Financial Roundup: Bush May Expand Bailout, Commercial Credit Thaws, SBA Loans Dry Up, EU Leaders Want Fast Reform

(MoneyWatch)  Are Feds planning a big bailout expansion? -- With President-elect Barack Obama searching for a new Treasury chief, the Bush Administration may be expanding the $700 billion bailout well beyond the $250 billion earmarked for banks. Beneficiaries could include auto financing firm GMAC, insurers Prudential and MetLife, and homeowners who could see $40 billion worth of modifications in their mortgages. [Source: The Washington Post]

Frozen commercial paper starts thawing --Slow improvement continues in the commercial paper market with the Federal Reserve reporting an increase this week of $50.5 billion, the second weekly hike in a row. Helping light the way is tobacco holding firm Altria Group with $6 billion in bond sales this week. [Source: CFO.com]
SBA loans dry up -- One outlet for business startups denied traditional funding is the U.S. Small Business Administration. But costs of capital related to the financial crisis and inattention in Washington have cut SBA lending by about 50 percent. [Source: The Wall Street Journal]

Big losses predicted D&O and E&O insurance -- Thanks to the sub prime mortgage mess, losses could be running as high as $9.6 billion for Errors & Omissions and Directors & Officers insurance policies protecting company officials against rising shareholder lawsuits. [Source: Businessinsurance.com ]

EU leaders want fast reforms -- The European Union is pushing for fast financial reforms such as more disclosure and greater global regulation at a world financial summit in Washington late next week. [Source: The Seattle Times ]