Wall Street Rattled By Bailout Angst

Dow Plunges 370 Points As Government Hashes Out Rescue Plan For Banks' Mortgage Debt

(CBS/ AP)  Volatility swept the financial markets again Monday as investors grew nervous about an amorphous government plan to buy $700 billion in banks' mortgage debt. Stocks fell sharply, taking the Dow Jones industrials down more than 370 points, while investors sought safety in hard assets such as gold and oil, which at one point shot up more than $25 a barrel.

The credit markets were still uneasy but not showing the frantic trading they saw last week. And the dollar skidded lower, contributing to oil's surge.

While investors last week were pleased that federal authorities were constructing a plan to relieve the nation's banks of their toxic assets, many weren't waiting for the details to emerge Monday before seeking safety; selling was heavy across the market, although the financial sector again took some of the biggest hits. Investors are not sure how successful the plan might be in unfreezing credit markets, which many businesses depend on to fund day-to-day operations.

"The reason why they're tumbling down so much is because nothing has happened," Ladenburg Thalman analyst Dick Bove told CBS News correspondent Anthony Mason. "We don't know exactly when the government's gonna step in. We don't know exactly what the government's gonna buy."

Bush administration officials and congressional leaders have been meeting on the rescue plan, the thrust of which congressional leaders have endorsed. Many market observers are hoping for details of the plan to emerge by midweek and delays could weigh further on investor sentiment.

"This government opening of the checkbook - it's a stopgap measure that will calm people and help us buy a little bit more time but ultimately what we need to see is more confidence," said Rob Lutts, chief investment officer at Cabot Money Management Inc. in Salem, Mass.

While investors try to gauge the effect of the government's lifeline they also were absorbing more rapid changes in the banking sector. Morgan Stanley said it is working to sell up to a 20 percent stake to Mitsubishi UFJ Financial Group Inc., Japan's largest bank.

The announcement comes after the Federal Reserve late Sunday granted Morgan Stanley and Goldman Sachs, Wall Street's last two major investment banks, approval to change their status to bank holding companies. The move will allow the companies to set up commercial banks that will be able to take deposits, significantly bolstering the resources of both. However, they also will be subject to more regulation.

That shift came a week after negotiations failed to save Lehman Brothers Holdings Inc. from bankruptcy. That and a quickly assembled government bailout for insurer American International Group Inc. helped lead to a seizing up of the credit markets that spurred federal officials to formulate a plan to rescue companies from their bad debt.

The Dow fell 372.75, or 3.27 percent, to 11,015.69. The retreat follows the Dow's best two-day point gain since March 2000 so some retrenchment, especially amid the anxiety on the Street, wasn't unexpected. But the decline erased a gain of nearly 370 points from Friday.

Broader stock indicators also tumbled. The Standard & Poor's 500 index fell 47.99, or 3.82 percent, to 1,207.09, and the Nasdaq composite index fell 94.92, or 4.17 percent, to 2,178.98.

Bank stocks continued to slide on Monday, reports Mason. Washington Mutual, the country's largest savings and loan, dropped another 22 percent; it's fallen 90 percent over the past year because of its exposure to bad mortgage loans.

Oil's rise of $16.37 to a closing price $120.92 a barrel came as investors snapped up supplies to cover the October contract, which expired at the end of Monday's session. Although the contract's pending expiration helped inflate crude's advance - it was up $25.45 at one point - trading still showed the intensity of emotion in the market, and still-active contracts also rose sharply.

Gold, also in demand as a safe haven, jumped more than $40.30 to settle at $909 an ounce.

The yield on the Treasury's 3-month Treasury bill was at 0.88 percent Monday, down from 0.94 percent late Friday, indicating that investors were still willing to take low returns on a safe asset. However, the yield was well above yields around zero at the height of last week's frenetic buying; yields move in the opposite direction from price. Short-term Treasurys are seen as the safest place to put cash.

The Treasury's 2-year note's yield was at 2.16 percent, up from 2.13 percent Friday. The yield on the 10-year benchmark Treasury was unchanged at 3.85 percent up from 3.82 percent late Friday.

Investors could grow nervous about the trajectory of the government's bailout plan if it appears that enough progress isn't being made, observers said. Senate Banking Committee Chairman Chris Dodd, D-Conn., said Monday he wants the government to receive a stake in the companies helped by the rescue.

Senate Democrats are also calling for the plan to include aid for homeowners struggling with mortgage payments and caps on executive compensation.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are scheduled to appear before Congress on Wednesday for a briefing on the economy.

"There is going to have to be some sort of a homeowner relief package. I think that's part of where the give-and-take process is going to unfold this week," said Michael Strauss, chief economist at Commonfund. "I think the moderates on both sides know something has to get done."

The market did get some good news from Microsoft Corp., which said it plans to repurchase as much as $40 billion of its shares. The software maker said it completed a previous $40 billion buyback plan. The company also raised its quarterly dividend to 13 cents from 11 cents. Microsoft rose 24 cents to $25.40.

Morgan Stanley said it signed a letter of intent to sell its stake to Mitsubishi UFJ Financial for an as yet undetermined price. Morgan Stanley fell 12 cents to $27.09.

Meanwhile, Goldman Sachs fell $9.02, or 7 percent, to $120.78 following announcement of its move to become a commercial bank.

Other financial stocks fell sharply amid the continued uncertainty about the sector. JPMorgan Chase & Co. fell $6.25, or 13 percent, to $40.80, while American Express Co. fell $3.11, or 7.7 percent, to $37.29. They were the biggest decliners among the 30 stocks that make up the Dow industrials.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 1.27 billion shares.

The Russell 2000 index of smaller companies fell 33.30, or 4.4 percent, to 720.44.

Overseas, Japan's Nikkei 225 index climbed 1.42 percent, and Hong Kong's Hang Seng Index rose 1.58 percent. Britain's FTSE fell 1.41 percent, Germany's DAX declined 1.32 percent and France's CAC 40 fell 2.34 percent.

[jmurrieta11]

"Nervous Investors Drag Markets Lower Awaiting Bailout Details"


Quick, give another trillion dollars no strings attached to the Wall Street fatcats, or they won''t buy this election for John McClone and Bush Baby!!!

[hockeybub]

I can''t believe that your government down there would allow institutions that have already proven they can''t protect shareholders to now take the money of those who would rather not gamble on the stock market. It''s like giving an arsonist who fails to burn the building down with matches a can of gas and a blow torch. sheesh!

[smurfcrusher]

Maybe the oil giants can ask for a $20 Billion tax gift if McCain gets elected.

The $10 Billion tax break Bush gave them just doesn''t spend like it used to.

[smurfcrusher]

p.s. I wonder who was invited to the oil "s.e.x. party" ?

Only Republicans are so "crude". And I don''t mean the light, sweet crude, either.

[smurfcrusher]

Where are the blogging Republican shmucks now? I don''t hear them as of late. Perhaps between George "oil man" Bush and John "BOTTOM GUN, Mr. Deregulation" McCain they realize - finally - that they''ve been had.

[skyk239]

Wall Street Angst is nothing compared to the suffering Americans have been enduring under this corrupt, inept, incapable and incompetent Bush Gang.

Posted by BajaJohn1 at 04:28 PM : Sep 22, 2008
Amen to that! When you look at what they were handed in January of 2000 it make you sick at your stomach!! I''d say another 4 years of "Trickle Down" just just about do in the Middle Class!

[skyk239]

I can''''t believe that your government down there would allow institutions that have already proven they can''''t protect shareholders to now take the money of those who would rather not gamble on the stock market. It''''s like giving an arsonist who fails to burn the building down with matches a can of gas and a blow torch. sheesh!

Posted by hockeybub at 02:31 PM : Sep 22, 2008

LOL You know us better than any creatures on planet earth, what surprises you about that? LOL Have WE ever done anything EASY??

[stevex47]

Shouldn''t let gamblers mess with our money.

Leave that stuff to john "bart maverick" mcsame. With his own elitist money, not mine. He can gamble Cindy''s $300,000.00 dress.

[iphyt4u]

between the iraq war and this bailout, americans could have had health care for 15 years. now, american taxpayers get to pay for the mistakes of the executives. i say no, lets fight.

[marshall_nee]

how have you been suffering?

Posted by jamesm12341 at 04:39 PM : Sep 22, 2008

Inflation; thats about to get a whole lot worse if this Socialist bailout goes ahead.

[generey]

Up, down, up, down. Just a big game.

[jmurrieta11]

The stock market is down again. Quick, another trillion dollar giveaway to the corporate elite.

McClone and Bushit say so!

Or the Baroness von Rothschild won''t make any big donations to the Republican party!

[observantx]

Not a single shiny dime for the fatcats who mucked this all up! Let THEM pay for it. Make THEM cough up all their bonuses, stock options and golden parachutes to pay for this train wreck. DO NOT REWARD THEIR FAILURE!

Enough of this shell game.

[omded]

I never thought I''d see the day when a bunch of good, moralistic, capitalist investors were champing at the bit for the government to socialize their industry. Of course, they only want the government to selectivly socialize things. In other words, they want the government to socialize the unprofitable parts, but leave the profitable parts alone so they can continue to profit from them.

Folks, what this all amounts to is a bunch of careless investors wanting all of us in the tax paying general public to buy their bad investments and assume their losses. What I say to Uncle Sam is this: If the investors don''t want it, neither should you. Capitalism involves taking risks, and profiting when those risks pay off, and losing when they don''t. The government takes our money in taxes, and it has an obligation to use it wisely. This doesn''t mean assuming other peoples'' losses. After all, was the governmnet invited to share in the profits???

[marshall_nee]

These are crazy times, last week it looked as if we were facing deflation, but now we could be on the cusp of hyperinflation if this panicky bailout leads to colossal printing of Dollars.

[inventagod2]

Read Section 8 of the proposed Bailout:

''Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.''

[dronemonk]

Our debtors'' way of life is winding down.

This is what happens when there is no one left to barrow from.

[oscarez]

Wall Street says: Oh please Mr. Bush buy our debt before the tax payer finds out you have lied about how much it is going to cost.

[wl7bzh]

Dang,

the money high on Wall Street lasted about as long as a Chinese dinner-filling, but no real substance our dollar.

We HAVE to bail out these types...I mean how else do the well-connected get their free shrimp dinners, filet mignon, private jets, two-thousand an hour hookers, the best drugs, the *** parties with the free alcohol, mansions, free golf junkets, free world travel, etc. Pity them America...

[noloyalisti]

Bushoccio and his legions of Republicon fascists are still at it. Take the taxpayers money and bail out the criminal fascists on Wall Street. Just say no to this bailout. Tax the rich and take back our money they gained from their orgies.

[toby2957]

At the end of Bill Clinton''s presidency we had the highest budget surplus in our nation''s history. Now, eight years of near total Republican rule and we have an economy in the toilet, and endless war, spiraling debt, home values evaporating, record fuel, food and heating costs, massive financial institutions failing and collapsing and then being paid for by corporate welfare through taxpayer funds, and the neocons STILL try to blame the democrats. These are the facts. It''s just so incredibly pathetic.

McSame/Palin''s platform is the radical right wing agenda. McSame is no longer McCain, he''s completely reverted to type, and Palin is scary beyond all belief. She''ll be rolling around on the oval office floor speaking in "tongues". It is quite simply not possible to be patriotic American and vote for McSame. The ONLY reason anyone might want to vote for McSame is if they hate minorities and/or want to advance a radical religious agenda (Much like Iraq has done in their government).

Stop the hate. Be a patriot. Vote Obama/Biden 2008!

[scorpio59er]

McCain/Palin

"The Bridge to Nowhere"

[omega40]

Whatever happened to that personal responsibility lecture that Republicans are so quick to draw every time one of us falls on hard times (and usually not of our own making)?

[omega40]

Where are Jwind and mbcsmith with their accusations about "wanting big nanny government to take care of you"?

[omega40]

Where is the "pull yourself up by your own bootstraps" lecture that Republicons like to toss around?

[scorpio59er]

McCain/Palin

"Thanks, but no thanks"

[omega40]

They are what is called "incurious."

Posted by tuckerndfw


I believe the term is intellectually lazy, just like their leader, the guy that doesn''t read newspapers.

[beehive21-2009]

Is this another Bush trick ? lets see, AIG worth one Trillion,we loan them 800 billion ? we can''t get a $ 8000, loan ? Whats wrong with this story ? Should anyone else have 1 million and need help they''d have to sell off their assets,or, if they had $10000 they''d sell off their assets, so let AIG, and the rest of the incompetent fools sell off their assets,why,do they want our money,and who said they could have it.Time to play hard ball ,tax The big oil and corporations whom 70 % pay no, taxes ? Our we still subsidizing Big Oil ? Is it time to protest by not paying taxes ,like the corporation,70 % of the people should perhaps,stop paying.

[mandalay-bay]

''''Where are the blogging Republican shmucks now? I don''''''''t hear them as of late.''''
Posted by smurfcrusher at 03:30 PM

they''''re just like cockroaches. they disappear when the light shines on them.


--------------------------------------------------------------------------------

Posted by bushisadik at 04:48 PM : Sep 22, 2008


LMFAO POST OF THE DAY MAN!! THIS HAD ME ROLLIN

[mandalay-bay]

McCain/Palin

"Thanks, but no thanks"


--------------------------------------------------------------------------------

Posted by scorpio59er at 05:36 PM : Sep 22, 2008

LOL

[omega40]

The GOP is blaming borrowers more than anyone else.

Air Fleischer (Bush''''s former press secretary) repeated that claim during a televised interview.

Those damned corrupt borrowers made those poor wealthy lenders give them money they couldn''''t afford to repay.

I think I''''ll call my bank and ask for a signature loan for one million dollars.

(and they''''ll tell me where to go with that request)

The GOP is the most corrupt political party ever to exist.

Posted by tuckerndfw

Well who wouldn''t give a $500,000 dollar no document loan to someone that cuts grass for a living?

[yongamerica]

If this was a game of Monopoly, all the players would be calling the Bush administration !!C H E A T E R S!!

What happened to enforcing the laws and rules that was supposed to prevent such a meltdown? Georgie, how many times were you told you can''t play a game unless you play by the rules?

[omega40]

Hello:
The bailout is a loan to the companies. A loan with interest, that they will have to pay when they recover. So the US Treasury will make the 700 Billion plus interest. Where will that interest go? Will it go to the tax payers? That is the question all must ask.

Posted by TomMarAlem19

Lets hope that the government does to them what they let the credit card companies do to us. I would say a 23.99% interest rate sounds about right with a default APR of 36.5%.

[omega40]

Yes, that is what "incurious" means.

I see no evidence that anyone in the GOP is anything else, including McCain * Palin.

Posted by tuckerndfw

He has 7 houses and 13 cars, shes an avid moose hunter that can see Russia from her house.....What''s not to like?

[omega40]

BTW, I''''m too good to work, I don''''t even cut my own grass. If I had grass. . .

But, I should still be able to get a one million dollar loan based on my good name.

After all, that''''s what Paulson (former CEO of Goldman Sachs) is demanding.

Posted by tuckerndfw


Yep and cannot be challenged in court nor oversight be provided by any agency. I would love a sweet deal like that myself.

[lovegetpeace]

Folks,
Do you wish to see the Stock Brokers, Financial Professionals and CEOs just laid off from Wall Streets in the last 2 weeks in America today:
-Surf to http://www.joke-portal.com/d_jokes.htm
-Click the ''Day Laborers'' link in the middle of your screen.

Enjoy!

[tburzio]

Dodd caused this mess, why hasn''t he resigned? How about he give back the money Fannie and Freddie gave him? He and Obama can give their checks back at the same time...

[omega40]

I have never heard either of them offer specifics about anything.

They appear to rely on the same bullsh*t Bush used for the past nearly eight years, which amounts to "trust me" (regardless how much I lie and appear ignorant).

ANY working class American who vote for McCain in November is a M O R O N. ("incurious")

It''''s just that simple.

Posted by tuckerndfw

His handlers are keeping him away from the press and it''s a good thing too. Look at how he was all over the road last week in his response to the economic meltdown. I read today his campaign manager was on a conference call with the press whining that they weren''t all over the Obama stories that the RNC keeps making up.

[pollroller1]

Volatility again swept the financial markets Monday as investors grew nervous
-------------------------------------------------------
Wow!! CBS news can read people''s minds. If I was a betting man I would say that a lot of people got in made a profit and got out.

[mandalay-bay]

Republicans:

How many times do you have to get hit over the head before you realize WHO''S hitting you??

[omega40]

Based on what I''''ve seen, McCain''''s stock answers are:

"I''''m a POW."

"I''''m a maverick who voted against my own party."

"It''''s Barack Obama''''s fault."

I see nothing presidential or heroic about the guy. Or his running mate.

Posted by tuckerndfw


That would make a good basis for a drinking game during the debates this Friday. When he mentions his days as a P.O.W. shotgun a beer, when he mentions "maverick" slam a shot. How long would it take before we were face down in our pizza?

[inventagod2]

Re-read Section 8 of the proposed Bailout:

''Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.''

[grandesign]

Paulson is the former CEO of Goldman Sachs, an INVESTMENT bank. . .

Now he wants $700 billion (or more) to "invest"?

If US taxpayers sit idly by while the GOP loots the Treasury, we deserve whatever we get.
Posted by tuckerndfw at 05:59 PM : Sep 22, 2008

What are you suggesting. That part of the $700 billion will be used by the GOP through campaign contributions to the RNC, so that Republicans can increase their effort to keep the presidential office?

[amercanbiker]

I love Bunnies!

Do you?

[omega40]

Posted by omega40 at 06:15 PM : Sep 22, 2008

*ROFL*

I doubt you''''d get past the first round.

McCain will mention the term "POW" at least five times before the second question.

Posted by tuckerndfw


Lol! True, he may actually start to make sense though when viewed through the prism of a heavily intoxicated state......nah.

[grandesign]

''''Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.''''
Posted by inventagod2 at 06:24 PM : Sep 22, 2008

Boy, that''s BETTER than Executive privilege!!!

[nextgenman]

Posted by onemoretim at 06:27 PM : Sep 22, 2008
------

Donnie is a Blog troll. We ignore him.

[generey]

I love Bunnies!

Do you?






--------------------------------------------------------------------------------

Posted by AmercanBiker at 06:24 PM : Sep 22, 2008

Space Bunnies !!! They ROCK !

[omega40]

''''''''Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.''''''''
Posted by inventagod2 at 06:24 PM : Sep 22, 2008

Translation: when billions of this "aid" turns up missing (much like taxpayer dollars in Iraq), there will be no investigation, prosecution or incarceration of those that benefited.