Stocks extend fall as Street weighs bailout plan
NEW YORK (AP) -- Financial markets extended their declines Tuesday as investors worried that lawmakers were beginning to doubt the necessity of a broad government bailout for financial institutions as a way to revive ailing credit markets.
Top economic officials updating Congress about efforts to work out a $700 billion financial rescue plan faced a greater degree of second-guessing from lawmakers than some investors had expected. The Dow Jones industrials, which had been higher for the first half of the session ended at the lows of the day, tacking a 161-point loss onto a steep drop from Monday.
Still, trading appeared more orderly than Monday, when investors rushed into hard assets like oil and gold. Meanwhile, demand remained high for 3-month Treasury bills, considered the safest short-term financial asset, while the dollar regained some ground after being hard hit Monday.
After days of intense gyrations in financial markets, investors are anxious about whether the plan to absorb bad mortgages and other risky assets will help steer the economy onto more solid footing -- and also about resistance to the plan in Congress.
Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox testified before lawmakers, who are working alongside others in the Bush administration to complete the details of the bailout.
Traders grew nervous, and sent the stock market lower, as the officials faced questions about whether the government's planned response was appropriate. Sen. Chuck Schumer, D-N.Y., for example, asked whether $150 billion might be adequate to get the program started if investors were told more money could be added if necessary.
The market remains uncertain about how long it will take for the bailout plans to take effect, and assuming they do, how effective they will be.
"There's skepticism about whether the $700 billion number is the right number," said Jim Herrick, manager and director of equity trading at Baird & Co.
Bernanke told the Senate Banking Committee Congress risks triggering a recession if it doesn't act on the plan. He said inaction could leave a range of businesses unable to borrow the money while consumers could find it impossible to finance big purchases like cars and homes.
While financial markets showed uneasiness as investors listened to the testimony, there wasn't the level of fear and volatility that dominated Monday's trading.
Demand for short-term Treasurys remained high. The yield on the 3-month T-bill fell to 0.79 percent from 0.88 percent on Monday; last week, it was around zero after investors flooded money into T-bills as the credit markets seized up. That spurred government officials to propose a debt buyout plan.
The yield on the benchmark 10-year Treasury note, which trades opposite its price, fell to 3.80 percent from 3.85 percent late Monday.
The dollar, whose decline Monday drove some of the frenetic trading in other markets, regained some of its lost ground against the euro, while gold prices declined after starting the week with a big advance.
The Dow fell 161.52, or 1.47 percent, to 10,854.17 after having risen more than 125 points in the early going and then falling by more than 180. With Monday's 370-point decline, the blue chips are down 534 points, or 4.69 percent, for the week.
Broader stock indicators also fell Tuesday. The Standard & Poor's 500 index fell 18.87, or 1.56 percent, to 1,188.22, and the Nasdaq composite index fell 25.67, or 1.18 percent, to 2,153.34.
Investors also were watching oil prices after anxiety over the government bailout and a huge short-covering rally pushed crude to the biggest one-day gain.
Light, sweet crude for November delivery fell $2.76 to settle at $106.61 on the New York Mercantile Exchange. The October contract, which expired Monday, surged as much as $25.45 to $130 before falling back to settle at $120.92, an advance of $16.37. While that gain was due to technical market dynamics, the price of oil has moved higher over the past week amid increasing concerns about the U.S. financial system.
"We're going to see this volatility for a while even after this package passes because I think we're still facing a fundamental slowdown in the economy worldwide which is going to have some impact on earnings," said J. Stephen Lauck, chief executive and portfolio manager at Ashfield Capital Partners.
Financial stocks finished mixed as some investors worried that the government's plan could prove inadequate to save some banks. Should the government pay too little for assets some banks might be forced to book ruinous write-offs and risk going under.
Bank of America Corp. fell 85 cents, or 2.5 percent, to $33.30, while Washington Mutual Inc. fell 13 cents, or 3.9 percent, to $3.20.
Some energy names lost ground as oil declined. Occidental Petroleum Corp. fell $4.08, or 5 percent, to $77.16 and XTO Energy Inc. declined $1.14, or 2.2 percent, to $51.30.
In addition, some industrial stocks slid as investors worried about the well-being of the global economy. Aluminum maker Alcoa Inc. fell $1.21, or 4.5 percent, to $25.59. Seed company Monsanto Co. fell $4.85, or 4.2 percent, to $112.14.
Some technology stocks advanced as investors looked for areas outside the financial, energy and industrial sectors. Computer chip maker Intel Corp. rose 13 cents to $18.63, while Sprint Nextel Corp. rose 27 cents, or 4.2 percent, to $6.77.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange, where consolidated volume came to 5.11 billion shares, compared with 5.22 billion traded Monday.
The Russell 2000 index of smaller companies fell 11.25, or 1.56 percent, to 709.19.
Overseas, Britain's FTSE 100 fell 1.91 percent, Germany's DAX index slid 0.64 percent, and France's CAC-40 fell 1.98 percent. Japanese financial markets were closed Tuesday for a national holiday.
Top economic officials updating Congress about efforts to work out a $700 billion financial rescue plan faced a greater degree of second-guessing from lawmakers than some investors had expected. The Dow Jones industrials, which had been higher for the first half of the session ended at the lows of the day, tacking a 161-point loss onto a steep drop from Monday.
Still, trading appeared more orderly than Monday, when investors rushed into hard assets like oil and gold. Meanwhile, demand remained high for 3-month Treasury bills, considered the safest short-term financial asset, while the dollar regained some ground after being hard hit Monday.
After days of intense gyrations in financial markets, investors are anxious about whether the plan to absorb bad mortgages and other risky assets will help steer the economy onto more solid footing -- and also about resistance to the plan in Congress.
Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox testified before lawmakers, who are working alongside others in the Bush administration to complete the details of the bailout.
Traders grew nervous, and sent the stock market lower, as the officials faced questions about whether the government's planned response was appropriate. Sen. Chuck Schumer, D-N.Y., for example, asked whether $150 billion might be adequate to get the program started if investors were told more money could be added if necessary.
The market remains uncertain about how long it will take for the bailout plans to take effect, and assuming they do, how effective they will be.
"There's skepticism about whether the $700 billion number is the right number," said Jim Herrick, manager and director of equity trading at Baird & Co.
Bernanke told the Senate Banking Committee Congress risks triggering a recession if it doesn't act on the plan. He said inaction could leave a range of businesses unable to borrow the money while consumers could find it impossible to finance big purchases like cars and homes.
While financial markets showed uneasiness as investors listened to the testimony, there wasn't the level of fear and volatility that dominated Monday's trading.
Demand for short-term Treasurys remained high. The yield on the 3-month T-bill fell to 0.79 percent from 0.88 percent on Monday; last week, it was around zero after investors flooded money into T-bills as the credit markets seized up. That spurred government officials to propose a debt buyout plan.
The yield on the benchmark 10-year Treasury note, which trades opposite its price, fell to 3.80 percent from 3.85 percent late Monday.
The dollar, whose decline Monday drove some of the frenetic trading in other markets, regained some of its lost ground against the euro, while gold prices declined after starting the week with a big advance.
The Dow fell 161.52, or 1.47 percent, to 10,854.17 after having risen more than 125 points in the early going and then falling by more than 180. With Monday's 370-point decline, the blue chips are down 534 points, or 4.69 percent, for the week.
Broader stock indicators also fell Tuesday. The Standard & Poor's 500 index fell 18.87, or 1.56 percent, to 1,188.22, and the Nasdaq composite index fell 25.67, or 1.18 percent, to 2,153.34.
Investors also were watching oil prices after anxiety over the government bailout and a huge short-covering rally pushed crude to the biggest one-day gain.
Light, sweet crude for November delivery fell $2.76 to settle at $106.61 on the New York Mercantile Exchange. The October contract, which expired Monday, surged as much as $25.45 to $130 before falling back to settle at $120.92, an advance of $16.37. While that gain was due to technical market dynamics, the price of oil has moved higher over the past week amid increasing concerns about the U.S. financial system.
"We're going to see this volatility for a while even after this package passes because I think we're still facing a fundamental slowdown in the economy worldwide which is going to have some impact on earnings," said J. Stephen Lauck, chief executive and portfolio manager at Ashfield Capital Partners.
Financial stocks finished mixed as some investors worried that the government's plan could prove inadequate to save some banks. Should the government pay too little for assets some banks might be forced to book ruinous write-offs and risk going under.
Bank of America Corp. fell 85 cents, or 2.5 percent, to $33.30, while Washington Mutual Inc. fell 13 cents, or 3.9 percent, to $3.20.
Some energy names lost ground as oil declined. Occidental Petroleum Corp. fell $4.08, or 5 percent, to $77.16 and XTO Energy Inc. declined $1.14, or 2.2 percent, to $51.30.
In addition, some industrial stocks slid as investors worried about the well-being of the global economy. Aluminum maker Alcoa Inc. fell $1.21, or 4.5 percent, to $25.59. Seed company Monsanto Co. fell $4.85, or 4.2 percent, to $112.14.
Some technology stocks advanced as investors looked for areas outside the financial, energy and industrial sectors. Computer chip maker Intel Corp. rose 13 cents to $18.63, while Sprint Nextel Corp. rose 27 cents, or 4.2 percent, to $6.77.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange, where consolidated volume came to 5.11 billion shares, compared with 5.22 billion traded Monday.
The Russell 2000 index of smaller companies fell 11.25, or 1.56 percent, to 709.19.
Overseas, Britain's FTSE 100 fell 1.91 percent, Germany's DAX index slid 0.64 percent, and France's CAC-40 fell 1.98 percent. Japanese financial markets were closed Tuesday for a national holiday.
Tuesday, September 23, 2008
Bailout debate mulls making Wall Street pay
NEW YORK (Reuters) - The planned $700 billion bailout to shore up the battered U.S. financial system looked set to drag into next week as Washington lawmakers haggled over how exactly they could make Wall Street pay for its rescue.
Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.
"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?"'
A day after America's last two big investment banks, Goldman Sachs (NYSE:GS - News) and Morgan Stanley (NYSE:MS - News), ended Wall Street's swashbuckling era by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.
U.S. lawmakers and Bush administration officials were hammering out details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.
U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two-days of congressional hearings on Tuesday to hasten approval of the bailout.
With the economy the No. 1 issue in a U.S. presidential election that is about six weeks away, lawmakers want a plan in place quickly, fearing delay could send markets reeling again.
But with one-third of the U.S. Senate and the entire U.S. House of Representatives up for re-election on November 4, lawmakers will want to sound tough on such hot-button issues as the pay of reckless executives.
"We are not sending a blank check to Wall Street," House Speaker Nancy Pelosi said after holding bipartisan talks.
With so many ideas being floated in Washington on Monday, one congressional aide who asked not to be identified likened the scene to a "Turkish bazaar of public policy ideas."
The crisis has unsettled world markets, and Group of Seven finance ministers and central bank heads promised "heightened close cooperation" to safeguard the global economy.
The latest jitters came after the deal late Sunday scrapped the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that collapsed or were bought in the brutal meltdown of recent weeks.
Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc (Tokyo:8306.T - News), on Monday to spend as much as $8.5 billion for about one-fifth of the prestigious 73-year-old investment bank, sending Morgan's shares higher before closing down.
ANGER AT BAILOUT
After Monday's talks, U.S. Rep. Barney Frank, a top Democrat, said the U.S. government would take equity in the companies seeking a bailout. But the U.S. Treasury is against that idea, sources close to Treasury told Reuters.
The White House said it agreed to an oversight board to monitor the bailout, which Democrats had pushed for. And Frank said there was also agreement that the plan should minimize the number of Americans who will lose their homes to foreclosure.
But lawmakers and Treasury officials were at odds on the emotional issue of whether executives at the companies in need of rescue must agree to limits to their compensation.
With details still in dispute, Frank said the legislation could take until next week to complete.
Earlier, U.S. President George W. Bush said, "Failure to act would have broad consequences far beyond Wall Street."
But U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, voiced outrage at the notion of any bailout without a cap on executive pay.
"The (Bush) administration's plan ... would enrich the Wall Street executives whose reckless investments caused the financial crisis," the powerful California Democrat said. "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
Even some Republicans came out against the bailout.
Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said he feared the bailout was "neither workable nor comprehensive."
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Sen. Chuck Hagel, a Nebraska Republican, told Reuters after a meeting of fellow Senate Banking Committee members, "I suspect there will be opposition. We're not there. We don't even have a product yet."
South Carolina Republican Sen. Jim DeMint called the Bush plan "completely unacceptable."
The uncertainty caused stocks to lose most of the gains seen on Friday, when word of the plan sparked Wall Street's best one-day gain since 1987. The S&P 500 index (^SPX - News) dropped 3.8 percent.
Buoyed by the dollar's near 2 percent decline, U.S. crude oil futures soared $16.37 to settle at $120.92, the biggest ever jump in a trading session. At one point, oil was up a stunning $25.45, or 24.3 percent.
In a crisis that has lurched from issue to issue since the U.S. economy first showed weakness and home prices began to tumble last year, prompting a credit crunch and the collapse of investment banking, some wondered where it would end.
"The thing that scares me is the breadth of it," said Robert MacMahon, managing director for restructuring at GE (NYSE:GE - News) Corporate Lending.
Democrats, who control both chambers of Congress, pushed for changes to the plan on concerns that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of the Bush administration.
GLOBAL CRISIS
The crisis is threatening global markets. Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system. (ID:nLM163631). Even in the oil-rich Gulf region, the crisis was felt.
The United Arab Emirates Central Bank launched its first-ever emergency funding facility to help fund banks as global lending between institutions shriveled.
The Fed's agreement to convert the once high-flying Goldman and Morgan Stanley investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets and avoid a deep recession.
Both Goldman and Morgan will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.
The rescue came together after seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK - News) file for bankruptcy, Merrill Lynch & Co Inc (NYSE:MER - News) agree to sell itself to Bank of America (NYSE:BAC - News), and the Fed stage an $85 billion rescue of American International Group Inc (NYSE:AIG - News).
AIG shares gained 23 percent on Monday on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed's loan.
Goldman and Morgan Stanley were the last of the big five investment banks that shaped 20 years of Wall Street history after Bear Stearns collapsed earlier this year.
Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.
"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?"'
A day after America's last two big investment banks, Goldman Sachs (NYSE:GS - News) and Morgan Stanley (NYSE:MS - News), ended Wall Street's swashbuckling era by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.
U.S. lawmakers and Bush administration officials were hammering out details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.
U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke start two-days of congressional hearings on Tuesday to hasten approval of the bailout.
With the economy the No. 1 issue in a U.S. presidential election that is about six weeks away, lawmakers want a plan in place quickly, fearing delay could send markets reeling again.
But with one-third of the U.S. Senate and the entire U.S. House of Representatives up for re-election on November 4, lawmakers will want to sound tough on such hot-button issues as the pay of reckless executives.
"We are not sending a blank check to Wall Street," House Speaker Nancy Pelosi said after holding bipartisan talks.
With so many ideas being floated in Washington on Monday, one congressional aide who asked not to be identified likened the scene to a "Turkish bazaar of public policy ideas."
The crisis has unsettled world markets, and Group of Seven finance ministers and central bank heads promised "heightened close cooperation" to safeguard the global economy.
The latest jitters came after the deal late Sunday scrapped the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that collapsed or were bought in the brutal meltdown of recent weeks.
Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc (Tokyo:8306.T - News), on Monday to spend as much as $8.5 billion for about one-fifth of the prestigious 73-year-old investment bank, sending Morgan's shares higher before closing down.
ANGER AT BAILOUT
After Monday's talks, U.S. Rep. Barney Frank, a top Democrat, said the U.S. government would take equity in the companies seeking a bailout. But the U.S. Treasury is against that idea, sources close to Treasury told Reuters.
The White House said it agreed to an oversight board to monitor the bailout, which Democrats had pushed for. And Frank said there was also agreement that the plan should minimize the number of Americans who will lose their homes to foreclosure.
But lawmakers and Treasury officials were at odds on the emotional issue of whether executives at the companies in need of rescue must agree to limits to their compensation.
With details still in dispute, Frank said the legislation could take until next week to complete.
Earlier, U.S. President George W. Bush said, "Failure to act would have broad consequences far beyond Wall Street."
But U.S. Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, voiced outrage at the notion of any bailout without a cap on executive pay.
"The (Bush) administration's plan ... would enrich the Wall Street executives whose reckless investments caused the financial crisis," the powerful California Democrat said. "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
Even some Republicans came out against the bailout.
Alabama Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said he feared the bailout was "neither workable nor comprehensive."
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Sen. Chuck Hagel, a Nebraska Republican, told Reuters after a meeting of fellow Senate Banking Committee members, "I suspect there will be opposition. We're not there. We don't even have a product yet."
South Carolina Republican Sen. Jim DeMint called the Bush plan "completely unacceptable."
The uncertainty caused stocks to lose most of the gains seen on Friday, when word of the plan sparked Wall Street's best one-day gain since 1987. The S&P 500 index (^SPX - News) dropped 3.8 percent.
Buoyed by the dollar's near 2 percent decline, U.S. crude oil futures soared $16.37 to settle at $120.92, the biggest ever jump in a trading session. At one point, oil was up a stunning $25.45, or 24.3 percent.
In a crisis that has lurched from issue to issue since the U.S. economy first showed weakness and home prices began to tumble last year, prompting a credit crunch and the collapse of investment banking, some wondered where it would end.
"The thing that scares me is the breadth of it," said Robert MacMahon, managing director for restructuring at GE (NYSE:GE - News) Corporate Lending.
Democrats, who control both chambers of Congress, pushed for changes to the plan on concerns that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of the Bush administration.
GLOBAL CRISIS
The crisis is threatening global markets. Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system. (ID:nLM163631). Even in the oil-rich Gulf region, the crisis was felt.
The United Arab Emirates Central Bank launched its first-ever emergency funding facility to help fund banks as global lending between institutions shriveled.
The Fed's agreement to convert the once high-flying Goldman and Morgan Stanley investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets and avoid a deep recession.
Both Goldman and Morgan will now face a thicket of new regulations, which will bolster their resources but also curb the spectacular profit growth that made investment bankers among the highest paid in the nation.
The rescue came together after seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK - News) file for bankruptcy, Merrill Lynch & Co Inc (NYSE:MER - News) agree to sell itself to Bank of America (NYSE:BAC - News), and the Fed stage an $85 billion rescue of American International Group Inc (NYSE:AIG - News).
AIG shares gained 23 percent on Monday on reports its investors were hatching a plan to prevent the insurer from falling into government ownership, by repaying the Fed's loan.
Goldman and Morgan Stanley were the last of the big five investment banks that shaped 20 years of Wall Street history after Bear Stearns collapsed earlier this year.
Thursday, September 18, 2008
Morgan Stanley seeks deal with Wachovia
NEW YORK (AP) -- Morgan Stanley's stock price plunged again Thursday as the investment bank scrambled to strike a major deal or raise more cash that will assuage investors and prevent more damage to its free-falling shares.
John Mack, the No. 2 U.S. investment bank's chief executive, has reached out to China's Citic Group overnight about a possible investment, according to a person familiar with the talks. Morgan Stanley is also considering a combination with retail bank Wachovia Corp. and an investment from Singapore Investment Corp., one of the world's biggest sovereign wealth funds, said the person, who spoke on the condition of anonymity because the discussions were still ongoing,
Morgan Stanley shares have fallen 38 percent in the past week amid unprecedented turmoil in the global banking system. Investors remain anxious after Lehman Brothers filed for bankruptcy protection, Merrill Lynch & Co. was forced into a sale to Bank of America Corp. and the federal government bailed out insurer American International Group.
Mack made telephone calls late Wednesday to Wachovia executives and also to Citigroup Inc. CEO Vikram Pandit, exploring all options to help restore confidence in the investment house, the person said. Citigroup was not interested in a tie-up, but talks remain ongoing with Wachovia, he said.
Wachovia declined to comment about a potential deal, while Citigroup confirmed that Mack and Pandit spoke.
Spokesmen for GIC and Citic could not immediately be reached for comment.
Mack isn't the only CEO looking to strike some kind of a deal or capital infusion. Washington Mutual Inc., which has lost billions and seen its shares plummet due to subprime mortgage exposure, is selling itself or looking for a deep-pocketed investor.
And overnight in London, Britain's Lloyds TSB Lloyds TSB announced a $21.85-billion deal to take over struggling HBOS PLC, Britain's biggest mortgage lender.
The U.S. government, which helped organize an $85 billion bailout of insurer AIG on Tuesday, also sought to break the grip of worsening global credit crisis by pumping billions into financial markets in a concerted action with central banks of other countries. The Federal Reserve Bank of New York, in two operations, injected $55 billion into temporary reserves in the United States, a move aimed to help ease a strained financial system in danger of freezing up.
The move helped steady Wall Street after the previous session's massive rout. However, market participants still moved into safe assets such as gold and Treasury bills, a sign that they remain skittish during the most troubling period for the world's financial system in most investors' memory.
AP Economics Writer Jeannine Aversa in Washington and AP Business Writer Tim Paradis in New York contributed to this report.
John Mack, the No. 2 U.S. investment bank's chief executive, has reached out to China's Citic Group overnight about a possible investment, according to a person familiar with the talks. Morgan Stanley is also considering a combination with retail bank Wachovia Corp. and an investment from Singapore Investment Corp., one of the world's biggest sovereign wealth funds, said the person, who spoke on the condition of anonymity because the discussions were still ongoing,
Morgan Stanley shares have fallen 38 percent in the past week amid unprecedented turmoil in the global banking system. Investors remain anxious after Lehman Brothers filed for bankruptcy protection, Merrill Lynch & Co. was forced into a sale to Bank of America Corp. and the federal government bailed out insurer American International Group.
Mack made telephone calls late Wednesday to Wachovia executives and also to Citigroup Inc. CEO Vikram Pandit, exploring all options to help restore confidence in the investment house, the person said. Citigroup was not interested in a tie-up, but talks remain ongoing with Wachovia, he said.
Wachovia declined to comment about a potential deal, while Citigroup confirmed that Mack and Pandit spoke.
Spokesmen for GIC and Citic could not immediately be reached for comment.
Mack isn't the only CEO looking to strike some kind of a deal or capital infusion. Washington Mutual Inc., which has lost billions and seen its shares plummet due to subprime mortgage exposure, is selling itself or looking for a deep-pocketed investor.
And overnight in London, Britain's Lloyds TSB Lloyds TSB announced a $21.85-billion deal to take over struggling HBOS PLC, Britain's biggest mortgage lender.
The U.S. government, which helped organize an $85 billion bailout of insurer AIG on Tuesday, also sought to break the grip of worsening global credit crisis by pumping billions into financial markets in a concerted action with central banks of other countries. The Federal Reserve Bank of New York, in two operations, injected $55 billion into temporary reserves in the United States, a move aimed to help ease a strained financial system in danger of freezing up.
The move helped steady Wall Street after the previous session's massive rout. However, market participants still moved into safe assets such as gold and Treasury bills, a sign that they remain skittish during the most troubling period for the world's financial system in most investors' memory.
AP Economics Writer Jeannine Aversa in Washington and AP Business Writer Tim Paradis in New York contributed to this report.
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