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Another US lender folds while Congress row blocks rescue deal
 Global stock prices crumbled Friday and investor anxiety mounted as another big US bank collapsed and political wrangling blocked a deal to save the beleaguered US financial sector.With talks on a $700 billion rescue package at an impasse in Congress, President George W. Bush issued another plea to fractious lawmakers to come together and approve a plan that would restore confidence and calm frazzled markets. "We've got a big problem ... we need a rescue plan," Bush said in televised remarks minutes after Wall Street shares plummeted in line with Asia and Europe and as central banks again injected tens of billions of dollars to avert seizure on inter-bank lending markets. After a rescue for American savings giant Washington Mutual by JP Morgan Chase in the biggest-ever US banking failure, shock waves hit European financial markets. Belgian-Dutch financial group Fortis struggled to dispel liquidity concerns hammering its shares, insisting there was "not a single chance" of failure. The bank announced an emergency asset sale to raise 5.0-10 billion euros (up to $14 billion). Fortis closed with a loss of nearly 21 percent at 5.18 euros, its lowest reading in 15 years. Wall Street shares lost ground Friday, with the Dow Jones Industrial Average down 0.71 percent at 10,943.77 at mid-day. The tech-heavy Nasdaq shed 1.63 percent to reach 2,150.93. "The markets had known that Washington Mutual was not financially sound, but they were holding out hope that the government would act [on a rescue plan] before regulators had to step in," said Nathan Topper at Economy.com. "If factions in Congress and the Bush administration do not agree today on a bank rescue package, markets could sell off further," he added. European exchanges also took a pounding on Friday. The London FTSE 100 index fell 2.09 percent to close at 5,088.47 points while in Paris the CAC 40 lost 1.50 percent to finish at 4,163.38. The Frankfurt Dax gave up 1.77 percent to finish at 6,063.50. Asian exchanges earlier in the day also closed in negative territory, with Tokyo shedding 0.94 percent and Hong Kong 1.3 percent. "Confidence is swinging like a seesaw at the moment," said Joshua Raymond, a market strategist at City Index. "We can ill afford to drag this out longer than the weekend. It's increasingly looking like the bailout plan lacks the substance to get it through Congress, which would be devastating to markets." Posted by: Fred 2008-09-27 |
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