Citigroup Takes Over Wachovia
The crisis gripping the nation’s banks took a dangerous turn on Thursday as investors’ confidence in even the largest and strongest institutions spiraled lower.
Financial shares plunged 16 percent on one of the blackest days for the American stock market since the 1987 crash.
After the House of Representatives rejected a rescue for the financial industry Monday, fears grew that more banks, particularly small and midsize lenders, could run into trouble unless a new plan emerges quickly.
Even the trio of banks that has emerged from this crisis as the largest in the industry — Bank of America, JPMorgan Chase and Citigroup — saw their shares fall more than 10 percent Monday as anxiety overwhelmed the markets. Goldman Sachs and Morgan Stanley, which transformed into bank holding companies last week, fell more than 12 percent.
Regional banks were punished even more severely as investors scrambled to figure out which might fall next in the absence of a bailout plan. National City Corp., Downey Financial Corp. and Sovereign Bancorp, lenders pressured by substantial exposure to soured mortgages, were especially hard-hit, falling 63 percent, 48 percent and 36 percent respectively on the heels of the government’s seizure on Thursday of Washington Mutual, the largest savings and loan.
Pirated Freighter Cornered by Navy
American warships on Monday surrounded an arms-laden freighter hijacked by pirates, sealing off any possible escape in a standoff near the craggy Somalia coastline.
Lt. Nathan Christensen, a Navy spokesman, said that “several destroyers and missile cruisers” had joined the American destroyer that was already following the hijacked vessel. He would not specify the number of warships or what they would do if the pirates refused to surrender.
“Our intent is for the ship not to offload any of its cargo,” he said, referring to the 33 battle tanks and large supply of grenade launchers and ammunition now in the hands of the pirates.
The ship, operated by a Ukrainian arms supplier, was hijacked Thursday in Somalia’s pirate-infested waters. The American military, among others, fears that the pirates could sell the dangerous cargo to Islamist insurgents battling Somalia’s weak government.
And the controversy over where exactly the tanks were going has heated up again.
Olmert Says Israel Must Withdraw From West Bank to Attain Peace
Prime Minister Ehud Olmert said in an interview published Monday that Israel must withdraw from nearly all the West Bank as well as East Jerusalem to attain peace with the Palestinians and that any occupied land it held onto would have to be exchanged for the same quantity of Israeli territory.
He also dismissed as “megalomania” any thought that Israel would or should attack Iran on its own to stop it from developing nuclear weapons, saying the international community and not Israel alone was charged with handling the issue.
In an unusually frank and soul-searching interview granted after he resigned to fight corruption charges — he remains interim prime minister until a new government is sworn in — Olmert discarded longstanding Israeli defense doctrine and called for radical new thinking in words that are sure to stir controversy as his expected successor, Foreign Minister Tzipi Livni, tries to build a coalition.