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Fed Chairman Hopes Recession Will End This Year
The Chairman of the Federal Reserve Ben Bernanke hopes that the current recession, already into its second year, will end in 2009. Bernanke shared the welcomed news with Congress today.
Before you let out a sigh of relief know that there is still reason to be anxious.
The End of Wall Street as We Knew It
While most of us were logging in couch time and watching the Emmys on Sunday night, the Federal Reserve was hard at work creating a new measure that converted investment banks Morgan Stanley and Goldman Sachs into traditional bank holding companies. The two firms were the last standing independent investment banks on Wall Street, and the conversion to bank holding companies truly marks the end of an era.
As bank holding companies, the two companies will be regulated by the Fed and held to much stricter capital requirements than in their previous independent lives.
Do You Read Credit Card Disclosure Forms?
Aside from spending its time making important decisions about our economy, the Federal Reserve stood up to credit card companies on Friday by proposing a set of rules that would be helpful to credit card-using consumers. If approved, the new rules would affect the following changes.
- Specify when card issuers can increase interest rates on existing balances.
- Ban finance charges on balances that have been repaid.
- Prohibit late fees on customers who were not given a reasonable amount of time to pay.
- Companies wouldn't be allowed to direct payments to pay down the portion of the bill that had lower interest charges.
- Give consumers the right to opt out of overdraft protection on their deposit accounts.
Interest Rate Cut Not the Best News For Your Savings Account
Yesterday the Federal Reserve announced its seventh interest rate cut since September, lowering the federal funds rate by a quarter-point to 2 percent. Interest rates are now at their lowest since 2004 and reflect the Fed's ongoing concern about a weakening economy. The prime lending rate that affects consumers and businesses dropped correspondingly, which could have a positive effect on some credit cards and loans.
News Flash: Fed Cuts Interest Rate Again
The Federal Reserve cut its federal funds rate this afternoon to 2.25 percent, making its sixth cut in the last six months. A weakening labor market, slowdown in consumer spending, a loss of confidence and crisis in financial markets, and a tight credit market were reasons the Fed used to support this most recent cut. Acknowledging the issues of inflationary pressures alongside a slowing economy, they stated "Uncertainty about the inflation outlook has increased.
Money, Money, Money! Economy Eeks and Laughs.
It's official. The "R" word has been unsheathed. This morning US Treasury Secretary Henry Paulson described the economy as being in "sharp decline."
News Flash: Fed Makes Emergency Interest Rate Cut
In an attempt to avoid a financial market meltdown in the US, the Federal Reserve made an emergency rate cut on Sunday. The quarter percentage point cut applies to the discount lending rate to financial institutions, bringing the short-term lending rate from 3.5 percent to 3.25 percent. This cut only covers short-term loans that banks receive from the Federal Reserve and doesn't include loans to individual borrowers.
Bush on Economy: Tough Times, No Recession
President Bush spoke to the Economic Club of New York, during what he called an "interesting moment." Today the stock market has been extra volatile on news that the Federal Reserve Bank and JP Morgan bailed out investment bank Bear Stearns with emergency cash. .
News Flash: On a Euro High
Yesterday, the euro's value hit its highest point against the dollar since it was introduced in 1999. The currency is valued at $1.5057 and analysts say it could move even higher than its current record. The euro's escalation is attributed to negative economic reports from the U.S.
News Flash: Fed Cuts Interest Rate Again
We knew there was a possibility the Fed would decide to cut rates during its two-day meeting, and this afternoon it announced a one-half percentage point rate cut. That brings short-term rates down to three percent, insinuating that right now the Fed is more worried about an economic slowdown than rising inflation. The WSJ added that the action is "capping an unprecedented eight-day period in which officials slashed rates massively to ward off recession risks."
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