Federal Reserve Starts Meeting Today, May Cut Rates
- Dec 15, 2008
A two-day meeting of the Federal Reserve begins today with expectations that it will cut the fed funds rate by a half-percentage point to 0.5 percent, according to CNNMoney.com. The U.S. automakers bailout still tops the news as top government officials said over the weekend that they might use taxpayer dollars set aside to bail out banks and Wall Street firms to keep troubled U.S. automakers out of bankruptcy, according to the CNNMoney report. GMAC, which is 49 percent owned by General Motors and 51 percent owned by Cerberus Capital Management, extended an offer to holders of $38 billion of its current notes to swap them for a combination of new notes, preferred stock in the company and a limited amount of cash until 5 p.m. Tuesday. This was the second extension in the past week, according to CNNMoney.The issuance of the preferred stock would allow GMAC to reach the $30 billion in capital in needs to be approved as a bank holding company, which would enable GMAC to access money from the $700 billion bank bailout fund. It had only $9 billion in capital on hand at the end of the third quarter, the report stated. Global markets advanced on revived hopes of the U.S. auto bailout. Japan’s Nikkei index soared 5 percent and the major exchanges in Europe were all in positive territory in morning trading, the report added.Bloomberg, too, reported that Asian stocks rose as optimism the U.S. will rescue American automakers countered a slump in Japanese business confidence and slowing Chinese industrial output. Toyota Motor Corp. advanced 9.8 percent in Tokyo and Hyundai Motor Co. jumped 7.1 percent in Seoul, Bloomberg stated. Holiday shopping figures may show an overall decline in purchases, but video games still move off the shelves with nearly $3 billion in sales in November, the Associated Press reported. U.S. retail sales of video game hardware, software and accessories jumped 10 percent last month from the year-ago period to $2.91 billion and the industry is still on track to rack up $22 billion in U.S. sales this year, the report stated. The Associated Press also reported that Delta Air Lines Inc., the world’s biggest carrier, will offer voluntary severance payouts to a majority of the 75,000 employees at Delta and Northwest’s mainline operations as part of a plan to cut an unspecified number of jobs.