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Bailout chaos hits the City
Jonathan Prynn, Evening Standard26.09.08
The global banking crisis deepened today after American politicians failed to agree a bail-out deal.
The breakdown of rescue talks in Washington plunged the world's financial system back into despair after a day of rising optimism.
Meanwhile, another series of blows buffeted the City and Wall Street at the end of a second week of drama and uncertainty.
In London, leading shares dropped sharply in early trading with the FTSE-100 down 91.67 points to 5105.35.
Shares in Bradford & Bingley slumped again, falling 4p to an all-time low of 17.25p after a 25 per cent drop yesterday.
Banking giant HSBC said it is to cut at least 500 jobs in London as part of a worldwide cost-cutting initiative.
US bank Washington Mutual had to be rescued by JP Morgan Chase after savers withdrew billions of dollars of deposits making it the biggest US bank to fail.
City bankers were warned that their bonuses are likely to be halved this year.
The Bank of England said it was making $80 billion (£43.5 billion) available to British-based banks because they are refusing to lend to each other.
Reader views (9)
American taxpayers are right to vent their anger over the proposed bailout.However, a functioning banking sector is essential to the prosperity of the country - Japan provides a useful template for how damaging asset price deflation can be. That said it seems appropriate that a 'bail out' should be accompanied by regime change within the financial organisations- I do believe President Bush is familiar with the words regime change !
- Paul, Kent
Wow more reason to hate bush, at least he'll be gone very soon......but it feels like an eternity. I'm sorry other Countries had to be affected by this whole wall street boom and bust crap that makes capitalism sooo great...
- Michael Clark, Boothbay Harbor Maine, US
Great to see Americans are seeing right through this and not buying the 'Bush is saving the world' spin. Bush is saving the corporate elite, at the taxpayer's expense, and that's about the size of it - as usual.
- Athena Murphy, London NW3
If the banks refuse to lend to each other, thereby worsening the crisis, why is the Bank of England lending them more of our money unconditionally?
- Val Daniels, Mijas Costa. Spain
Let get one thing straight again.
Not all banks have been affected by recent events and those that have steered their organisation successfully through the storm should be congratulated. The bad financial instruments that have caused this crisis were as common in the market as say forged pound coins are in the high street and were passed to UK banks a AAA rated securities.
I find it quite rich that U.S citizens are creating a fuss as this whole episode has been caused by JimBob (who obviously lived beyond his means) refusing to pay for the mortgages for which they signed-up.
Banks have merely worked within the regulatory framework that was provided to them by regulators i.e governments.
- Big Andy, London
Nothing is going to stop this credit crisis and it has now only really just started. The $700bn is no where near enough and Paulson knows this. It is enough to help his pals in Wall str but no more. Depression is coming and people should prepare for the worst.
- Mgrelton, London
The Paulson plan is ill-conceived and must not be rubber-stamped by the US Congress.
- Blackstone Coke, London
No George, Bankers don't have any sense of perspective, that's why we're in this mess. Taxpayers money should not be used to bail out their debts -- no one is bailing out ordinary individuals.
- Philip, London, England
" City bankers were warned that their bonuses are likely to be halved this year."
I hope this is a wind-up. I think most of them should be happy just to keep their jobs. Do they have no sense of perspective?
- George, London
