European leaders ready bank support plan

[dipsydoodle]

Source: Yahoo News / Reuters

PARIS (Reuters) - European governments are ready to help banks weather the financial crisis by guaranteeing some of their lending and other measures, according to a document being discussed by leaders trying to stem panic on markets.
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Prime ministers and presidents from the 15 countries sharing the euro currency plus Britain met in Paris on Sunday to find a response to the chaos that has frozen credit markets, the lifeblood of the financial system, and sent markets crashing.

"I believe that we will see over a few days worldwide action that will make people see that confidence in the banking system can be restored," British Prime Minister Gordon Brown told reporters after leaving the euro zone leaders meeting.

The leaders were racing against the clock to clinch a rescue strategy for banks battered by the worst financial crisis since the 1930s, under intense pressure to throw them a lifeline before world markets reopen.

Read more: http://uk.news.yahoo.com/rtrs/20081012/tpl-uk-financial-e9012a6.html

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Full agreement has been reached including new rules concerning accounting practice.

[midnight]

1. I keep hearing that phrase frozen credit markets. My guestion-

who froze them and why did they do it right now?

[PSPS]

3. Because many banks' books have been "Enron-ized"

Their "assets" include a lot of these worthless mortgage-based securities. They're booked at imaginary values, meaning the actual booked "wealth" of the banks is in question. So loaning them money based on their ability to pay it back is risky because, if they had to liquidate these pretend assets to repay the loan, they'd be stuck. It's hard to liquidate an asset that's booked at, say, a billion dollars when it's really worth about 20% of that amount.

[dipsydoodle]

5. 20% - that much ?

2% might be nearer the mark. I'm guessing that the changes in accounting rules will prohibit anything like this occurring again.

[dipsydoodle]

4. I believe that expression

relates to an an inability to lend ratherthan a general unwillingness. Perhaps someone could correct me if I'm wrong.
The EU are designed to free off the situation and make credit available again. The agreement with banks here runs to 31/12/09 only.

[muriel_volestrangler]

2. European banks rescue plan agreed

Europe's leaders meeting at an economic crisis summit in Paris have pledged that no major financial institution will be allowed to collapse.

They also pledged to guarantee loans between banks on a temporary basis, in order to address the liquidity crisis.
...
French President Nicolas Sarkozy - the current European Union head - said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares.
...
Mr Sarkozy said the guarantees would be at commercial rates, and he stressed that what he called defective managers would be removed - and rash shareholders would not benefit from the public intervention.

http://news.bbc.co.uk/1/hi/business/7666274.stm

[dipsydoodle]

6. Thanks

Was on breaking TV news before 8pm but the Beeb didn't update their website.

[newfie11]

7. I hope this helps the Asian Markets later today.

If not watch out tomorrow.:scared:

[dipsydoodle]

8. This is domestic

Another link here : http://news.bbc.co.uk/1/hi/business/7665823.stm The £40 billion has already been approved.

I don't think it will have any bearing on Asian Markets the culprits being overvalued USA bonds and CSDs - they need sorting elsewhere.