Credit crisis

NBC
Published: October 6, 2008

Financial markets here and around the world suffered major losses Monday afternoon despite the bailout President Bush signed into law Friday.

The DOW has dropped below 10,000 and countries around the world are scrambling to prop up their own failing banks. This bailout has not restored confidence. In fact, investors seem more nervous Monday not only here in the U.S., but around the world. As the DOW dropped hundreds of points and slipped below 10,000 Monday morning governments around the world are feeling the ripple effect of America’s credit crunch.

In Russia, trading stopped after shares fell 15 percent in the first hour.

In Japan, the market sank to its lowest level in almost five years.

President Bush Monday heard how it’s affecting small businesses:  “They’re having trouble getting money to be able to continue to be able to either expand their business and be able to get consumers to be able to buy their products,” said President Bush. 

The president’s working group on financial markets announced this morning they’re using new powers granted in the $700 billion bailout, expanding loans and paying interest on banks reserves.

“We’re doing everything we can to get that money into the market place to help facilitate working through strengthening the balance sheets of our financial institutions,” said Assistant Secretary of Treasury Anthony Ryan.

As the Bush administration deals with that “what” Congress still wants to know “why” what happened on Wall Street?  “Had they been less reckless, or the government been more attentive, the financial crisis could have been prevented,” said democratic Congressman Henry Waxman of California.  This first of five hearings investigates last month’s bankruptcy of Lehman Brothers.  “I wanna be very clear: I take full responsibility for the decisions that I made and for the actions that I took,” said Lehman Brothers CEO Richard Fuld.  Actions that led to the nation’s largest bankruptcy ever and some experts say triggered the current crisis.

Strangely, there is one good point in all this for consumers. Oil has dropped below $90.00 a barrel, and while that’s contributing to the lack of confidence on Wall Street it also means you can probably expect lower gas prices.