Bailout in Chaos, US Government Seizes WaMu Bank
Source: Al-Manar TV, 26-9-2008
Talks on a $700 billion rescue for the U.S. financial system fell into chaos on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and U.S. authorities closed Washington Mutual and sold its assets in America's biggest ever bank failure.
As negotiations over an unprecedented bailout plan to restore credit markets degenerated into chaos, the largest U.S. savings and loan bank was taken over by authorities and its deposits auctioned off. U.S. stock futures fell by more than 1 percent, the dollar weakened and share markets in Asia fell.
The third-largest U.S. bank JPMorgan Chase & Co said it bought the deposits of Washington Mutual Inc, which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu's depositors and customers. JPMorgan said it would be business as usual on Friday morning.
Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages.
Earlier on Thursday, U.S. lawmakers had appeared close to a final agreement on the bailout, lifting world stock markets and sending the dollar higher. But an emergency White House meeting between Congressional leaders with U.S. President George W. Bush "devolved into a contentious shouting match," according to a statement from the McCain campaign.
After the session, Congressional leaders said an agreement could take until the weekend or longer.
A group of conservative Republican lawmakers proposed an alternative mortgage insurance plan, eschewing the Bush administration's Wall Street bailout just weeks before the November 4 election as many lawmakers try to hold on to their seats.
Democrats said McCain had scuppered the anticipated agreement by throwing his support behind that scheme.
The conservative group's plan calls for the U.S. government to offer insurance coverage for the roughly half of all mortgage-backed securities that it does not already insure.
The architects of the original plan, U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben Bernanke, rushed to Capitol Hill for late night meetings to urge House Republicans to get back on track.
"It is critical that this legislation get done quickly," White House spokesman Tony Fratto said. "We have serious concerns about the state of our credit markets."
U.S. Senate Banking Committee Chairman Christopher Dodd said a deal could take beyond Friday to reach and took a swipe at McCain, who returned from his presidential campaign to try to broker a deal.
"What this looked like to me was a rescue plan for John McCain for two hours," Dodd told CNN. "To be distracted for two to three hours for political theater doesn't help."
INJECTION OF POLITICS
Also speaking to CNN, Obama said of McCain's involvement, "The concern that I have ... is that when you start injecting presidential politics into delicate negotiations then you can actually create more problems rather than less."
Earlier, news that a deal was near stabilized beleaguered money markets, frozen by reluctance by banks to lend. The rate on one-month U.S. Treasury bills shot higher as traders unwound safe-haven trades.
INTENSE BAILOUT TALKS
The crisis comes after a month of turbulence marked by the government's takeover of mortgage companies Fannie Mae and Freddie Mac, the bailout of insurer American International Group Inc, and the bankruptcy filing of investment bank Lehman Brothers Holdings Inc.
Concern lingered that even with a bailout, the United States may stumble, prompting a global slowdown.
German Finance Minister Peer Steinbrueck said one outcome of the crisis would be a less dominant role for the United States in the global financial system.
"The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar.
Talks on a $700 billion rescue for the U.S. financial system fell into chaos on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and U.S. authorities closed Washington Mutual and sold its assets in America's biggest ever bank failure.
As negotiations over an unprecedented bailout plan to restore credit markets degenerated into chaos, the largest U.S. savings and loan bank was taken over by authorities and its deposits auctioned off. U.S. stock futures fell by more than 1 percent, the dollar weakened and share markets in Asia fell.
The third-largest U.S. bank JPMorgan Chase & Co said it bought the deposits of Washington Mutual Inc, which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu's depositors and customers. JPMorgan said it would be business as usual on Friday morning.
Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages.
Earlier on Thursday, U.S. lawmakers had appeared close to a final agreement on the bailout, lifting world stock markets and sending the dollar higher. But an emergency White House meeting between Congressional leaders with U.S. President George W. Bush "devolved into a contentious shouting match," according to a statement from the McCain campaign.
After the session, Congressional leaders said an agreement could take until the weekend or longer.
A group of conservative Republican lawmakers proposed an alternative mortgage insurance plan, eschewing the Bush administration's Wall Street bailout just weeks before the November 4 election as many lawmakers try to hold on to their seats.
Democrats said McCain had scuppered the anticipated agreement by throwing his support behind that scheme.
The conservative group's plan calls for the U.S. government to offer insurance coverage for the roughly half of all mortgage-backed securities that it does not already insure.
The architects of the original plan, U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben Bernanke, rushed to Capitol Hill for late night meetings to urge House Republicans to get back on track.
"It is critical that this legislation get done quickly," White House spokesman Tony Fratto said. "We have serious concerns about the state of our credit markets."
U.S. Senate Banking Committee Chairman Christopher Dodd said a deal could take beyond Friday to reach and took a swipe at McCain, who returned from his presidential campaign to try to broker a deal.
"What this looked like to me was a rescue plan for John McCain for two hours," Dodd told CNN. "To be distracted for two to three hours for political theater doesn't help."
INJECTION OF POLITICS
Also speaking to CNN, Obama said of McCain's involvement, "The concern that I have ... is that when you start injecting presidential politics into delicate negotiations then you can actually create more problems rather than less."
Earlier, news that a deal was near stabilized beleaguered money markets, frozen by reluctance by banks to lend. The rate on one-month U.S. Treasury bills shot higher as traders unwound safe-haven trades.
INTENSE BAILOUT TALKS
The crisis comes after a month of turbulence marked by the government's takeover of mortgage companies Fannie Mae and Freddie Mac, the bailout of insurer American International Group Inc, and the bankruptcy filing of investment bank Lehman Brothers Holdings Inc.
Concern lingered that even with a bailout, the United States may stumble, prompting a global slowdown.
German Finance Minister Peer Steinbrueck said one outcome of the crisis would be a less dominant role for the United States in the global financial system.
"The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar.
