Stock Market

With the subprime crisis lingering and causing wild swings in the world’s stock markets, Federal Reserve Chairman, Ben Bernanke, and President Bush have given signs that the government will work to assist with the crisis. Bush tried to ease fears and jitters, by downplaying the size and severity of the crisis, and also by asking strained borrowers to refinance and to take advantage of the Federal Housing Administration insurance. Bernanke–in his typical artful language–promised to “take action as needed” and to provide “liquidity” to the markets, if need be. Wall Street stocks responded on Friday with the Dow Jones gaining 119 points (.9%), and the Nasdaq up 1.21%. However, the two made clear that a huge bailout was not in the works.

The big names that are deeply involved with subprime mortgages also rose on the news. Accredited Home Lenders (LEND) rose a whopping 43%, likely due to the troubled mortgage company balking on a low-ball buyout attempt from Lone Star, who revised their offer to buy the company from $15.10 per share, to $8.50. Countrywide Financial (+1%), Bear Stearns (+1.84%), and Lehman Brothers (+1.97%) were also among those that benefited from the news.

One company for which there was no saving, Ameriquest, announced on Saturday that they were closing for good, and selling off all assets to Citigroup (C). Ameriquest had been one of the fast-risers in the subprime game, but were eventually nailed by a rash of non-payments and delinquencies.

Filed under: Uncategorized