Stopgap Measures
A look at the series of government moves to counter the financial meltdown.
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The Federal Reserve announces a rescue package to provide up to $200 billion in loans to banks and investment houses and let them put up risky mortgage-backed securities as collateral.
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The Fed provides a $29 billion loan to JPMorgan Chase & Co. as part of its purchase of investment bank Bear Stearns.
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The Fed increases the size of its loans to banks and lets them put up less-secure collateral.
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Federal regulators seize Pasadena, Calif.-based IndyMac, costing the Federal Deposit Insurance Corp. billions to compensate deposit-holders.
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President Bush signs a housing bill including $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners.
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The Treasury takes over mortgage giants Fannie Mae and Freddie Mac, putting them into a conservatorship and pledging up to $200 billion to back their assets.
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The Fed injects $85 billion into the failing American International Group, one of the world's largest insurance companies and pumps $70 billion more into the nation's financial system to help ease credit stresses.
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The Treasury temporarily guarantees money market funds against losses up to $50 billion.
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The Fed makes an extra $330 billion available to other central banks, boosting to $620 billion the amount available to the Fed through currency "swap" arrangements, where dollars are traded for foreign currencies. It also triples to $225 billion the amount available for short-term loans to U.S. financial institutions.
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President Bush signs the $700 billion economic bailout package. Treasury Secretary Henry Paulson says the money will be used to buy distressed mortgage-related securities from banks.
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The Fed increases a short-term loan program, saying it is boosting short-term lending to banks to $150 billion. It says that by year's end, $900 billion in potential overall credit will be outstanding. It also says it will begin paying interest on reserves that banks keep with the Fed in hopes of coaxing banks into keeping more money on deposit at the central bank.
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The Fed says it will start buying unsecured short-term debt, so-called "commercial paper," from companies.
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The Fed cuts its benchmark interest rate a half percentage point, to 1.5 percent. It follows a one-quarter point cut on April 30 and a three-quarter-point reduction on March 18 The Fed also agrees to lend AIG $37.8 billion more, bringing total to about $123 billion.
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The Treasury says it will use $250 billion of the $700 billion bailout to inject capital into the banks, with $125 billion provided to nine of the largest. The FDIC says it will temporarily guarantee up to a total of $1.4 trillion in loans between banks.
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The Fed says it will provide up to $540 billion in financing to provide liquidity for money market mutual funds.
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The Fed cuts its benchmark interest rate to 1 percent, matching the low point reached in 2003. The rate hasn't been lower since 1958.
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The Treasury and Fed replace the two previous loans provided to AIG with a new $150 billion aid package that includes an infusion of $40 billion from the government's bailout fund.
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Treasury Secretary Henry Paulson says the government will no longer buy distressed mortgage-related assets, formerly the centerpiece of the bailout, and instead will concentrate on injecting capital into banks.
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Treasury says it has provided $33.6 billion in capital to another 21 banks, with the largest stake being $6.6 billion to Minneapolis, Minn.-based U.S. Bancorp. So far, the government has invested $158.6 billion in 30 banks.
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The Treasury says it will invest another $20 billion in Citigroup Inc., on top of $25 billion provided Oct. 14. The Treasury, Fed and FDIC also pledge to backstop large losses Citigroup might absorb on $306 billion in real estate-related assets. Citigroup will assume the first $29 billion in losses, and after that the government will absorb 90 percent of losses and the company 10 percent. In return, the government will receive $7 billion in preferred shares and warrants for more than 250 million additional shares.
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The Federal Reserve said it will buy up to $600 billion in mortgage-backed. The Fed said it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors. The Fed also unveiled a new program to help unfreeze the market that backs consumer debt such as credit cards, auto loans and student loans.
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Racing to reverse the country's downward economic spiral, President Barack Obama signed a mammoth $787 billion stimulus package into law. The ambitious package of federal spending and tax cuts is designed to revive the economy and save millions of jobs. Most wage-earners will soon see the first paycheck evidence of tax breaks that will total $400 for individuals and $800 for couples.
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The U.S. government will exchange up to $25 billion in emergency bailout money it provided Citigroup Inc. for as much as a 36 percent equity stake in the struggling bank. The deal — the third attempt at a rescue plan for Citigroup in the past five months — is contingent on private investors also agreeing to a similar swap.
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Treasury Dept. and the Fed announce a third aid plan for AIG, putting $30 billion more at the company's disposal, and easing terms and conditions to give the insurer a $1 billion-a-year break on interest and dividend payments.
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The Obama administration launched a new effort to end a paralysis in lending. Treasury Secretary Timothy Geithner said a new program will seek to harness government and private resources to purchase a half-trillion dollars of bad assets off the balance sheets of banks that have been reluctant to make loans to consumers and companies. Geithner said he expects purchases eventually could grow to $1 trillion.
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President Barack Obama sent a blunt message to Detroit automakers: To survive — and win more government help — they must remake themselves top to bottom. Driving home the point, the White House ousted the General Motors chairman as it rejected GM and Chrysler's restructuring plans.
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Credits:
AP/CBS
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