The US government announced that it plans new measures to bolster the two largest US mortgage companies, Freddie Mac and Fannie Mae. The new measures will call on the US Congress to increase the firm’s access to credit, and permit the Treasury to purchase shares in the companies when needed.
The Federal Reserve has also stated that it would lend to Freddie Mac and Fannie Mae if additional funds were required.
The Federal Reserve has announced that US interest rates are to be held at 2%, amidst continuing worries in the housing market and consumer confidence allegedly at its lowest level in 16 years.
The move was an expected one, with analysts stating that the Federal Reserve is facing a balancing act, as it copes with rising prices and economy slowdown. A recent survey has suggested that house prices were significantly lower in April, compared to the same time last year.
US investment bank, Lehman Brothers is being sued by one of its shareholders and accuses the firm of misleading investors over sub-prime loans. The lawsuit states that the senior managements conduct has led to significant financial loss for its shareholders.
The Wall Street bank, last week announced a quarterly loss of more than $2.8 billion as shares have fallen by 60% this year over fears of more bad debts.
Corn prices have risen to new highs as the US Department of Agriculture predicts that supplies will fall because of poor weather.
Corn hit the record price of $6.672 a bushel this week on the Chicago Board of Trade after the forecast, as crops have been hit hard by flooding and wet weather in the US.
Also adding to the problem, demand for corn for use in both food and fuel has been steadily increasing worldwide, and as demand for corn to feed animals and make biofuels increases it is likely to push up prices further.
The Federal Reserve has auctioned more than $7bn in securities, which it hopes that it will boost the credit markets.
The Federal Reserve last year started a succession of auctions to help shore up liquidity after the credit crunch. The central bank is hoping to stop the housing slowdown from turning into wider recession.
In exchange for the securities, investment firms can obtain a short-term cash loan by trading it with their more risky investments, including mortgage backed risks.
In the United States commercial bankruptcy has jumped 56% in April compared with the same time last year, a report has shown. Businesses filing for bankruptcy rose to 5,173, while the total including those who file for individual bankruptcy rose to 93,096.
Tropicana Entertainment, which owns numerous casinos in Las Vegas and Atlantic City, has become the latest firm to file for protection against bankruptcy. Known as Chapter 11, this allows the company to reorganise and to plan strategies to keep the business running and pay creditors over a period of time.
The dollar remained firm against other major currencies overnight.
A welcome recovery over the losses incurred on Friday but perhaps the perceived strength in the dollar will remain clouded after the recent credit crunch.