Central banks step in to calm markets
European banks, the Bank of Japan and the Bank of Canada plan to pump billions of dollars into global markets to avoid panic over the crises on Wall Street. Megan Williams has the story.
The European Central Bank headquarters in Frankfurt, (Dominque Faget/AFP/Getty Images)
Links
- Markets up after central banks action
Markets up after central banks action - A look at the action by central banks
A look at the action by central banks
TEXT OF STORY
Scott Jagow: Fear seems to be driving almost every market decision right now. Investors are afraid more big companies are gonna fail. Banks are afraid to lend to each other. The Treasury's afraid the Fed will run out of money because of all these bailouts. Here are the latest developments:
- There's talk that Washington Mutual and Morgan Stanley might be sold. Washington Mutual has interest from Wells Fargo and Citigroup. Wachovia's talking with Morgan Stanley.
- In Britain today, Lloyds of London bought a troubled mortgage company called HBOS.
- And, central banks around the world announced another massive infusion of cash into the markets. They're hoping it will calm the fear.
Megan Williams: The U.S. Federal Reserve and the central banks of Europe, England, Japan, Canada and Switzerland will jointly pump that money -- almost $200 billion -- into financial institutes worldwide.
The move is an attempt to bring confidence back to the lending market after historic banks like Lehman Brothers, Merrill Lynch and insurance giant AIG have either gone bankrupt or been rescued at the last minute.
Cost of short-term borrowing in dollars shot up to its highest in almost a decade and has nearly paralyzed the banking world. By auctioning off billions of dollars to lenders, the central banks hope to ease the funding squeeze. At least for now.
I'm Megan Williams for Marektplace.
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