Fed Cuts Rates by 50 Basis Points: Can It Go Below One Percent
Moments Ago Fed Funds Rate was cut to down to 1.00% bringing it down 50 basis points. It was expected as 25 basis was too low and 75 basis points were thought as too high.
This new kind of pushed Fed into corner. It is running out of Monetary options. few fiscal tools are left. It is very unlikely that Fed will lower the rates below One Percent. but some sources says that this option is still on tables. we did an article on Zero interest rate a few days back.
We at FLR don’t think that Fed cutting rate will ease the credit market. The current problem is about stinking balance sheets. Govt Bail outs Or Easy Credit from Fed can not do any thing but to inflate them by putting either equity or credit on these balance sheets. It does not take away the stink from the balance sheet. The problem with liquidity of commercial paper will not be solved unless all those toxic assets like sub prime credit are removed from them.
DOW and S&P 500 took a dip after rate cut. and 10 year bond yields rallied upwards….. watch Bloomberg for more details.
PNC Bank Bids $5.6 Billion for National City Corp.
Before the Friday’s opening bell, PNC bank has announced that it will buy National City Corp. for $5.6 billion. National City has been in trouble for quite a while now. This news was not taken well by WallStreet and shares of both banks plunged even lower. Share value of PNC dropped almost 5%, while National City Corp dropped more, shedding 30% of its opening value so far. While all stocks are going down, It is difficult to stay that this sharp decline in share value is because of the Announcement.
PNC however expects to gain a lot from this deal. If successful, this bid will make PNC-National City 5th largest bank in United States.
CNN Reports Says:
Making the announcement before Friday’s opening bell, Pittsburgh-based PNC said it would also get a capital injection from the government by selling $7.7 billion worth of preferred stock as part of a federal program aimed at propping up the nation’s banking system.
PNC Bank posted a letter from chairman and CEO Jim Rohr on its Web site, saying the bank’s underlying business remains strong: “As we have reported in our public filings, PNC continued to be well capitalized as others in the financial services industry have faltered … and our operations and credit positions have performed as expected. PNC pursues a moderate risk profile and has minimal subprime exposure.”
In other news about this bank KY Post published pictures of an armed robbery in the PNC Bank, Covington, KY.
More PNC Robbery Pictures Here
