Fed refuses to cut interest rate

The Federal Reserve decided not to cut interest rates by quarter of a point Tuesday, as it was first expected, disappointing investors who were hoping the move would boost the financial markets after

News 12 Staff

Sep 16, 2008, 11:36 PM

Updated 5,728 days ago

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Fed refuses to cut interest rate
The Federal Reserve decided not to cut interest rates by quarter of a point Tuesday, as it was first expected, disappointing investors who were hoping the move would boost the financial markets after the collapse of Lehman Brothers.
The 158-year-old investment bank filed for bankruptcy Monday, dealing a crushing blow to the Asian and European financial markets, with Dow Jones shedding 150 points in the opening minutes after dropping 504 points Monday - its greatest drop since the Sept. 11 terror attacks.
Crippled by $60 billion in soured real-estate holdings, Lehman Brothers was forced to file bankruptcy when it was unable to find an investment partner to save it.
Then, Merrill Lynch, one of the world's biggest brokerage firms, sought to avoid a similar fate with a $50 billion transaction to become part of Bank of America.
Still, investors emphasized the importance to stay calm and not rush to sell stocks in a feat of panic.
"It's a painful blip, but it's a blip, and if you look back five years from now, you'll say: ?I'm glad I didn't pull all out in rash decisions,?" says Catherine Lap, of Bronxville.
In the wake of the collapse, AIG, the nation's largest insurer, barely avoided bankruptcy by announcing it would need to restructure its system.
In order to save AIG, New York Gov. David Paterson is pushing to change state laws to release $20 billion in subsidiary funds.
AIG officials will meet Tuesday evening with representatives of the state's insurance department and the Federal Reserve to discuss steps to rescue the embattled company.
Not all is bleak about the economy these days, however. Inflation remained at bay amid the financial turmoil, and oil prices dropped. After climbing to an all-time high of $150 a barrel in the summer, crude was trading below $92 a barrel Tuesday.
Click here for reactions to Wall Street layoffs


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