End of Wall St era; bailout to be hotly debated

Wall Street's last two big investment banks, Goldman Sachs and Morgan Stanley, secured Federal Reserve approval to become banks, ending the swashbuckling era of American deal making amid the worst U.S. financial crisis since the Great Depression, reported Reuters.

Morgan Stanley went a step further and struck a deal with Japan's largest bank, Mitsubishi UFJ Financial Group (8306.T), which agreed on Monday to buy up to a 20 percent stake in the prestigious 73-year-old investment bank, sending Morgan Stanley shares higher.

But other financial stocks and the broader market fell as attention turned to political wrangling in Washington over a proposed $700 billion bailout for troubled banks.

The crisis, which has seen major firms such as Lehman Brothers collapse and others such as Merrill Lynch bought, has dragged on since last year, when falling U.S. home prices, a sluggish economy and problems on Wall Street led to a severe credit crunch.

With details of the bailout plan sketchy on key questions such as what price the U.S. government would pay for toxic mortgage-related securities, markets remained unsettled.

"Even as the package is being debated, we could see more sizable losses or another significant institution come under pressure," said Richard McGuire, interest rate strategist at RBC Capital Markets.

Standard Bank analyst Walter de Wet said, "The U.S. plan has calmed nerves, but I don't think people believe it will take out all the problems yet. Details are still sketchy. We need to see when and how the plan will be implemented."

The Group of Seven finance ministers and central bank governors promised "heightened close cooperation" to safeguard the international financial system.

Central banks from Europe to Japan sought to shore up banks by injecting money into the banking system. And even in the oil-rich Gulf region, the impact of the crisis was felt.

The United Arab Emirates Central Bank launched its first ever emergency funding facility, worth almost $14 billion, to help fund banks as global lending between banks shrivels.

U.S. stocks indexes fell about 2 percent, the U.S. dollar fell 1 percent, and the 10-year U.S. Treasury yield hit its highest level in more than a month as investors worried about profligate government spending. And oil prices soared.

The Fed's agreement to convert the once high-flying Wall Street investment banks into more conventional depositary institutions was Washington's latest effort to restore calm to chaotic markets. It followed frantic talks between the Bush administration and Congress to prevent the crisis from pushing the economy into severe recession.

The agreement announced late on Sunday effectively scraps the investment bank model synonymous with Wall Street, ensuring Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) avoid the fate of rivals that either collapsed or were taken over in the brutal meltdown of recent weeks.

Democrats, who control both chambers of Congress, expressed support for quick approval of the rescue plan but also concern that it could expand the powers of the executive branch without adequate oversight -- a frequent Democratic criticism of President George W. Bush.

The rescue would give sweeping powers to the U.S. Treasury to buy up toxic mortgage-related debt from financial groups.

Bush said in a statement, "Failure to act would have broad consequences far beyond Wall Street." Delay would threaten small businesses and home owners, he said.

Senate Democrats called on the administration to take a stake in firms unloading assets, limit the pay of the executives involved, and set up an oversight board to limit the Treasury's powers.

"We need to see more details from the rescue package," said Heino Ruland, analyst at FrankfurtFinanz. "What is missing is the price the U.S. authorities are going to pay for the toxic assets."

Both Goldman and Morgan will now face a thicket of new regulations, including the capital requirements that have insulated conventional banks from the year-old credit crisis. The changes will bolster their resources but also curb the spectacular profit growth that have made investment bankers among the highest paid in the nation.

Investment banks can borrow about $30 for every dollar of shareholder equity, but commercial banks can borrow less than half that amount. That means Goldman and Morgan now face a substantial decrease in profits.

In return for tighter regulation, Goldman and Morgan will gain greater access to central bank funds and will find it easier to buy retail banks.

As Wall Street sought details of what will become the nation's largest-ever bank rescue, markets were looking ahead to Tuesday, when U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke begin an intensive two-day round of congressional hearings to hasten approval of the bailout legislation.

The rescue was cobbled together late in a week of seismic shifts on Wall Street that saw Lehman Brothers Holdings Inc (LEHMQ.PK) file for bankruptcy, Merrill Lynch & Co (MER.N) agree to sell itself to Bank of America Corp (BAC.N), and the Fed stage an $85 billion rescue for insurer American International Group Inc (AIG.N).

Goldman and Morgan Stanley were the last surviving of the big five investment banks that shaped 20 years of Wall Street history. Bear Stearns collapsed earlier this year.

After the Fed move, Mitsubishi UFJ Financial Group said it would buy up to one-fifth of Morgan Stanley as part of a strategic alliance, an investment estimated at $8.5 billion.

Elsewhere, Japan's biggest brokerage, Nomura Holdings Inc (8604.T), is to buy the Asian operations of Lehman, a source with direct knowledge of the deal said. And in Europe, Nomura and Britain's Barclays Plc (BARC.L) have pitched bids for parts of Lehman's business.

With the economy the No. 1 issue in a U.S. presidential election less than six weeks away, lawmakers are striving to get a plan in place by the end of the week, fearing delay could send markets reeling again.

"It's important we act quickly but more important that we act responsibly," Senate Banking Committee Chairman Christopher Dodd told the CBS Early Show.

Iranian Energy Exchange announces products to be on sale November 29
Iranian Energy Exchange announces products to be on sale November 29
Details of Iran’s exports to Iraq declared
Details of Iran’s exports to Iraq declared
Iran reveals its COVID-19 data for November 28
Iran reveals its COVID-19 data for November 28
Loading Bars
President, members of Board of European Muslim Forum send letter to President Aliyev
Aghdam district of Azerbaijan after 27 years of Armenian occupation (VIDEO)
Kazakhstan to bring waste processing level to average European level
UK appoints minister in charge of COVID-19 vaccine rollout
Number of blocked malware in AzStateNet network drops
Airport in Uzbekistan to buy auto parts via tender
Iranian Energy Exchange announces products to be on sale November 29
Azerbaijani team takes third place in group exercises at 36th European Rhythmic Gymnastics Championships
At least 6 killed in Somali capital suicide bombing
Microsoft Azerbaijan to support all initiatives in liberated territories of Azerbaijan
Azerbaijan shows footage of Kalbajar's Vang village (VIDEO)
Police fire tear gas at Paris protest against police violence
Electricity imports growing in Georgia
Cargo, passenger traffic via Turkish Sabiha Gokcen Airport slumps amid pandemic
Uzbek-Korean JSC Uz-Dong Won Co. announces tender for steel pipes supply
Cargo transportation at Turkish Antalya airport reduces
Austria records nearly 1,000 COVID-19 deaths over past 10 days
State Employment Agency of Azerbaijan opens tender on supporting start-up projects
Results of Azerbaijan's junior national team performance at 36th European Rhythmic Gymnastics Championships announced
Details of Iran’s exports to Iraq declared
Azerbaijan reports 4,212 new COVID-19 cases, 1,760 recoveries
Four citizens dead as result of mine exploding in Fuzuli - Azerbaijani Prosecutor General's Office
Kazakhstan's export volumes to China surge despite COVID-19
Assistant to Azerbaijan's president, diplomats, Garabagh FC representatives visit Aghdam Mosque (PHOTO)
Turkmenistan committed to promoting socio-economic development of Afghanistan
Georgian oil companies seek to avoid price increases
Tender for maintenance of elevators, escalators launched in Turkey
Azerbaijan's ten-month output of oil products declines
Turkey's export of grain and legumes to Turkmenistan up
Turkmenistan, Belarus discuss program of cooperation
Iran reveals its COVID-19 data for November 28
Azerbaijani president's assistant, diplomatic corps reps arrive at liberated Aghdam city
Rural digitalization project successfully underway in Kazakhstan
Missile fired to Tartar by Armenia delivered to local museum - president's assistant (VIDEO)
Number of enterprises put into operation in Iran's Ardabil Province up
Water problems center to be created in Uzbekistan’s Khorezm region
Khazar Consortium opens tender for purchase of lubricating oil
Azerbaijan’s Baku Telephone Communications opens tender
Georgia sees increase in COVID-19 cases
Number of shells fired at Tartar district by Armenian Armed Forces revealed
German minister says partial lockdown could last until Spring 2021
Kazakhstan doubles export to Afghanistan
Price of apartments in Iran’s Tehran rising
Autumn grain sowing carried out on large area of land in Azerbaijan
Azerbaijan’s Baku Metro to buy inert materials through tender
Weekly review of Azerbaijani currency market
Azerbaijani president's assistant, diplomatic missions visiting Tartar (PHOTO)
Turkish soldiers to soon begin their missions in Azerbaijan - Turkey’s VP
Georgian Basisbank launches service for purchase of government securities
Azerbaijan shows footage of Kalbajar's Istisu village (VIDEO)
Uzbekistan reveals its COVID-19 data for November 28
Turkey issues 10M2020 data on cargo, passenger traffic in Adnan Menderes Airport
Assistant to Azerbaijani president, Karabakh football club to visit Tartar, Aghdam cities
Azerbaijani oil prices reaching $49 per barrel
Tesla could widen release of 'self-driving' software in two weeks
Iranian currency rates for November 28
Kazakhstan’s Intergas Central Asia opens tender for equipment modernization
Turkish municipality to rent vehicles via tender
Turkmenistan, EU discuss prospects for developing bilateral contacts
Iran seeks to cooperate in auto sector with foreign countries
Azerbaijani flag raised in liberated Kalbajar city after 27 years (VIDEO)
OPEC+ likely to roll over its current production cut at least until end-March 2021
Brazil's COVID-19 death toll nears 172,000
826 new coronavirus cases in 24 hrs, total at 130,039
Georgian Poti FIZ plans to implement production of high-tech electrical devices in 2021
Chinese mainland reports 6 new imported COVID-19 cases
British, Irish prime ministers discuss EU trade negotiations
Kazakhstan increases exports to Georgia multifold despite COVID-19
France reports 957 new COVID-19 deaths, hospitalizations down
76 more coronavirus patients die in Moscow in past day
OPEC+ monitoring committee postpones meeting on oil production cuts deal in 2021 to Sunday
Brexit goes down to the wire: EU and UK say big differences remain
Iran expected to reduce potato production
Azerbaijan national team won silver and bronze medals at 36th European Championship in Ukraine
Diesel fuel production down in Azerbaijan
Кazakhstan Electricity Grid Operating Company opens tender to buy batteries
Export of grain and legumes by Turkey to Iran down
Turkey registers nearly 30,000 new coronavirus cases as recoveries surpass 390,000
Kazakhstan has high hopes for homegrown COVID-19 vaccine - Minister
Georgia expect stabilization of pandemic with the expansion of restrictions
Iraq reports 2,545 new COVID-19 cases, 547,215 in total
Resolution adopted by French Senate is gross violation of int'l law - Honorary Member of French Parliament
Erdoğan urges public caution against COVID-19 in Turkey amid violations
76 Iranian professors among world top 2% scientists
Monetary policy in Georgia remains tightest among CIS - Renaissance Capital
Representatives of Kyrgyzstan take part in XVIII meeting of CSTO ICMEC
Britain records 16,022 new coronavirus cases, 521 new deaths
Azerbaijani gymnasts reach finals of 36th European Championship in Rhythmic Gymnastics in Ukraine
Turkish political parties condemn French Senate’s resolution on Karabakh
World Maritime University, Georgia aim to develop maritime education, capacity-building activities
Georgia makes giant strides in transposition of energy efficiency acquis
Cash receipts from Azerbaijan to Georgia increases
Number of debit cards in Azerbaijan increases
Uzbekistan increases raisins export to Netherlands
Georgia to subsidize wheat flour price
IAEA to implement multiple projects in Georgia
Uzbekistan, Hungary consider establishing Uzbek-Hungarian Business Council
Uzbekistan confirms repayment schedules on ADB loan for solid waste cleaning
Percentage of problem loans in Azerbaijan down
Eni Turkmenistan Ltd opens tender for vehicles provision
All news