-

US Gov't Plots Rescue Plan

-

For

-

Banking Industry

-

-

The Federal Reserve and the Treasury Department have proposed a special trust corporation to manage and oversee all toxic debts which developed over the past ten years involving bad real estate loans.

The proposal would function much like the old Resolution Trust Corp which was created after the Savings & Loan industry collapsed nearly 20 years ago. The Treasury Department and the Federal Reserve will huddle over the weekend with Congressional leaders in both the House and the Senate to work out the details of what amounts to as a rescue plan to bail out the banking and real estate industries.

Once details are worked out with the plan, Congress will have to take emergency legislative measures to pass legislation before the lawmakers adjourn on Friday, September 26.  Market analysts report that the swift move is necessary to keep the financial markets from a total collapse and bankruptcy of the American and the global economy. In other words, it's being sold to Congress as a matter of grave National Security.

The overall concept of the rescue plan was reported to have been on the drawing boards for several months at the Treasury and the Fed Reserve, but was broached at a special "Insiders" meeting on Thursday night between with Fed officials and key Congressional leaders including New York Senator Chuck Schumer, who said after the meeting that lawmakers were bluntly given an apocalyptic description of what would happen if a comprehensive industry rescue plan is not adopted immediately within the next several days. More on the secret meeting. LINK HERE. Could Cost $1 Trillion dollars or more. LINK HERE.

In addition to the proposal for some type of a "resolution trust" entity, the Feds pledged another $50 billion dollars to guarantee money market funds, much like the FDIC insurance fund. Why? There were indications  that by Friday, September 19 there would/could be a physical "run" on the banks as average citizens rushed to pull money out of banks before they failed. There was a real concern that a massive closures of banks could develop.

The Securities and Exchange Commission also instituted temporary reform rules that severely restrict "short-selling" tactics which day-traders used to accelerate stock price declines. Illegal "short-selling" is believed to have exacerbated the price collapse of many stocks and thus pouring gasoline onto an economic fire.

For more details on the latest Fed moves - LINK HERE. 

There will be further analysis of the financial crisis in the next edition of The A-O Intelligence Digest.

-

-

-

-

-

-

-

-