Paulson defends U.S. rescue of Bear Stearns
|
|
|
| Posted
:
Mon, 17 Mar 2008 20:10:15 GMT |
| By
:
Reuters |
| Category
:
US (Business) |
| News Alerts by
Email ( click
here ) |
|
US Business News |
Home
|
|
|
|
WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson on Monday defended government moves to rescue Bear Stearns Cos Inc from bankruptcy, saying it was important to ensure the orderly function of financial markets.Speaking to reporters following a White House meeting between President George W. Bush and his economic advisers, Paulson said those worried about the government rescue creating a "moral hazard" should keep in mind that Bear Stearns shareholders face considerable losses with the sale of the investment firm to JPMorgan Chase for $2 a share.Moral hazard is the concept that investors might take greater risks on the belief that government policy would protect them from suffering losses.The $236 million value of the Bear buyout deal represents less than 90 percent of the company's value as of Friday at its closing share price of $30.85.To facilitate the deal, the U.S. Federal Reserve committed to fund up to $30 billion of Bear Stearns' less liquid assets. The problems faced by the New York investment firm underscored a loss of investor confidence in the health of the U.S. financial system.Paulson said the orderly function of U.S. financial markets was a priority and it was better to arrange the takeover of Bear Stearns than to have the investment firm, the fifth largest in the United States, file for bankruptcy.He also said mortgage finance giants Fannie Mae and Freddie Mac needed to raise capital, and urged Congress to enact reform measures for the Federal Housing Administration to help beef up the slumping housing market.Paulson declined to answer a question about the weakening dollar and whether the U.S. government would intervene in currency markets to support it."I'm not going to speculate on hypotheticals about intervention," Paulson said. "I will just again say to you what you have heard me say before: We have a strong-dollar policy. It's very much in our nation's interest. Our economy has ups and downs."(Reporting by Donna Smith; Editing by Leslie Adler)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Five more US bank failures bring total for 2009 to 120
New York - Bank failures in the United States have risen to 120 this year as five more regional institutions were added to the list, the US agency that guarantees the safety of bank deposits said. United Commercial Bank in San Francisco with assets o...
US stocks climb slightly despite double-digit jobless rate
New York - US stocks posted mild gains Friday to end the week as investors shrugged off government figures that put the unemployment rate above 10 per cent. The Labour Department said the jobless rate hit 10.2 per cent in the month of October, the hi...
US joblessness hits 10.2 per cent, highest in 26 years - Summary
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday. The figure comes after a 9.8-per-cent jobless rate in September and wa...
US joblessness jumps to 10.2 per cent, highest since 1983 - Update
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years, as another 190,000 people lost their jobs during the month, the US reported Friday. The figure reported by US Labour Department came after the 9.8 per ...
US jobless rate jumps to 10.2 per cent
Washington - The US unemployment rate surged to 10.2 per cent in October as another 190,000 people lost their jobs, according to US Labour Department figures released Friday. The jobless rate stood at 9.8 per cent in September. Unemployment had been ...
Bulls stop James, edge Cavs - Summary
Los Angeles - The King couldn't deliver in the clutch. Luol Deng and Joakim Noah combined to deny LeBron James a potential game-winning drive in the final seconds as and the visiting Chicago Bulls snapped the Cleveland Cavaliers' three-game winning...
Mortgage lender Fannie Mae posts nearly 19-billion-dollar loss
Washington - US mortgage lender Fannie Mae said Thursday that it would seek 15 billion dollars in federal aid, after posting its ninth consecutive quarterly loss. Fannie Mae reported a net loss of 18.9 billion dollars in the third quarter of 2009, co...
|
|
|
|
|
|
|
|
