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The next step of this panic could become the mother of all bank runs, i.e. a run on the trillion dollar plus of the cross border short-term interbank liabilities of the US banking and financial system as foreign banks as starting to worry about the safety of their liquid exposures to US financial institutions; such a silent cross border bank run has already started as foreign banks are worried about the solvency of US banks and are starting to reduce their exposure. And if this run accelerates - as it may now - a total meltdown of the US financial system could occur. We are thus now in a generalized panic mode and back to the risk of a systemic meltdown of the entire financial system. And US and foreign policy authorities seem to be clueless about what needs to be done next. Maybe they should today start with a coordinated 100 bps reduction in policy rates in all the major economies in the world to show that they are starting to seriously recognize and address this rapidly worsening financial crisis.

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While thanking Treasury Secretary Henry Paulson for negotiating on the bill, Pelosi said on the House floor that the Democrats had insisted that the bill "protect the American people and Main Street from the meltdown on Wall Street."

Pelosi also said the cost of the bailout "is a number that is staggering, but tells us only the costs of the Bush administration's failed economic policies -- policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system."

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The federal government has pledged eye-popping amounts — more than $600 billion in the past year — to bail out, or help bail out, some of the biggest names in American finance. The latest was American International Group Inc.

Now the credit crisis is starting to tax even the Federal Reserve's deep resources.

On Wednesday, the central bank took the unprecedented step of asking the Treasury Department to sell debt on behalf of the Fed. The first of those auctions raised $40 billion, and two more to raise an additional $60 billion are scheduled for Thursday.

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Due to the recent events in the market

place the Treasury market has moved sharply

higher. In some cases the prices are delayed.

Due to the nature of these events your orders

have been cancelled because they are away from

the true market. Should you need any immediate

assistance please contact the fixed income

desk at 1-877-355-3237 and anyone of the

representatives will assist you without

any additional charges.

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said by AR :

Which large bank isn't?

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Robert Hull, GMAC’s chief financial officer, said on Thursday that recoveries on SUV sales in June were only 75 per cent of expected values. Resale prices have often exceeded residual values in the past.

Losses have been highest on short-term leases where the residual value makes up a higher proportion of the lease carrying value
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The blow to GMAC has been cushioned by a 2006 risk-sharing agreement with GM, under which the carmaker has already paid GMAC $350m and is on the hook for another $1.5bn as existing leases expire.
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GMAC, which has almost 1.5m leased vehicles on its books, said it aimed to contain future losses by cutting back on its US leasing business, halting lease incentives in Canada, and encouraging drivers to hold on to their vehicles after leases expire. Chrysler’s financing arm announced last week that it was pulling out of the leasing business.

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GMAC said it has $30 billion in North American leases. That includes $12 billion in SUVs and $6 billion in other trucks, vehicle types that are losing sales because of $4 gasoline.

The residual value is what a vehicle is worth when a customer returns it at the end of a lease. The lender's residual losses average $11,000 a vehicle for GM models, GMAC Chief Financial Officer Robert Hull said yesterday.

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NEW YORK (CNNMoney.com) -- General Motors reported a huge second-quarter net loss Friday of $15.5 billion, after restructuring and other charges, as the automaker's run of troubles continued.

The automaker lost $27.33 per share in the quarter, compared to a profit of $784 million, or $1.37 per share, a year earlier...

»money.cnn.com/2008/08/01/news/co···?cnn=yes

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NEW YORK (CNNMoney.com) -- The Senate on Saturday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.

President Bush is likely to sign the bill into law within days. After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).

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When an insured bank or thrift closes, the FDIC usually arranges for another institution to take it over, including branches where you might have a safe deposit box. In those situations, you should be able to conduct business as usual. If the FDIC cannot find a buyer for your bank, it arranges for you to remove the contents of your box so you can obtain a box at another institution, if you wish. This is done within a few days after the bank fails.

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