Bank, Credit Union Fail; Auto Bailout Talks Continue
First Georgia Community Bank in Jackson, GA, was closed on Friday by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corp was named receiver. Its deposits were assumed by the United Bank of Zebulon, GA. The failed bank had $237 million in assets and $197 million in deposits.
The West Hartford Credit Union in Farmington, CT. was closed on Friday by the State of Connecticut Department of Banking. The small credit union was taken over by the National Credit Union Administration because it was having problems with capital level, earnings, recordkeeping and management. It had $2.9 million in assets and served 1,206 members in four Connecticut counties.
Obama Introduces Recovery Plan
President-elect Barack Obama introduced a recovery plan and says it will be equal to the task and will be the largest public works spending program since the interstate highway system build more than 50 years ago.
Obama warns the nation that the economic situation is going to get worse before it gets better. The economic outlook has gotten worse since Obama's election, and on Friday the news that 533,000 jobs were lost last month was the worst performance in over 30 years. Unemployment is at 6.7 percent, as retailers report slow holiday sales, and credit markets haven't gotten back to normal since the Congressional bailout of $700 billion was approved in October. Obama did not reveal how big the economic stimulus plan will be; saying the blueprint for recovery will include help for homeowners struggling with foreclosure.
Government Bailout of Big Three
Should the government bail out the floundering automakers, there would be cabinet-level oversight and provisions to take back the money if the big three auto makers don't do enough to overhaul themselves. The package, which isn't finalized, would be about $15 billion. The amount is less than half of what the industry originally asked for from Congress. The plan would have a board of cabinet secretaries from Treasury, Energy, Labor, Transportation, Commerce and the EPA overseeing the industry's restructuring efforts. Stipulations placed on the automakers would limit executive compensation and give back to the government a large portion of future profits to repay the loan before any dividends would be paid to shareholders.
Wall Street Responds To Plan
Investors on Wall Street rallied on the news that President-elect Obama's plan will boost the nation's struggling economy. Wall Street also relaxed on the news that the Congressional aid to the Big Three automakers may pass as soon as Tuesday. Hong Kong's Hang Seng market closed up 8.7 percent higher on Monday, its highest close in seven weeks. Japan's Nikkei was also up 5.2 percent, and the major European indexes all reported gains of more than 4. 8 percent or higher on the U.S. news and reports from China that the government is discussing plans to expand its $586 billion stimulus plan already in place.