the VOA Special English Economics Report.
United States government is working on a plan to rescue banks from the bad
debts at the center of the financial crisis. World stock markets have risen
sharply Friday on the news.
Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with
congressional leaders Thursday night. Secretary Paulson says the measures will
require legislation to deal with the bad housing debt held by financial
companies. He says work on details of the plan will continue through the
weekend and Congress will be asked to take action next week.
the Treasury Department has announced a temporary insurance program to protect
money market mutual funds in the United States. Concerns in financial markets
spread this week even to money market funds -- normally considered among the
another move, the Securities and Exchange Commission has temporarily barred
short selling of stocks in financial companies. Short selling is selling
borrowed stock in the expectation of buying it back later at a lower price, and
keeping the difference. The commission said its emergency action should prevent
short selling from being used to drive down share prices. Britain took similar
action on Thursday.
Thursday, major central banks pumped extra money into financial markets to try
to persuade nervous banks to lend to each other.
week, the United States government took control of the nation's two biggest
housing finance companies. This week the Federal Reserve agreed to lend up to
eighty-five billion dollars to the nation's largest insurance company. In
return, the government will own eighty percent of A.I.G., the American
International Group, and get interest on the two-year loan.
got into deep trouble on insurance policies that it provided for securities
tied to risky home loans. It has dealings with every major financial company in
the United States and operates in more than one hundred thirty countries.
the government took over A.I.G., it refused a bailout for a big investment
bank, Lehman Brothers. That forced Lehman to seek Bankruptcy Court protection
from its creditors.
United States had five big, independent investment banks before the credit
crisis began a year ago. Now two remain: Morgan Stanley and Goldman Sachs.
the VOA Special English Economics Report, written by Mario Ritter. I'm Bob