Oct. 27 Update: Ten New Banks Line up for Fed DollarsThe final week of October started off badly, as investors today saw world markets continue last week's slide. The Japanese Nikkei stock index hit a 26-year low, and U.S. government rescue moves for the economy aren't easing jittery consumer and investor fears of a prolonged global recession.
Along with Asian markets falling, including the Philippine stock market that closed trading after a 12 percent drop, European markets also traded down, with Britain, Germany and France markets trading slipping more than 4 percent or more in early trading. The global financial tsunami hit the Persian Gulf on Sunday, as Kuwait's central bank guaranteed bank deposits and pulled together a quick bailout for one of its largest banks. Previously the oil-rich Gulf remained immune to the current financial crisis, but lower oil prices and currency speculators have helped drive a steep selloff across the region.
Banks in Line for Billions
The U.S. government will begin giving out $125 billion to nine major banks this week as part of an effort to stave off a mounting financial crisis. Deals were signed on Sunday night, and the government will take stock in those banks to help the bank's balance sheets and promote more normal lending.
On Monday 10 regional banks announced they will receive nearly $18 billion from the same fund. Two Ohio-based banks, Key Corp and Huntington Bancshares, will get $3.9 billion. Other banks receiving funding include Capital One Financial Corp., Valley National Bancorp, and three Southern based banking groups - First Horizon National, Regions Financial and SunTrust. Collectively they will receive $11.7 billion.
Provident Bancshares will also get bailout money, but would not say how much it is getting. Northern Trust and City National will receive a total of $1.9 billion.
Other banks say they will apply for bailout money. Fifth-Third Bancorp, a Cincinnati-based holding company says it has applied for $3.4 billion in aid.
The world's leading nations in the last month have taken highly unusual actions to aid their ailing financial industries. Many onlookers expect the U.S. Federal Reserve Bank to cut its short-term interest rate from 1.5 percent to 1 percent at the conclusion of its two-day meeting on Wednesday.
On Friday, the FDIC announced it was closing the Alpha Bank & Trust in Alpharetta, GA. The bank's insured deposits were assumed by Stearns Bank, N.A., St. Cloud, MN. Alpha Bank & Trust had assets of $354 million and was the 16th FDIC-insured bank to close this year.