Programme to weather the storm
Thursday, 17 July 2008
Fazle Rashid in New York
AGAINST the backdrop of a run on a regional bank, steady downturn in the economy and no turn around on sight in the immediate future, Vikram Pundit, Chief Executive Officer ( CEO ) of Citigroup, summoned 50 of his top officials and placed before them a seven-point programme to keep afloat his beleaguered bank. A Saudi prince is the largest stake holder of the bank.
The seven-point programme styled 'Rules of the Road', is not strong enough to weather the storm that is likely to hit the financial sector with enormous ferocity, the experts contended. An array of big American banks are set to announce their performance report in the course of the week. None will have anything to report that would cheer the employees or the stakeholders.
Merrill Lynch is expected to announce huge write-off and huge quarterly loss. The other financial giant, JPMorgan Chase will have nothing better to divulge. Both the banks will announce their quarterly performance reports today (Thursday). Citigroup will reveal its report tomorrow (Friday). The bank 'reflects many of the ills plugging the economy'. The Citigroup has reported loss of $45 billion since mid 2007 and has lost $15 billion in last two quarters. Vikram Pundit, since becoming CEO has fattened bank's capital base by $40 billion and terminated the services of 19,000 employees.
Meanwhile, the Federal Reserve has opted for sweeping measures designed at preventing abusive and deceptive mortgage lending process that have prompted widespread delinquencies, collapse of the housing market and an economic downturn. The goal is to end abuse but not to abort a recovery in the housing sector.
The US government was prompt to assure the depositors that their money is safe. Shares of the regional banks plunged in one of the sharpest declines since the 1980s, the New York Times reported Tuesday. The assurance of the government has come, notwithstanding the investors fear that the rising tide of bad loans unleashed by the weakening housing market and the faltering economy will not rein in the troubles.
The Securities and the Exchange Commission (SEC) has warned traders not to spread rumours and indulge in wild speculation. The SEC will make an inquiry of its own to find out if their is any hidden factors behind this serious economic crisis facing the US.
The US, citadel of free market economy, is now seeking government intervention, strict regulations of mortgage lending and close vigilance of Wall Street operations -- all anathema to free economy.
AGAINST the backdrop of a run on a regional bank, steady downturn in the economy and no turn around on sight in the immediate future, Vikram Pundit, Chief Executive Officer ( CEO ) of Citigroup, summoned 50 of his top officials and placed before them a seven-point programme to keep afloat his beleaguered bank. A Saudi prince is the largest stake holder of the bank.
The seven-point programme styled 'Rules of the Road', is not strong enough to weather the storm that is likely to hit the financial sector with enormous ferocity, the experts contended. An array of big American banks are set to announce their performance report in the course of the week. None will have anything to report that would cheer the employees or the stakeholders.
Merrill Lynch is expected to announce huge write-off and huge quarterly loss. The other financial giant, JPMorgan Chase will have nothing better to divulge. Both the banks will announce their quarterly performance reports today (Thursday). Citigroup will reveal its report tomorrow (Friday). The bank 'reflects many of the ills plugging the economy'. The Citigroup has reported loss of $45 billion since mid 2007 and has lost $15 billion in last two quarters. Vikram Pundit, since becoming CEO has fattened bank's capital base by $40 billion and terminated the services of 19,000 employees.
Meanwhile, the Federal Reserve has opted for sweeping measures designed at preventing abusive and deceptive mortgage lending process that have prompted widespread delinquencies, collapse of the housing market and an economic downturn. The goal is to end abuse but not to abort a recovery in the housing sector.
The US government was prompt to assure the depositors that their money is safe. Shares of the regional banks plunged in one of the sharpest declines since the 1980s, the New York Times reported Tuesday. The assurance of the government has come, notwithstanding the investors fear that the rising tide of bad loans unleashed by the weakening housing market and the faltering economy will not rein in the troubles.
The Securities and the Exchange Commission (SEC) has warned traders not to spread rumours and indulge in wild speculation. The SEC will make an inquiry of its own to find out if their is any hidden factors behind this serious economic crisis facing the US.
The US, citadel of free market economy, is now seeking government intervention, strict regulations of mortgage lending and close vigilance of Wall Street operations -- all anathema to free economy.