the VOA Special English Economics Report.
markets showed signs of some improvement this week. Interest rates for
short-term loans between banks fell, in a sign that banks may be more willing
to lend. But stock markets fell on new concerns about company profits.
President Bush invited leaders of the
Group of Twenty countries to Washington on November fifteenth to discuss the
financial crisis. The group includes leading industrial economies and large
developing ones like China and India.
A White House spokeswoman said the
leaders will seek a common set of ideas for reform of the world's financial
system. The summit is meant to be the first in a series of talks.
This week, the Federal Reserve announced
a program to lend up to five hundred forty billion dollars to money market
mutual funds. And Treasury Secretary Henry Paulson detailed his department's
new capital purchase program. The Treasury will buy two hundred fifty billion
dollars worth of nonvoting preferred stock in healthy banks.
PAULSON: "This is an investment, not an expenditure, and there is no
reason to believe that this program will cost taxpayers anything. They will not
only own shares that should be paid back with a reasonable return, but also
will receive warrants for common shares in participating institutions."
In return, the banks have to restrict
pay for top officials. The nation's nine largest banks have already agreed to
accept half the money. The money will come from the financial rescue plan
passed by Congress.
aim is to increase lending, but experts predict banks may also use the new
capital to buy smaller banks.
in Washington, government officials considered new measures to help struggling
homeowners. And a congressional committee held a hearing on credit rating
agencies and their part in the financial crisis. They underestimated the risk
of complex securities based on mortgage loans for people with poor credit
of securities pay the rating agencies to estimate the risk for investors. The
heads of the three major agencies said the failures were honest mistakes, and
that they are working to regain trust.
a former official at Standard & Poor's said, "Profits were running the
show." The committee released an instant message exchange in which two
Standard & Poor's employees discussed a deal last year. The first wrote:
"we should not be rating it." The second answered: "we rate
every deal ... it could be structured by cows and we would rate it."
And that's the VOA Special English
Economics Report, written by Mario Ritter. I'm Steve Ember.