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Fed Funds Rate Slashed by 50 Basis Points in Emergency Meeting

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The FOMC announced early this morning that it's cutting the target for the federal funds rate by 50 basis points to 1.50%. According to the press release, "The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures."

Even the inflation hawk Richard Fisher voted for this cut. As this Reuters article describes, Fisher has long been against rate cuts at the FOMC, but now even he has less concern about inflation. This is definitely bad news for savers. It's starting to look like it did in 2001 when rates were slashed and stayed low for several years.

Refer to this CNN article for more news of this emergency rate cut and how the Fed acted in coordination with other central banks worldwide.

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Comments
37 comments.
Comment #1 by Bozo (anonymous) posted on
Bozo
To: All
Re: It's time for "I remember when . . .." gallows humor

I remember when, not too long ago, World Savings introduced its "special" CD at 3% (when the Fed rate was at 1%). The Sandlers were flooded with money. Guess what they did with it (tee hee).

Good luck to all in these times.

Bozo

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Comment #2 by Anonymous posted on
Anonymous
We are so cooked. May Almighty God help us all. The profligate spenders are coming in force to steal savers' money. They are using their Congress. They will be using their new POTUS and all his minions. And they will succeed. At this point I see no escape.

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Comment #3 by Anonymous posted on
Anonymous
It just doesn't pay to be a saver in this era. If you can't beat um then join um. Once my WaMu CD matures next year I'm going to do a cash out refinance (fixed) on my home and buy some more land. At least it's something I can hold on to.

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Comment #4 by Anonymous posted on
Anonymous
Cutting interest rates is not a solution to the problem. Even if there is 0% interest rate, the Banks will not lend money for obvious reason, missing TRUST. What Ben is doing is totally destroying the Dollar and our savings by cutting rates and printing money with his buddy Henry Merritt "Hank" Paulson Jr.

What is the purpose of saving, when the Feds and his gangs around him have no idea what they are doing with our money. Giving it almost for free to the Banks so they can repeat the same crimes all over again. Who benefits of this cut, only the criminals on wall street and CEOs of the corrupt banking system.

Congress gave unlimited power to few incompetent people to destroy our life's savings and wellness. Congressmen have no idea what they are doing either. What is left to do, get read off the old Congress and take a chance on the newbies in November election. I guess it is worth a try.

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Comment #5 by Anonymous posted on
Anonymous
Quote: :What is left to do, get rid of the old Congress and take a chance on the newbies in November election. I guess it is worth a try."

I hope the majority of voters take that attitude. We all just might be pleasantly surprised with a fresh new look leading our country instead of the same old buddy network in Washington.

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Comment #6 by Anonymous posted on
Anonymous
I agree with poster 8:11 AM, October 08, 2008 and the previous post of 7:53 AM, October 08, 2008.

King Henry and Prince Ben are too comfortable with each other and are outbidding who can do more damage to our lives.
Congress is a mess of corrupt people and self serving idiots.

Long live election day.....

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Comment #7 by Anonymous posted on
Anonymous
It really doesn't matter, McCain is going to get my mortgage reduced on this overpriced house I am stuck with. If he can knock my payments down about a Grand a month then it should make up for the lost in the interest rate on my CD's.. See not all is bad..

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Comment #8 by Anonymous posted on
Anonymous
LOL, that one of the biggest crap (McCain mortgage plan) I have ever heard. By default, that is the last thing any investor wants from their mortgage back security. They rather extend your 30year mortgage loan to 40+ loan with lower payment plan. Unless the law specifically force the investor to do this, you will NOT get this option. Remember this sound bite seems good but practically impossible because rich bank, investor, mortgage insurance will bark against it. So the little guy will lose.

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Comment #9 by Anonymous posted on
Anonymous
RE: "We are so cooked."

There is no "almighty" except for nature.

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Comment #10 by Anonymous posted on
Anonymous
Not so fast, to the poster at:
9:19 AM, October 08, 2008
Banks purposely inflated the appraisal on the real estate loans so that they can reap bigger benefits twice:
1-When mortgage is originated and
2-When mortgage is resold on the open market for a price above the current value.

The Banks know of this scheme and that is why they shy to lend to each other. A bigger crook must be even bigger con artist to sell to someone those inflated mortgage papers.

There is no end of the circle of deceit. That is why McCain suggested to get to the bottom of the problem. He is the only one visionary enough to root out this problem.

See what Congress did, gave free money to the crooks. Now the problem is even bigger. Bernanke and Paulson are like Santa Claus, giving away free money to the egomaniacs and selfish CEOs. They will not solve the problem with $700 Bil., this is only a beginning of their deceit to the American people. This is over $5 Trillion messed up housing market. No money on earth can solve it, and Ben and Henry are fooling us and the world by promising solution that can never work. Cutting interest rate is just a smoke screen, not factual need for it.

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Comment #11 by Anonymous posted on
Anonymous
I like to add to this discussion by saying that some of your guys are really smart and see the things as they are. How come the Congress is blind, oh I forgot, we elected idiots for representatives. I blame myself and I believe thousands of you for not voting in the previous elections.
This time I will vote for new representatives, count me in.

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Comment #12 by Anonymous posted on
Anonymous
"There is no end of the circle of deceit. That is why McCain suggested to get to the bottom of the problem. He is the only one visionary enough to root out this problem."
McCain does not give one ____.
The problem is the Federal Resevre. Who speaks about abolishing the Fed?

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Comment #13 by Anonymous posted on
Anonymous
How quick we all forget.

Politicians will tell you anything to win your vote and get elected.
Once in office, none of them give a crap about you and me and all the working stiffs.

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Comment #14 by Anonymous posted on
Anonymous
1. I would not abolish the Fed because with out them there would be no regulation period and we would be in another heap of trouble. Yes, I know they have been asleep or ignoring the issue until it was to late. Perhaps a change in policy would be better similar to the ECB.

2. These rates cut does have an effect because this make your money cheap. The average joe will get some cut from credit card, car loans, etc. It might be less than I think since the financial needs to generate more money since real estate is going down. Another effect would be the big hedge funds, foreign investment needs to pump that money back to the market. You can't make money just by leaving it in the bank or government fund. We all know we're not retiring by look at the best CD rates (LOL).

3. Of course America economy depends on spending. I wonder will they keep going with all this crap.

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Comment #15 by Anonymous posted on
Anonymous
I didn't know the world was coming to an end until I found out about it here. What a bunch of cry babies and doom & gloomers. I hope I am not considered a saver as the posters here think everyone is out to get them and their money. Beware, the spenders are at the gate with horrible HANK and big bad BEN leading the pack and if they don't get it all Obama is waiting in the on deck circle. Most of the people here don't give a **** how much their neighbor may have to pay in interest to buy a car or send his kid to school as long as they get a good rate on their CD'S. The next time you **** about wall street greed take a look in the mirror and you will see greed at its worst. You should be happy you have CD"S instead of ****ing about the interest rate you are earning. Guess I will stop now as everybody is probally ****ed off by now.

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Comment #16 by Anonymous posted on
Anonymous
To poster at: 12:52 PM, October 08, 2008.

You are a one of the reasons we are in this mess. Being ignorant or a gloater to people in need for steady income, you are one of us cry babies by ignoring the facts and posting nonsense.

We are stating facts and blowing some anger out of us at people like you.

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Comment #17 by Anonymous posted on
Anonymous
To Anonymous at 12:52PM,
You must be a wall streeter, because people without humanity can only work in wall street. If you don't have any facts to post, get the hell out of this blog.

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Comment #18 by Anonymous posted on
Anonymous
What happens when all our savings can only buy a gallon of gasoline and twinkie due to rampant inflation? Why is gov't declaring war on savings?

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Comment #19 by Anonymous posted on
Anonymous
Please provide better criticism than saying we are greedy. I don't know about you but the CD rates have rarely gone above 7% (at the highest) this past 8 years. When you count for real inflation, your return is actually close zero. The people here are very conservative about their money and risk aversion. Bank in the old days always make money because they leverage 10:1. Because banks has over leverage and YOU accepted, the crisis is at hand because no one wants to pay the bill. YOU could have been prudent not to buy the car or a house but YOU decide to stick the bill to the next guy (and the next, and next). After a while somebody said No and now we are in a crisis.

1
Comment #20 by Anonymous posted on
Anonymous
In all this doom-and-gloom and finger pointing crap, who stands out? The "Bank Deals" guy who write this blog, that's who. No crying, no whining, no complaints - just useful facts, day after day (INCLUDING WEEKENDS - and that's what really impresses me) and useful information for us.

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Comment #21 by Anonymous posted on
Anonymous
Well said for the last several posts.

We savers are being punished and suffer at the hands of the Feds because we all chose not to live beyond our means.

Now the people who wanted to have it all "now" at any price are crying the blues and bad mouthing us savers because we refused to support their "habit".

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Comment #22 by Anonymous posted on
Anonymous
TO Anonymous, at 12:52 PM

You are a grasshopper

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Comment #23 by Anonymous posted on
Anonymous
Greedy? Because I have worked a lousy blue collar job. Bought a house I could afford. Purchased used cars with saved money. Grown a garden. Paid for things my entire life AFTER saving for them first.

You say we are greedy because many of us went without instant gratification and knew the security of "money in the bank", instead of being "owned by the banks".

I have skimped and saved my whole life to get a little money put away. My neighbors who make more a year than I ever have, driving their new cars, sitting in their hot tubs, but can't go out to McDonalds without putting it on a credit card are all losing their homes, yet they can't seem to make it.

Tell me, who are the greedy ones?

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Comment #24 by Bozo (anonymous) posted on
Bozo
To: All 401K savers
Re: More "good" news

Rep. George Miller is holding hearings on the idea of doing away with tax-deferred 401Ks. Seems like all us greedy savers are "costing" the government $80 billion a year. Some idiot economist suggests we swap our existing 401Ks for a government variable annuity tied to T-bills. Which are yielding, what, something south of 1%? Read the thread and comments over on the Boglehead forum. Posters are going ballistic.

Bozo

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Comment #25 by Anonymous posted on
Anonymous
I don't know who this Rep. George Miller is, but I hope he is up for re-election this November and the state/district he represents boots him out the door.

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Comment #26 by Bozo (anonymous) posted on
Bozo
To: Anonymous at 7:10 pm yesterday
Re: George Miller

He represents the Seventh Congressional District of CA, the district immediately adjacent to the one in which I live. He is Chairman of the House Education and Labor Committee. He is in a very safe seat and has represented the district since 1975.

His district is hopelessly gerrymandered to pick up virtually all of the lower-middle-income vote in the East (Contra Costa) County and Solano County regions of Northern California. This is the area with some of the highest foreclosure rates in the nation, if you get my drift. If you read the New York Times or the Wall Street Journal, you've heard of Antioch, CA, where in some neighborhoods, 40% of the homes are in foreclosure. Antioch is in his district.

Why the Committee on Education and Labor is even HOLDING hearings on 401Ks is beyond me. One would think if the proposal were seriously being considered, it would be before the House Banking Committee, or the Ways and Means Committee. So, the deeper I drilled, the more I concluded this is just another one of Miller's populist stunts, to wave in front of his economically-challenged voters before election day. Hopefully, the nonsense will die immediately thereafter.

Bozo

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Comment #27 by Time to Cooperate! (anonymous) posted on
Time to Cooperate!
To all the frustrated savers out there, please consider moving your money to your local Credit Union.

-Credit Unions want your savings and offer really good rates.
-They consistantly give back to the communities in which they are apart.
-They only make loans in an effort to help real people.
-They don't have malicious intent and there isn't this plague of greed and narcissism amongst their management.
-They are good to their employees.
-Credit Unions also consider what's best for their membership in every decision.

So, proudly give your loyalty to one of your local Credit Unions and I guarantee you'll feel better. You can sleep well too knowing that your deposits are insured by the federally backed National Credit Union Share Insurance Fund (NCUSIF). Now, I realize there are exceptions to every generalization. But ask yourself, would you rather know that your savings is helping people in your community, or take the chance that it is being used to make some fat cat bank CEO disgustingly rich?

To all of you that invest in your Credit Union, good for you! Your loyalty is appreciated!

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Comment #28 by Anonymous posted on
Anonymous
Credit Unions sound good in principle, but their interest rates are lousy. "Non-profits" somehow always manage to absorb more money than for-profits.

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Comment #29 by Anonymous posted on
Anonymous
Some credit unions today have rates right up there with the banks. Other credit unions do not. You have to shop. I go with a credit union whenever I can, and I agree with the sentiments of the above pro credit union post.

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Comment #30 by Anonymous posted on
Anonymous
Most of my savings are in credit unions, but they drop rates when the Fed does too. Just like banks some offer very competitive rates and services while others are downright lousy.

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Comment #31 by Anonymous posted on
Anonymous
Credit Unions have the best loan rates & the most honest. Why anyone would take a loan from any where else for cars & mortgages is amazing, even if you do have bad credit. Establish relationships with Credit Unions & honest small banks.

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Comment #32 by Anonymous posted on
Anonymous
http://www.youtube.com/watch?v=4dpJL6ANnV0

1
Comment #33 by Anonymous posted on
Anonymous
Did I hit a nerve or what. I am not a wall streeter as one poster suggests. I am not any of the following:broker-banker-real estate sales person-loan broker and have never had a job in any financial company. I am retired and live off of Soc Sec and income from stocks, bonds and CD'S so I do have a dog in this fight. Some of the posts here refer to "us savers" as if it's an elite group that is better than people who don't or can't save. Is this part of the class warfare. Which of the follpwing do you think is responsible for the current mess:
The people who bought houses that they knew they couldn't afford.
The realtor who sold them the house that knew they couldn'
t afford it.
The loan broker who helped them get a loan he knew they couldn't pay.
The banker who knew it was a bad loan from day one but didn't care cause he was going to sell the loan anyway and when it was sold he could make another bad loan.
How about the guys who kept buying CD'S from WAMU-Countrywide-Indynac and Wahovia so they could keep making bad loans just because they could get a quater or half % more on their CD.
So who do you think caused this mess.
Remember, these loans did not originate on wall street, or in congress, or the Fed Res or the treasury dept.

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Comment #34 by Anonymous posted on
Anonymous
To: By Anonymous, at 7:29 PM, October 09, 2008

No, you didn't hit a raw nerve, we just recognize B.S. when we read it.

You are injecting too much into other posts.

"us savers" was not meant to be an elite group as you say, but meant as a frugal group of people who did not try to live beyond their means and are not now begging for a government (tax payers' handout).

Wall Street, with all their greed and corruption, along with our Federal governement leadership and agencies that stood by and allowed this financial mess to happen are responsible for it. Period!

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Comment #35 by Anonymous posted on
Anonymous
To poster:
Anonymous, at 7:29 PM, October 09, 2008

Did you know that the Banks made over 5 Millions of mortgages to Illegal Aliens without credit or income or residency checks. Over an 1 Trillion dollars were squandered and sent out of the country thanks to irresponsible lending.

This is the info Banks don't want us to know because the bail out money will be cut to them in a public outrage. Banks and the brokers and wall street created the mess by allowing such loans. It was much easier to prevented than to cure it now. GREED was behind this whole mess.

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Comment #36 by Anonymous posted on
Anonymous
To the anonymous who said "It really doesn't matter, McCain is going to get my mortgage reduced on this overpriced house I am stuck with. If he can knock my payments down about a Grand a month then it should make up for the lost in the interest rate on my CD's.. See not all is bad."

I had post a comment on how laughable that was. Now by Mccain own website states its not longer will doing to that (LOL).

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Comment #37 by Anonymous posted on
Anonymous
I remember reading the disclosure when Countrywide sold itself to Bank of America, that over 2 million loans were made to people without verified SS numbers, income or citizenship.

Also, Magnus loan services, made over 100,000 loans to Mexicans without ss numbers at all, just made up digits to fill in the blanks.

No wonder we all suffer now.

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