Dow Soars Friday, President Talks Market Rescue Plan

11:00am Dow Jones Averages

30 industrials         11342.44 up   322.75 or   2.93 percent
20 transportation       5083.81   up   44.28 or   0.88 percent
15 utilities           449.38   up   10.47 or   2.39 percent
65 stocks             4073.57   up   84.50 or   2.12 percent

Bush says economy stable despite financial crisis

WASHINGTON (AP) - President Bush has told the nation his administration is taking “unprecedented action” to deal with the ailing financial markets.

Bush said he appreciates the willingness of Congress to work with the administration to address the crisis “head on.“

The president spoke publicly for the third time this week about convulsive developments in the business world. He was joined on the White House steps outside the Oval Office by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox.

Paulson says Fannie, Freddie will buy more mortgages

WASHINGTON (AP) - Treasury Secretary Henry Paulson says alone it won’t be enough, but mortgage giants Fannie Mae and Freddie Mac will step up their purchases of mortgage-backed securities hurt by the housing and credit crisis.

Paulson says the move will help support the crippled housing market.

He also says the Treasury Department will expand its program to buy mortgage-backed securities. That program was announced earlier this month when the government took control of the two troubled mortgage giants. At that time, the Bush administration said it planned to purchase 5 billion dollars in mortgage-backed securities issued by Fannie Mae and Freddie Mac.

Paulson didn’t say how much the Treasury program or Fannie and Freddie would expand, but the moves are aimed at increasing the flow of money in mortgage markets.

Stocks hold gains as Paulson speaks about plan

NEW YORK (AP) - Wall Street is holding on to most of its gains after Treasury Secretary Paulson addressed the nation about a plan to relieve banks of their bad debts and restore the credit markets to health.

Paulson says he plans to work through the weekend with congressional leaders to reach agreement on a plan that would address the root problems of the financial crisis. He gave few details of how the plan would be structured.

The Dow Jones industrials are up about 324 at the 11,344 level. They were up more than 450 in the first half-hour of trading, but pulled back from that high as the market awaited Paulson’s remarks.

Treasury, Fed move to strengthen money market funds

WASHINGTON (AP) - The Treasury Department and the Federal Reserve have come up with separate actions designed to shore up the nation’s 2 trillion dollars of assets in money market funds.

The Treasury plans to tap a Depression-era fund to provide guarantees for the money market mutual funds.

The Fed, meanwhile, says it will expand its emergency lending efforts to let commercial banks finance purchases of asset-backed paper from money market funds. That should help the funds meet demands for redemptions.

The central bank also says it plans to buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, which provide low-cost funding for mortgages, small businesses and farms. The aim is to pump money into the financial system and persuade banks to begin lending again and stop hoarding cash.

Key lawmakers promise fast action on bailout

WASHINGTON (AP) - Senate Banking Committee Chairman Chris Dodd says the United States may be “days away from a complete meltdown of our financial system” and Congress is working quickly to prevent that.

Dodd said Friday that Democrats and Republicans on the Hill are coming together to support the Bush administration’s developing plan to buy up bad debt from financial institutions and get the credit system working again. Dodd told ABC’s “Good Morning America” that the nation’s credit is seizing up and people can’t get loans.

The ranking Republican on the Banking Committee, Senator Richard Shelby, predicts the new bailout plan will cost at least half a trillion dollars.

Shelby says the nation has “been lurching from one crisis to another.“ Both veteran lawmakers say this is the most serious financial crisis they’ve seen in their years in Congress.

Key finance officials meet with lawmakers

WASHINGTON (AP) - The Bush administration is asking Congress to give it the power to buy distressed assets in an attempt to rescue banks caught in Wall Street’s financial crisis.

So say lawmakers who have been given an update from Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Christopher Cox. Lawmakers were briefed tonight at the Capitol.

Senate Majority Leader Harry Reid says he expected the administration and the Fed to have a proposal to lawmakers in a matter of hours, rather than days.

Massachusetts Congressman Barney Frank said the administration wants the power “to buy up illiquid assets.“ Frank says that could be done must faster than to “set up an entity.“

Frank says there was “virtually unanimous agreement” among lawmakers in attendance. Frank says the House Financial Services Committee, which he chairs, could have a legislative drafting session on a proposal as early as Friday.

Asian markets soar on possible US rescue package

HONG KONG (AP) - Asian stock markets have been soaring following news of a possible U.S. government plan to rescue banks from risky
mortgage debt.

Hong Kong’s Hang Seng Index jumped 7 percent at the open and was up 5.8 percent in mid-morning trading. Japan’s Nikkei 225 average was up 3.1 percent.

China’s Shanghai benchmark surged a stunning 9.5 percent as encouraged investors resumed buying following a government decision to cut a tax on share purchases and to buy up shares in state-owned lenders. Stock measures in Taiwan, South Korea and Australia were also sharply higher.

Following a week of steep losses, regional markets were lifted partly by Thursday’s gains on Wall Street, where the Dow Jones industrial average surged 410 points.

Investors also were encouraged by news that the U.S. Government is seeking the power to rescue banks by buying distressed assets.

SEC bans short-selling

WASHINGTON (AP) - The Securities and Exchange Commission has taken the dramatic step of temporarily banning the routine practice of betting against company stocks.

The move, announced early Friday on the agency’s Web site, may well be unprecedented and a reflection of regulators’ concern about the widening scope of the financial crisis as entreaties come from all quarters to stem a swarm of short-selling.

In the announcement, the commission said it was acting in concert with the U.K. Financial Services Authority in taking temporary emergency action to “prohibit short selling in financial companies” to protect the integrity of the securities market and boost investor confidence.

    (Copyright 2008 by The Associated Press.  All Rights Reserved.)