Wall Street, Banks Plunge on Inauguration DayNew Data Breach Study Examines Costly Aftermath of Hacks The excitement of the 1 million-plus citizens on hand at the Capitol's Mall for the swearing in of 44th President Barack Obama didn't extend to Wall Street, as stocks dropped to November numbers while investors focused on the recession.
The Dow Jones industrials lost 3.5 percent, dropping to its lowest levels since November 21. The S&P's 500 index lost 4.5 percent, and the Nasdaq composite lost 4.9 percent. The fears of the recession combined with fourth-quarter earnings that show huge drops compared from the year before mean a rough ride ahead as more earnings reports come in. Bank stocks were hardest hit, falling almost 30 percent so far in the year.
Royal Bank of Scotland on Monday says it may report a loss of $41.3 billion - the biggest loss in British corporate history. RBS' U.S. shares plunged 72% yesterday. In addition to bad news from British banks, U.S. bank State Street says its fourth quarter earnings dropped 71 percent, and it may face billions in new credit losses.
Bank Rescue Plan Nearly Complete
President Barack Obama's economic team is working to finish a bank-rescue plan to go with Obama's $825 billion stimulus package that will be debated in Congress. Full details of the plan haven't been revealed, but it will likely include a $50 billion program to avert foreclosures and more money made available to banks to deal with toxic assets that are on balance sheets. Obama's inaugural address called for "bold and swift" action to resolve the financial crisis that cost nearly 2.6 million jobs and has driven the economy down further into a recession that began in December 2007.
The Federal Reserve and Federal Deposit Insurance Corp. have called for a government-backed "aggregator bank" to buy the troubled securities now held by institutions as toxic assets on their balance sheets.
Treasury Nominee Geithner Faces Senate Hearing
Treasury Secretary nominee Timothy Geithner called on senators to support the Obama administration's $825 billion stimulus plan in his Senate Finance Committee hearing today. He says the greatest risk to the economy is to do too little. Geithner's prepared testimony comes during the panel's confirmation hearings. He notes that in a crisis of this magnitude the most prudent course is the most forceful course.
Geithner's hearing had been scheduled for last week, but was pushed back until today. He faced criticism earlier when it was revealed that he didn't pay self-employment taxes between 2001 and 2004, about $34,000 in total. Obama and his team dismissed the tax problems as a common mistake and say Geithner has since paid the taxes and interest penalties.