Bush Monitors Wall Street
CBS
Transcript
the American people are concerned about the situation in our financial markets and our economy and I share their concerns I've canceled my travel today to stay in Washington where I'll continue to closely monitor the situation in our financial markets and consult with my economic advisers spoke to secretary Paulson this morning and I will meet with him later on today in recent weeks the federal government has taken Extraordinary Measures to address the challenges confronting our financial markets we've taken control of Fanny May and Freddy Mack the home finance agencies to help promote Market stability and to ensure they can continue to play a role in helping our housing market recover this week the Federal Reserve acted to pre prevent the disorderly failure of the insurance company AIG development that could have caused a severe disruption in our financial markets and threatened other sectors of the economy yesterday the Security and Exchange Commission took action to strengthen investor protections and step up its enforcement actions against illegal Market manipulation last night the Federal Reserve in coordination with central banks around the world took a substantial step to provide additional liquidity to the US Financial system these actions are necessary and they're important and the markets are adjusting to them our financial markets continue to deal with serious challenges as our recent actions demonstrate my Administration is focused on meeting these challenges the American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence thank you
Collapsed Confidence
CBS
Transcript
the world's edgy markets continued to whipsaw as the Dow went through a 600 Point mood swing people would like to see a direction any direction President Bush canel a planned trip to talk with his economic advisers the American people can be sure we will continue to act and the market soared on reports the treasury Department is considering creating a resolution trust that's what the government used to bail out the troubled Savings and Loans in the 1980s by buying up all their bad debt but critics say that crisis was different the paper Financial paper sold then was not as damaged in uh its reputation as the subprime paper is today this financial crisis meanwhile continues to deepen wacovia reportedly is in talks to merge with Morgan Stanley Washington Mutual is in a desperate search for a buyer and the credit markets have Frozen as banks have become reluctant to loan money even to each other I've been in this business for 25 years and I've never seen the markets this locked up with the failure of Leman Brothers Paul McCully says confidence has collapsed no one trusts anybody anymore they still do trust Uncle Sam Mr banki and Mr Paulson need to put Uncle Sam's money on the line to restore trust overnight the Federal Reserve and the world's biggest central banks pumped hundreds of billions of dollars into the financial syst system to try to keep the markets moving and the economy from stalling if you start a business you got to borrow money and if there's no money to be borrowed people aren't getting educated they aren't buying houses they're not building companies and that means trouble for the American economy that's why the Dow went skyrocketing at even the idea of a resolution trust but that would require Congressional legislation which could take months and the economy Harry doesn't have that much time so Hank Paulson Treasury meets tonight Ben Bernan Washington leaders they want to get this thing together the time is really of the essence here is urgency is the key thing right now I I mean one money manager said to me today this situation is spiraling down I mean we saw with AIG this can sneak up really fast suddenly like a $40 billion problem was an $85 billion problem that's what we're dealing with that's why you have this series of ongoing meetings there isn't a lot of time I remember resolution trust from the late ' 80s early 90s entire developments were sitting rotting in the subur giant skyscrapers were empty by the time that came online how might this help these markets the whole idea here is you take all this bad debt you move it off their balance sheets and you park it somewhere else where you can get rid of it in an orderly process that cleans up their balance sheets and makes things move smoothly again but it takes time it does take time all right Anthony Mason thanks
McCain Slams Wall Street, Bush
CBS
Transcript
in Cedar Rapids Iowa today John McCain slammed the head of the Securities and Exchange Commission accusing Christopher Cox of allowing Wall Street to become a casino for speculators and he implicitly criticized President Bush for standing by him if I were president today I would fire him after stumbling earlier in the week when he claimed the economy's fundamentals are strong McCain is now roaring back with a harsh attack on Washington and Wall Street mismanagement and greed became the operating standard while Regulators were asleep at the switch he ripped into Barack Obama for being too close to mortgage Giants Fanny May and Freddy Mack who he said are at the center of the economic crisis Fanny's former general counsel is a senior adviser to his campaign whose side do you think he's on in fact though McCain also has advisers who've lobbied for Fanny and Freddy and while he did sound an early warning on them he is not known for tough regulation of Wall Street where the crisis is now raging McCain is taking his populist attack to crucial Battleground states in the midwest this week Ohio Michigan Iowa Wisconsin and Minnesota the strategy there certainly a lot of Democrats uh some maybe who didn't vote in the primaries but certainly some who did vote for Hillary Clinton who we feel we have a very good shot at meanwhile Senator Chuck Hegel a republican says it's a stretch to say Sarah Palin is qualified to be president asking quote you get a pass sport for the first time in your life last year Hegel has split with his party on a number of issues still he's one of a number of prominent Republicans who have questioned whether Palin has enough experience in foreign policy Chi Reed CBS News Green Bay Wisconsin
Protecting Your Money
CBS
Transcript
with all of the bad news on wall street you may be worried about protecting your own money our financial advisor ray martin is here with five tips to keep your money safe good morning ray good morning julie all right what is something that someone can do today to make sure their money is protected okay i've been a financial advisor to my private clients for 22 years i have to be 100 years old to say i've seen this before first thing to do on my checklist is check the safety of your money and banks i can't say this enough with the failure of any mac bank a month or so ago there were a billion dollars in deposits that were not fdic insured what do you do go to the fdic.gov website and check the eddie calculator electronic deposit insurance estimator calculator put in all your bank account information find out what's insured and what's not the insurance limits are 100 000 per count 200 000 per joint account okay next you say check the safety of your money market funds it was a shock earlier this week when we heard that the reserve's primary money market funded 68 billion money market fund broke the buck they had business dealings with lehman brothers and they had leaning commercial paper and they paid a high interest rate check your money market fund if it pays more than two and a half percent that's a warning sign it's paying too high interest because it's risky it should be lower than that or ask your brokerage firm for a money market fund in government securities a us government money market fund for the ultimate safety okay next you recommend buying treasury bills if you have more than a hundred thousand dollars in cash and you're concerned about the safety seek the ultimate in safety buy u.s treasury bills 30 60 and 90 days maturity you can buy them directly at auction at the treasury direct website or in your brokerage account you'll have the ultimate in safety and you'll be able to sleep at night and the website is at treasury direct website okay next tip is to establish a home equity line of credit you know if you have good credit more than a 700 uh credit score no late payments your home is worth significantly more than you owe on it and you don't have a line of credit you should go get a credit facility here a line okay it won't hurt your credit score it might even actually improve it and you'll have a source to borrow in case your money in banks and brokerage accounts is disrupted because of a failure of your brokerage firm or bank you'll have a source to be able to borrow and get money for cash in a short term basis and your fifth and final tip is simply don't panic absolutely don't here you know now isn't the time to sell great investors are defined by moments like these they look at things to buy you know we've had a bear market for 11 months now the average bear market 18 months down 19 to 32 we're down 27. a lot of people are saying maybe this is near the end of this bear market the systemic bear market that we're having here and they're looking at things and saying you got great valuations on companies like ge johnson and johnson procter and gamble apple you might want to start thinking about a portfolio don't buy yet but think about how you're going to restructure your long-term investments and there should be some great bargains when we pull through on this wait for some stability first to return to the markets ray martin always have good advice thank you so much you're welcome julie if you have a question for ray go to our website earlyshow.cbsnews.com
Wall Street On Edge
CBS
Transcript
it is day four in the most extraordinary week in Wall Street history and enormous uncertainty hangs over the markets with a psychology of fear taking hold President Bush canceled his travel plans to make a statement from the White House the American people are concerned about the situation our financial markets and our economy and I share their concerns among the concerns haunting the markets the future of the last two major investment banks Goldman Sachs and Morgan Stanley both are under siege as speculation swirls about secret merger negotiations and the nation's largest Savings Bank Washington Mutual is on the block the unraveling of the financial world has sent investors running for safety out of stocks and into the safety of Treasury bills and gold which is rallied about a hundred dollars an ounce if your money is in a regular bank account the government guarantees it up to one hundred thousand dollars through the FDIC that limit is much higher at least half a million for a brokerage account so even if the investment bank goes under your mutual funds stocks and bonds should be protected right now people have much more confidence in the ability of the US government immediate obligations and some of these financial institutions just a day after the Federal Reserve bailed out AIG it joined other central banks to pour 180 billion dollars into the global banking system and the president promised today the White House is prepared to step up to the plate to prevent a total collapse of the financial system Alexis Christopher s CBS News Wall Street
Wall Street Still On Edge
CBS
Transcript
let's talk about wall street gripped by fear investors are unnerved that other financial institutions may be in danger early show correspondent jeff glor is at the new york stock exchange with more good morning jeff hey julie good morning to you washington mutual and morgan stanley are two very different companies but they're both being affected by the same crisis and the same rumors and there's a lot of frustration here this morning about this snowballing effect and when it will end just when you thought it couldn't get much worse the dow slid again now down more than 800 points in three days and if you're frustrated because you can't figure it out well the experts can't either i'm perplexed i'm surprised i expected an update not a big down day despite the desired calming effect of an 85 billion dollar government bailout of aig investors snatched money out of stocks often routing it to ultra safe treasury notes and gold right now people have much more confidence in the ability of the us government to meet its obligations than some of these financial institutions and as many asked what companies next this new world on wall street forced major banks to consider major changes or maybe follow the fate of outfits like bear stearns and lehman brothers certainly there's a speculation that the model of a standalone investment bank may not survive future bank failures could put severe strain on the fdic's insurance fund which is at its lowest level since 2003 our economy has the strength to be able to deal with these shocks and more bailouts from uncle sam would almost surely swell the national debt already at 9 trillion and already costing taxpayers 230 billion a year on interest alone this is a global crisis at this point russia's markets have been suspended until friday the bank of japan put 14 billion dollars into money market funds and governments around the world can keep printing money maggie but that brings its own host of problems including inflation and a decreased value in your paycheck maggie jeff glor at the new york stock exchange thanks jeff joining us now from washington is sheila baer chairman of the fdic good morning chairman bear good morning how are you i'm good thank you when you and i spoke a couple of months ago i asked you if our money was safe in the bank and your answer was an unequivocal yes are you still as confident today yes if you stay within our coverage limits your money is absolutely safe and yes that guarantee has been good for 75 years and will continue to be so nobody has ever lost a penny of fdic insured deposits you say that no one's ever lost a penny with the fdic but no one ever imagined that lehman brothers would go under no one ever imagined that a big bank like washington mutual could be in danger of going under as it is this morning if that would happen if a monster bank like wamu failed could you still meet your obligations well i don't comment on open operating institutions or certainly make any scenario predictions uh that are institution pacific i would say that uh first of all people should know that we are back by the full faith and credit of the united states government uh we are we do rely on industry funded reserves we think those industry funded reserves will be more than ample to cover our losses even in with high lost scenarios but we are backed by the full faith and credit of the united states government we are the government so people shouldn't think we're running out of money we are the government we have a long-standing backup lines of credit with treasury and i'm confident we have whatever resources we will need to meet whatever challenges we make when we confront this is an extraordinary time but i think people should also understand that a lot of this turmoil is occurring outside of the banking sector outside of insured depository institutions investment banks insurance companies are different from fdic-insured banks so uh actually for the most part the fdic insured banks have weathered the storm pretty well so far that doesn't mean that they don't have challenges they do but as at the end of the second quarter uh 98 of all insured institutions were well capitalized representing 99 of of all banking assets so so far banks insured banks are weathering the situation pretty well chairman bear we should clarify that the money in your fund does not come from taxpayers it comes from member banks who pay a premium remember banks who pay premiums that's right i also know that that fund is running lower than it should the lowest since 2003 will there could there come a point where you will have to tap into taxpayer money i i don't think that will what will be the case it happened once before in the early 90s and it was not to cover losses again i think our industry-funded reserves will be more than ample to cover losses it was needed for short-term working capital and what i mean by that is when a bank has to close we pride ourselves on making the insured deposits immediately available so we pay that money out very quickly it takes us some time though to sell off the bank assets to get our money back so there's there's a mismatch a time leg so time sometimes there's a short term need for working capital and in the early 90s we used our treasury line to meet that need the money was paid back very quickly with interest and no cost to the taxpayers and again i don't think we'll have to tap into those treasury lines but if we do our statute requires us to repay the money over time again through an industry assessment so it ultimately it will not cost a taxpayer all right chairman sheila bear we're out of time but i do want to mention because it's so important your website my fdic insurance thank you so much you're welcome i went on it last night and it really is helpful it tells you exactly how to allocate your money spread it out at the banks to make sure that you're protected so thank you very much thank you thank you i know you like to be called chairman not sure woman so thank you you
Central banks stability measure
CNN
Transcript
European shares were up about a full percent going into the lunch hour, and they were being helped by this massive intervention by the central banks around the world. U.S. Federal Reserve has put billions and billions of dollars into the system. Much of that money coming here to the Bank of England in London and also to the European Central Bank in Frankfurt. They will then be able to loan banks to the regional banks, the commercial banks. These banks have found it very difficult to loan money to each other ever since the collapse of Lehman Brothers on Monday. And these banks must be able to loan money to each other overnight for the financial system to keep going. That's why we've seen this massive intervention by the Federal Reserve and the other central banks. Also helping European shares, a very, very big and unusual merger between two commercial banks here in the U.K. The Halifax Bank of Scotland, or HBOS, will be taken over by Lloyds TSB. This is a merger that was easy. Even totally inconceivable just a week ago. However, the failure of Lehman Brothers have changed all the rules, and the rule books are being thrown out. Jim Bolden, CNN, London.
Where to invest?
CNN
Transcript
So what should investors be doing right now? Yeah, look, it's a good question, Andrew. I think, first of all, I understand people's anxiety. And I saw that in Singapore outside AIG's offices. Interestingly, I ran into a doctor this morning here in Hong Kong. And the doctor was telling me that he's seeing investment banker after investment banker for stress. So anxiety has a physical effect on people. So I can well understand that. Look, I've been in this business since 1987, and I've seen six market downturns. So this is just another chapter. There is hope. But the key thing is perspective, taking a long-term view. So take a long-term view. But if you're in these stocks, which have fallen perhaps sort of 30 or 40 percent, should you be considering just pulling out and just keeping your stock? Should you be considering just pulling out and just keeping your stock? Yeah, I think that's a good question. And I think that's a good question.
Will markets get worse?
CNN
Transcript
So what are you suggesting? What are you suggesting as far as the ultimate scenario here for the financial systems around the world? Well, there's going to be a big clean-out in the financial system, Andrew. People who got MBAs made a terrible mistake because finance is going to be a bad place for another 15 years or so. It's going to be like the late 60s and 1970s. All the people who got agricultural degrees are going to be making a lot of money. The people who got mining degrees are going to be making a lot of money. The world is changing. You're not going to see the 29-year-olds on Wall Street driving Maseratis. You're going to see 29-year-old cotton farmers driving Maseratis. All those guys who are on Wall Street, the stockbrokers, are going to have to learn to drive taxis. They're going to have to learn to drive tractors. Maybe they'll be able to get a job on a farm. When you see the U.S. government now effectively owning two of the country's biggest mortgage companies, you see the U.S. government owning the biggest insurer. What do you think? I think it's socialism for the rich. It's welfare for the rich. It's a sad day. Not only that, Andrew, they're ruining the Federal Reserve's balance sheet. The Federal Reserve may have to go out of business before this is all over. And the American taxpayers are the ones who are getting stuck with all this. All the guys on Wall Street are still walking away with their huge bonuses. Wall Street has paid itself tens of billions of dollars of bonuses. It's not going to go back. It's going to go back to the way it was in the last few years. They're not giving it back. And Jim, what are you doing with your own investments? How are you dealing with this situation? Well, I recently bought some Japanese yen, some Swiss francs. I bought some airline companies. I'm thinking about trying to start buying shares again. If and when we have a big package. If we have a big panic, Andrew, I hope I'm smart enough to buy more. You usually should buy a panic. In the meantime, I'm still short investment banks. I shorted some more earlier this week. So I'm doing a little bit of both long and short.