One of the reasons the Dow Industrials index rose 936 points and the broader indices rose more than 11% in one day was because on a global scale governments decided to inject capital into banks and financial institutions.  As I read today’s Wall Street Journal, the credit markets had become so dysfunctional that the only [...]

The Dow had it’s record highest point gain today up almost 940. Although it was up a bit today, Oil prices have been retreating and have been steadily below $90/bbl for several days. And have you noticed the price of gasoline has also been declining?

Of course, we all know it’s not over yet, but it’s good to see some positive signs. Unfortunately, the price of diesel fuel has not come down with trhe price of gasoline, apparently due to supply issues worldwide. And this will keep the price of consumer goods general higher. Seems like[...]

At least good news for taxpayers… CitiGroup has backed out of talks for Wachovia leaving the entire deal for Wells Fargo. I’m guessing that after more of the depth of bad debt came to light, it became more and more obvious that the deal just was not longer going to be in the best interest of CitiGroup’s stockholders.

That was the good news, as long as…

After a weekend of back and forth, one judge’s order to stop Wells and Wachovia from proceeding on Saturday, and appellate court overturning that order on Sunday, and a $60 Million CitiGroup (C) suit against both Wells Fargo (WFC) and Wachovia (WB), the three parties have agreed to a temporary halt to all litigation and discovery until Wednesday at noon.

Which just demonstrates the fallout that can be expected as the government (in this case, the FDIC) strong-arms companies to act, no matter how imprudently, to prevent the government from stepping in and (in this case) taking yet another bank into receivership.

It probably comes as no big surprise that Wells Fargo (WFC), one of the largest banking concerns in the US, well diversified in financial products across deposits, lending, credit cards, sales finance, and a smart mortgage originator, announced Friday that they had made a deal to purchase the entire Wachovia package for $15.4 Billion. The surprise comes with the fact it was five days late. The deal undercuts CitiGroup’s (C) announced purchased of part of the Wachovia (WB) operation, and does what CitiGroup could not do: completes the deal without Federal Funding.

I was shocked when I heard, since Wells had originally participated in negotiations last weekend along with CitiGroup. Wells evidently was able to use the week, in which a contract had not yet been signed, to perform additional due diligence, and came up with an offer Thursday evening.

I have to admit, my thoughts regarding the latest financial debacles waver from one extreme to the other.  My initial instinct is that the markets need to be stabilized, and anything that provides a floor for a stock market in apparent free fall is a good thing.
My next thought is that $700 billion is a [...]

On Sunday I shared some initial thoughts about the Fed take-over of Fannie Mae and Freddie Mac. If you read it, you know I’m not exactly happy about the outcome.  My friend Bithead shared some great thoughts Monday, and I don’t disagree that something needed to be done.   He and I both agree [...]

Today US Treasury Secretary Henry Paulson announced plans for the new Federal Housing Finance Agency (FHFA) to take Freddie Mac and Fannie Mae into conservatorship.   The power to do this was provided in HR 3221 which was passed in July.
The move includes replacement of the CEO of both organizations, and an infusion of about $200 [...]

By now you probably know that both Freddie Mac and Fannie Mae have had very poor quarterly reports.  Worse than expected.  And now we’re in for worse trouble.
Money is now expected to be tighter as we roll into the fall and home buying will continue to be slow due to the fact rates will be [...]

As expected, President Bush signed HR 3221 into law this morning, making billions of federal dollars available to home owners, shoring up Fannie Mae and Freddie Mac, and providing closer oversight of the financial aspects of home ownership to the Administration and Congress.
What a shame.
After speaking with a good friend of mine that is a [...]