Wall Street ends sharply down

US stocks tumbled on Monday as worries about the economy and the troubled financial sector overshadowed the announcement of a rescue plan for mortgage giants Fannie Mae and Freddie Mac.

Financial stocks were among the blue chips hit the hardest, with insurance giant AIG down 12%. Shares of Citigroup fell 7.5%, Bank of America sank 5.1%, and Wachovia tumbled 6%. Bond insurer Ambac was the biggest loser for the day, falling 19%.

Merrill Lynch, AIG and Fannie Mae led financial shares to a third straight drop after the IMF warned that worsening credit conditions may prolong the economic slowdown in the US. Verizon slid to an almost two-year low on a bigger-than-estimated decrease in home-phone lines.

Tyson Foods tumbled the most in six weeks after profit sank 92% on higher feed costs.

The S &P 500 Index slumped 23.39 points, or 1.9%, to 1,234.37, its lowest level since reaching an almost three-year low on July 15. The Dow slid 239.61 points, or 2.1%, to 11,131.08. The Nasdaq Composite Index dived 46.31 points, or 2%, to 2,264.22.

Market breadth was very negative. Four stocks fell for each that rose on the New York Stock Exchange.

US indices had finished slightly higher in the previous session on encouraging reports from the housing and manufacturing sectors.

Stocks opened lower as worries about the credit crisis were exacerbated by federal regulators shuttering two more regional banks on Friday. They came off their lows briefly after Treasury Secretary Henry Paulson laid out guidelines for banks seeking to issue covered bonds as a way to finance home mortgages.

Investors will see if the US market can rebound on Tuesday as a key measure of consumer confidence is due to be released shortly after the opening bell. Scores of earnings reports are also due before and after the market.

Government-sponsored mortgage finance giants Fannie Mae and Freddie Mac turned higher after the Senate approved a bill that could establish a rescue plan for the embattled firms. Shares of Fannie and Freddie both soared in morning, but turned sharply down by midday. Fannie fell 10.7% and Freddie sank 6.7%.

Oil prices rose US$1.47 to US$124.73 per barrel as traders weighed slumping demand with renewed concerns about Iran's nuclear capabilities. Nonetheless, crude is still about US$24 below its high of US$147.27 set on July 11.

The average price of gasoline in the US fell 1.2 cents to US$3.958 per gallon.

In currency trading, the US dollar slipped against global currencies. The greenback fell against the euro, even as a measure of German consumer confidence fell to a more-than-five-year low.

COMEX gold for August delivery rose 90 cents to settle at US$927.70 an ounce after fluctuating above and below the break even point for much of the day.

Treasury prices rose, sending the yield on the benchmark 10-year note down to 4.01% from 4.11% late on Friday.

Europe stocks ended lower, as German consumer confidence dropped to a five-year low, Citigroup downgraded the banking sector and Ryanair Holdings warned of the possibility of its first-ever annual loss. The pan-European Dow Jones Stoxx 600 closed 1.1% lower to 278.73.

In Germany, the benchmark DAX 30 fell 1.3% to 6,351.15. The French CAC 40 fell 1.2% to 4,324.45 and the UK's FTSE 100 slipped 0.8% to 5,312.60.

In the emerging markets, the Bovespa in Brazil dropped 0.6% to 56,869 while the IPC index in Mexico was down 1.3% at 26,732. The RTS index in Russia slipped 1.2% to 1928 and the ISE National-30 index in Turkey gained 1.9% to 46,990.

Fame and Fortune: Claire Goose

Actress Claire Goose will be appearing next month in ITV’s police drama The Bill as the new Sergeant Rachel Weston.

Born in Edinburgh, she grew up in Norfolk before attending the Italia Conti stage school in London at 16. She established herself as nurse Tina Seabrook in the BBC drama Casualty and more recently played a detective, Mel Silver, in Waking the Dead. Goose made her movie debut in 2001 in the horror film Alone.

Goose, 33, is married to the scriptwriter Craig Woodrow, 34. They live in Chiswick, west London.

How much money do you have in your wallet?

I have £8.27. I normally don’t take out more than £40 at cash machines. That will last me the week. I’m a slave to work so I don't get a chance to spend much anyway.

I like to have some change for a coffee — there’s a Starbucks round the corner from where we’re filming. I tend to use my debit card for my daily shopping.

Do you have any credit cards?

I have a Virgin Money Visa but I only really use it when I go abroad to take cash out. I know it’s not the most effective way to do it but I’m normally in such a last-minute rush that I never get round to organising things like foreign cash.

I have to say, though, Craig was brilliant when we went to New Zealand for our honeymoon in January. He shopped around and found Nationwide don’t charge fees for foreign cash withdrawals, so we opened an account and put a great big lump sum into it before we went there.

Are you a saver or a spender?

Probably more of a saver although I love spending money on interior decorations. Having said that, I haven’t spent anything on the house recently. We spent a lot of money when we got married so we’ve decided to slow down for a bit.

Whenever I earn money I never for a second think all of the money’s mine. I tell myself that about half of any money I earn is for the taxman.

How much did you earn last year?

With the acting, repeat fees and voiceovers it’s probably getting into the six-figure mark. For a voiceover you might get anywhere between £150 and £250 an hour. You also get paid every time it’s used. I recently did a radio advert for BHS.

I love voiceover work because it’s very different from acting on screen and there isn’t all that pressure for make-up.

Have you ever been really hard up?

When I first came to London from Norfolk, I was quite hard up. I was 16 at the time and at drama school.

Dad gave me an allowance for my living expenses but I remember when my roommate and I had a fiver between us for the whole weekend. We went to the supermarket and bought a box of cereal, a pint of milk, some toast and some butter and that’s all we ate — we were pretty sick of it by the end.

The day I left college, I told dad that I didn’t want any money from him. I wanted to start for myself. I got a part-time job at the NSPCC children’s charity — I didn’t get a full-time job as I needed to be free for things like auditions.

Do you own a property?

We have a two-bedroom maisonette in Shepherds Bush, west London. I bought that in 2002 for £272,000. I lived there for a number of years but I now rent it out. People say it’s worth about £400,000 but you never know in the current market. The mortgage on it is about £282,000 so we probably have about £100,000 or so in equity. We paid off the mortgage on the flat, but we remortgaged that to put a deposit down on our house in Chiswick in 2004. It’s a three-bedroom Victorian terrace which we bought for £410,000. Other places on our road are probably worth about £525,000 to £550,000.

Further decline in UK mortgage lending

New figures released today show gross mortgage lending declined to an estimated £23.8 billion in June, down three per cent from May.

The Council of Mortgage Lenders (CML), which compiled the figures, said there had been a 32 per cent fall since June last year.

"Market activity during a traditionally a busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand," CML director general, Michael Coogan.

"While by historic comparisons we still have had a good level of gross lending, new net lending has been constrained in 2008 and this picture will continue for the rest of this year."

The decline between the first and second quarter was a marginal, at one per cent.

However, the CML would usually expect an increase in spring.

The year-on-year decline has gathered pace in recent months; lending in the first quarter of 2008 was down 11 per cent on 12 months earlier, while the second quarter was down 21 per cent.

"Government efforts to help housing associations purchase new-build properties and borrowers to save for a deposit are welcome, but are likely to have only a marginal impact on the housing market," said Mr Coogan.

This week the government announced a 'rent now, buy later' scheme, with the ambition of getting more first-time buyers onto the housing ladder.

"The recent reduction in short-term fixed-rate mortgage costs is a small bit of welcome news for hard-pressed households facing significant pressures on their finances from the higher cost of food and fuel, in particular," continued Mr Coogan.

"However, borrowers on tight budgets will have to plan ahead to manage higher mortgage payments than they have been used to. Speak to your lender early remains the advice for anyone struggling to pay."

Commenting on the figures Howard Archer, chief economist at analysts Global Insight, said: "There is just no let up on the bad news on the housing market, with the very low level of mortgage activity for house purchases being a consequence of the toxic mix of stretched buyer affordability and very tight lending conditions.

"Elevated affordability pressures on potential house buyers stem from high house prices and modest disposable income growth, while very tight credit conditions have led to markedly fewer and more expensive mortgages being available."

Regulators seize Mortgage lender IndyMac

(RTTNews) - Pasadena, California-based IndyMac Bancorp Inc. (IMB: News, Chart, Quote ), the holding company for Indymac Bank FSB, was closed by the Office of Thrift Supervision or OTS after the company's failure to raise capital. The regulatory has named Federal Deposit Insurance Corp. or FDIC as the Conservator to the run the bank.

OTS specified that, according to FDIC data, IndyMac is the second largest financial institution to close in US history and the largest OTS-regulated thrift ever to fail. IndyMac, which had total assets of $32.01 billion and total deposits of $19.06 billion as of March 31, 2008, now joins the list of financial institutions of major collapse, including Continental Illinois National Bank and Trust Co., which became insolvent in May 1984, and American Savings & Loan Association in 1998.

IndyMac is specialized in making and selling so-called Alt-A mortgage loans to consumers, who though more credit worthy than subprime borrowers, usually doesn't have complete documentation of income or assets necessary to receive a prime-rate loan.

IndyMac, which was founded as Countrywide Mortgage Investment in 1985, and spun off by Countrywide as an independent company in 1997, came under fire recently when Senator Charles Schumer of New York commented that lax lending standards and deposits purchased from third parties left the bank on the edge of failure.

Making situation worse, issues about taking responsibility of the failure were in a debate. OTS criticized that the immediate cause of the closing of the bank was a deposit run that began and continued after the public release of a June 26 letter by the Senator. OTS noted that, following the release of that letter expressing concerns about the bank's viability, depositors withdrew more than $1.3 billion from their accounts in the following 11 business days. In response, Schumer on Friday said that, "OTS should start doing its job to prevent future IndyMacs "

Commenting on the situation, OTS Director John Reich said, "This institution failed today due to a liquidity crisis. Although this institution was already in distress, I am troubled by any interference in the regulatory process."

Life Insurance 101

Life Insurance can be confusing, let us help you decipher your way through it. This is the first in a several part series where we will introduce you to a few of the key terms in the Life Insurance world.

First of all, life insurers (also known as carriers) offer more than just traditional life insurance. One of today's hot products is Long Term Care (LTC), we will talk about LTC in another article.

They also offer products like Annuities, Critical Illness and Disability Income insurance. You can purchase these products through agents, which typically sell only the carrier's product they are associated with, brokers which sell products from various carriers and on your own through the Internet.

An introduction to Life Insurance products starts with the two basic categories that life insurance products fall into. These are those with Cash Value and those without Cash Value. An insurance policy with a cash value is a policy that has a value for the insured that they can borrow or withdraw from. Cash value is built up by paying premiums to build up your cash value. Typically, those without cash value are Term Insurance products. Those products with a cash value, typically are investments that last until you die. A Whole life policy and a Universal life policy are examples of policies with a cash value.

In this article, we will concentrate on term life policies. These are the most common types of policies and do not have a cash value. You purchase a term policy for a specific amount of time, usually 10 or 20 years. Since these policies have no cash value, they are generally a very good value. A term policy is the ideal choice for people under 40 years old. For example, a 30 year old with good health can find a policy for less than $300 a YEAR for $500,000 in protection. This should more than cover anyone around that age.

Another form of a term policy is offered to many of to help offset some of our credit risks. For example, have you received an offer that if you pass away, your mortgage will be paid off? This is generally what is known as a decreasing term policy. Mortgage companies market this to their clients that covers the unpaid portion of the debt to them. Before purchasing one of these types of policies (often offered along with car loans, credit cards, etc as well) do your research! You can easily find out how much a policy will cost by clicking one the links on this page.

In later articles we will discuss some of the different kinds of cash value policies.

This article is brought to you by the Wealth Bounce webmaster.

Scott Cote is a software and business professional specializing the operations of life and health insurance companies. You can visit him at his website, www.wealthbounce.com