Word: banking
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...agency. "When the President says we're facing a systemic problem, should you really worry that you're not going to get your fund topped up by Congress?" asks one. But Bair knows that her chief role is to reassure everyday investors. "Your money is safe in the bank if it's FDIC-insured," she says. That's good. Because in the coming months, there may be many more modern-day Lydia Lobsigers...
...smaller than what it was, and though sectors like the car and financial-services industries have been hit hard by the current downturn, none is nearly as sick as agriculture was throughout the 1920s. And for all the current ills of megabanks like Washington Mutual and Wachovia, the national banking system still enjoys a measure of stability far greater than in the 1930s--or even the '20s. The kinds of "runs" on savings institutions that we watch Jimmy Stewart battle every Christmas season are all but unimaginable, thanks in large measure to the psychological reassurance provided by a landmark...
...resilience that simply did not exist eight decades ago. The abandonment of the gold standard has opened space for countries to adjust their monetary and fiscal regimes without fear of deflation or devaluation. And a landscape populated by an array of multilateral institutions like the IMF, the World Bank and the WTO has nurtured habits of international economic cooperation in times of crisis, as witnessed by the recent round of consultation among the G-7 countries and the coordinated efforts of finance ministries and central banks around the world to restore confidence and liquidity in the credit markets...
...government's effort to boost bank lending to end the credit crisis is hurting one of the areas critical to the nation's recovery: mortgage rates. In the past week, the average mortgage rate on a 30-year fixed home loan has jumped more than one half a percentage point to 6.74%, according to Bankrate.com. That might not sound like much, but it is the biggest one-week rise in the normally stable lending rate in 21 years. Some economists say mortgage rates could soon top 7%, a level they have not seen in more than six years...
...problem is that other moves the government has made to render bank debt safer has had the unintended consequence of making Fannie and Freddie's bonds less safe by comparison. So Fannie and Freddie's investors have to be compensated for the increased risk. In particular, traders say, the move in the past week by the Federal Deposit Insurance Corp. to temporary offer unlimited deposit insurance for non-interest bearing accounts and guarantee roughly $1.4 trillion in new unsecured bank debt has caused a rush of selling of the bonds of Fannie and Freddie. That's because the FDIC...