Sunday, September 28, 2008

Fortis, B&B, Wachovia, Bailout Plan

by Bill McBride on 9/28/2008 07:13:00 PM

Sunday is the new Monday ...

UPDATE 2: Der Hypo Real Estate droht die Insolvenz or in English from AFP: German mortgage bank near bankruptcy: report

Germany's Hypo Real Estate, a mortgage bank, is on the brink of bankruptcy, the daily Financial Times Deutschland reported in an advance copy of its Monday edition.
Update: From the Financial Times: Fortis thrown €11bn lifeline by governments (hat tip Alain)
Fortis was thrown an €11.2bn (£8.8bn) lifeline on Sunday night as the Belgian, Dutch and Luxembourg governments combined to inject capital into the embattled banking and insurance group in a last-ditch effort to shore up confidence among savers.

The partial nationalisation was announced in Brussels by Yves Leterme, Belgium’s prime minister, after a frantic weekend of talks involving ministers, central bankers and financiers.
In the U.K., Bradford & Bingley is being nationalized. From The Telegraph: Financial crisis: Bradford & Bingley nationalisation will cost taxpayers £150bn
British taxpayers will be liable for more than £150 billion of potentially toxic mortgage debt following the nationalisation of Bradford & Bingley, one of the country’s biggest mortgage lenders.

Alistair Darling, the Chancellor, will announce on Monday that the Government is taking over the bank’s mortgages and selling off the savings business and the branches. Savers are reassured that their money is safe although people owning shares in the bank will lose out.

The Government may merge the bank, which has mortgages worth more than £40 billion, with the nationalised Northern Rock. Every taxpayer in Britain will be exposed to the equivalent of £5,500 in mortgage debt as a result.
Meanwhile, as mentioned in the previous post, Citigroup and Wells Fargo are in negotiations today with regulators about a potential emergency takeover of Wachovia.

And the BIG story - the proposed bailout legislation was released earlier today. See: Emergency Economic Stabilization Act of 2008 Professor Krugman is being told there are "significant changes from this draft", so there is probably more to come.