Before the Bell: Bailouts and Buyouts
Since socialism is always more palatable when it bails out rich people, Henry Paulson’s $700 billion financial rescue package arrives in Congress today after round-the-clock negotiations over the weekend and exhortations from presidential candidates. But even as Congress prepared to vote, across the ocean the financial crisis rattled several European institutions.
The governments of Belgium, the Netherlands and Luxembourg moved to partially nationalize Fortis with an injection of over $16 billion. Also German lender Hypo Real Estate secured a credit line from the German government and banks up to 35 billion euros. And Britain nationalized mortgage lender Bradford & Bingley. Meanwhile shares in French bank Dexia fell on reports that it may need emergency capital. Rescue deals also emerged in Iceland, Russia and Denmark.
Citigroup will buy Wachovia Corp’s banking business, further consolidating power among three megabanks: Citigroup, JPMorgan and Bank of America.
The stock market was poised to open lower, on fears that the bailout plan would not be enough to rescue the economy. Treasuries and the dollar were up, but pared their gains after the Citigroup announcement.
- Derek Caney