Amerikai Magyar Hírlap, 2008 (20. évfolyam, 3-51. szám)
2008-09-26 / 39. szám
Hungarian Journal "Worst Financial Crisis Since the Great Depression" Morgan Stanley, banks rush to complete deals NEW YORK - Wall Street entered into another round of speed dating, with bankers representing Morgan Stanley and Washington Mutual scrambling to put together deals in the biggest realignment of the financial industry since the 1930s. Once vaunted investment banks like Bear Steams, Merrill Lynch & Co. and Lehman Brothers Holdings Inc. have lost their independence or been toppled at a breath-taking pace. And for a time on Thursday, fears intensified that the spreading credit crisis threatened to drag down the remaining global financial institutions and Main Street banks alike. -» Shares of financial stocks initially plunged, then recovered as part of a dramatic afternoon reversal for most stock indexes after CNBC reported that Treasury Secretary Hank Paulson might back the creation of a new Resolution Trust Corp. to soak up bad loans and defaulted mortgages, their shares reversed course.-The RTC was created by the government during the savings and loan crisis of the 1980s. Morgan Stanley slumped more than 46 percent in early trading as investors fretted about its ability to quickly find a buyer or cash infusion from a foreign investor. Rival Goldman Sachs Group Inc. skidded 25 percent. Morgan Stanley shares rallied to close up about 4 percent while Goldman Sach’s stock was lower by almost 6 percent. And Washington Mutual Inc. shares soared more than 48 percent. Anthony Sabino, professor of law and business at St. John’s University says: “This is history repeating itself. The debacle of the S&L crisis created the RTC, and we are faced with a similar crisis because we didn’t learn from history. This is yet another lifeline.” Some investors believe that the investment banks must combine with an institution that offers a stable base of bank deposits. That was one of the reasons Merrill Lynch agreed to be acquired by Bank of America Corp. earlier this week. Paulson urges quick action on $700 billion bailout “The most serious financial crisis the world has ever dealt with” WASHINGTON - The Bush administration insisted Sunday that Congress must move quickly to approve what one lawmaker called the “mother of all bailouts” — a $700 billion proposal to buy a mountain of bad mortgage debt in an effort to unfreeze the nation’s credit markets. Congressional leaders endorsed the plan’s main thrust, saying passage might occur in a matter of days. But they said it must be expanded to include help for people on Main Street as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions. The proposal “does not include the necessary safeguards,” said House Speaker Nancy Pelosi, D-Calif. She called for “independent oversight, protections for homeowners and constraints on excessive executive compensation.” • Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration’s measure, which was sent to lawmakers on Saturday, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression. In the past two weeks, the government has taken over the country’s two biggest mortgage companies, Fannie Mae and Freddie Mac, and its biggest insurance company, American International Group Inc., and stood by while the nation’s fourth-largest investment bank, Lehman Brothers, was forced to declare bankruptcy and another investment giant, Merrill Lynch, was forced to sell itself to Bank of America. Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up last week despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system. The plan the administration has developed with support from the Fed would have the government buy up to $700 billion of the bad loans, taking them off the books of financial firms with the hope that this will allow those companies to resume normal lending operations. Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said the government’s efforts would be the “mother of all bailouts” that could well cost $1 trillion when the cost of the government takeovers of Fannie, Freddie and AIG were included. Paulson, appearing on four of the five Sunday morning talk shows to sell the plan, insisted that the administration had no choice. The cost of doing nothing would have been far more severe because the clogged credit markets would make it harder for businesses to get the loans they need to keep operating, he said. It would also make it harder for consumers to get the credit they need for car loans and other purchases, the Treasury secretary said. Consumer spending accounts for two-thirds of total economic activity. “We need to look at what is going on in the credit markets and they are still very fragile right now and frozen,” Paulson said on NBC’s “Meet the Press.” In addition to what is happening in the United States, Paulson said he was confident that other major countries would take similar actions to support their financial systems, helping to avert a global meltdown. “We have a global financial system and we are talking very aggressively with other countries around the world and encouraging them to do similar things and I believe a number of them will,” Paulson said on ABC’s “This Week.” He refused to name the countries that he expected would act. Congressional Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes. And some GOP leaders told the White House on Sunday to prepare to accept more oversight and guarantees that the Treasury will recoup some of the bailout money. Republicans, however, appeared less eager to support several other Democratic proposals. One would change bankruptcy laws to allow for mortgages to be modified, something financial companies have strongly opposed. Another would cap benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government. “It would be a grave mistake to say that we’re going to buy up a bad debt that resulted from bad decisions of these people and then allow them to get millions of dollars on the way out,” said House Financial Services Chairman Barney Frank, D-Mass. “The American people don’t want that to happen and it shouldn’t happen.” Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters at a Capitol Hill news conference on Sunday that while he hoped Congress could pass the legislation this week “if it takes a little longer, then so be it.” --------------------------------------4 ft Subscribe to the Hírlap! Szeptember 26,2008/ Q sAdvertise your business in the i Hírlap! Call (323) 463-6376 Placido Domingo Invites Hungarians to Dress Rehearsal of New Opera “The Fly” As we reported earlier on our Hungarian pages, the most enduring of the “Three Tenors”, Placido Domingo is a great friend of Hungarians. As recently-as August 2008, he performed in the Hungarian city of Pécs, and his rendition of Bank Ban’s* great aria in Hungarian language was widely circulated among opera lovers. In the first week of September, Mr. Domingo, who is on friendly terms with the Consulate General of Hungary, invited Ambassador Balázs Bokor and a group of distinguished Hungarians to the final rehearsal of Howard Shore’s “The Fly”, and afterwards was invited by Balázs Bokor to the consular Residence for a reception. Performers of the opera and the Hungarian personalities who attended the rehearsal were also present. Ambassador Bokor presented the Maestro with a certificate acknowledging his spectacular career and acheivements. The Maestro, in turn, announced for the first time that the world famous opera festival, the Operalia will be held in Budapest and Pécs in 2009. Pictured: Ambassador Bokor and Maestro Domingo with the Certificate. (Photo Courtesy of the Hungarian Consulate General) THE CONSULATE GENERAL OF THE REPUPLIC OF HUNGARY EXPRESSES ITS DEEP APPRECIATION TO Maestro Plácido Domingo FOR HIS UNIQUE AND ADMIRABLE DEVOTION TO REPRESENT THE GREAT VALUES OF THE UNIVERSAL MUSIC, AMONG THEM THOSE OF THE HUNGARIAN MASTERPIECES. BALÁZS BOKOR, AMBASSADOR CONSUL GENERAL OF HUNGARY IN LOS ANGELES The Consul General also visited the Duna Csarda Hungarian Restaurant in Hollywood with distinguished guests from Hungary. Pictured: Professor Károly Novák, Katalin Novák, Brigitta Bokor. DUNA Travel 8530 Holloway Dr. If 102 W. 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