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Moneycontrol.com – Joseph Stiglitz, a professor at the Columbia University and the 2001 Nobel Prize winner, said the US government’s bailout packages designed for financial institutions may not work. “It is a peculiarly-structured programme,” Stiglitz said, “The government puts in 92% of the money, the private sector walks away with 50% of the profits and the government absorbs almost all the losses. What kind of partnership is that?”
The Nobel Prize winner said the financial system in the US engaged in too much risk-taking. “If you are a bank too big to fail, you have a one-sided bet. If you win, you walk off with the profit. If you lose, you are too big to fail, so the government picks up the losses.
Lethbridge Herald - The top cop at the U.S. Securities and Exchange Commission is leaving the government less than a week after receiving an angry dressing-down before Congress over the agency’s failure to detect a massive alleged fraud scheme.
The SEC said Monday that Linda Thomsen is leaving to pursue opportunities in the private sector, but did not provide further details. She has been the agency’s enforcement director since May 2005, under two previous SEC chairmen.
A replacement for Thomsen wasn’t named. The leading candidate was Robert Khuzami, a former federal prosecutor who is managing director and general counsel of investment firm Deutsche Bank.
Reuters – The government is considering injecting as much as 10 billion pounds into Northern Rock to use the nationalised bank to ramp up mortgage lending, the Daily Telegraph reported.
The Treasury has yet to make a final decision on the plan, which may also see the bank hiring new staff, the newspaper reported in its Friday edition.
Spokesmen for the Treasury and Northern Rock, which is due to unveil a new business plan in the next few weeks, could not immediately be reached for comment.
Northern Rock became the first British casualty of the credit crunch in September 2007 when the bank, heavily dependent on wholesale markets for its funding, revealed that it had been forced to seek emergency support from the Bank of England.
The bank was nationalised in early 2008 after attempts to find a private sector buyer fell through.
