Top 10 News Items 12/15-12/19: FOMC Cuts Fed Funds Rate to a Big Fat Donut; GM, Chrysler Get $17B in Loans; Madoff Fiasco Continues to Astonish

December 19, 2008 4:29 PM EST

This is a recap of the top news items for this week on Wall Street:

1. The FOMC took an unprecedented step in its attempts to stabilize the financial markets this week when it established a target range for its Fed Funds rate. The key interest rate now ranges from 0% to 0.25%. The Federal Reserve has never before lowered the rate to 0%.

2. After weeks of political grappling and what many have called theatrics on Capitol Hill, the Bush administration extended $17.4 billion in loans to General Motors (NYSE: GM) and Chrysler on Friday. The initial tranche will be for $13.4 billion with an additional $4 billion due in February.

3. Developments related to the Bernard Madoff Ponzi scheme continued to absolutely astonish the Wall Street community this week. Among the many names announcing losses, some included Fairfield Sentry Fund, Natixis, Carl and Ruth Shapiro Foundation, New York Mets owner Fred Wilpon, Yeshiva University,
Ezra Merkin's Gabriel Capital. Here is a report on the potential depths of the Madoff scam.

4. Treasury Secretary Henry Paulson made comments this morning saying that Congress will likely need to release the remaining funds from the TARP in order to fully stabilize the financial markets. The news has much of the investment community in an uproar as Paulson has recently said that he will not ask the government for the remaining $350 billion. With today's $17.4 billion commitment to General Motors and Chrysler, Paulson pointed out that the first half of the TARP has "effectively" allocated the first $350 billion solely to stabilize the markets. While the Paulson comments raise concerns about whether the $700 billion TARP program will be enough to get the US out of this mess, Paulson also said that he is confident that "we have the necessary resources to address a significant financial market event."

5. This week, warnings became about as common as layoff announcements have been recently. Some large companies which warned this week included: Honeywell (NYSE: HON), Conexant (Nasdaq: CNXT), Eaton (NYSE: ETN), Silicon Labs (Nasdaq: SLAB), Leggett & Platt (NYSE: LEG), Xilinx (Nasdaq: XLNX), Newell Rubbermaid (NYSE: NWL), Ryder (NYSE: R), MEMC Electronic Materials (NYSE: WFR), Ingersoll-Rand (NYSE: IR) and Potash (NYSE: POT).

6. President-elect Obama named Mary Schapiro as the SEC's next Chairman.

7. Wall Street got earnings results from two highly followed financials this week: Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS). Goldman reported a large loss, but the results were better-than-expected and the stock rose on the report. Morgan Stanley also reported a loss, but investors took the stock down as the loss was wider than the Street had anticipated. Goldman finished this weeks trading session up 19% while Morgan Stanley finished up 11.5%.

8. S&P affirmed General Electric's (NYSE: GE) AAA long-term and A-1+ short-term credit ratings this week, but cut its outlook on the company from Stable to Negative. The news weighed on the stock and, in turn, pulled down the broader markets on Thursday. Shares of GE finished this week down 3.6% to $16.50.

9. Weakness in the dollar continued this week. The dollar posted the largest loss against the Euro since the inception of the currency in 1999.

10. OPEC announced its largest-ever production cut this week. The organization said it will reduce its daily output by about 2.2 million barrels. Despite the very bullish news for oil, crude traded down on the day the news was released.

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• Chrysler LLC
• Goldman Sachs
• Henry Paulson
• Morgan Stanley
• Federal Open Market Committee
• Standard & Poor's
• StreetInsider.com Top 10 News Items for the Week
• Crude Oil
• Layoffs
• Bernard Madoff
• OPEC
• Mary Schapiro

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