bailout. as more banks go bust,the f-d-i-c will have to raise money...what are the options and who pays? plus, want-to-be homeowners rush to lock in low mortgage rates...as they drop to historic lows...thanks to a trillion dollar buying spree from the federal reserve. and... speakinof the fed...it's been 10 months since it lowered its target interest rate to zero...and more than two years since it first acknowledged the credit crunch. before we look back at the past two years why the federal reserve looking ahead the fed will continue to be a bit by year of bonds backed by u.s. mortgages. as the federal reserve decide to keep a santa rates to 0% no surprise but declined to extend the time. trying to continue to occur low interest rates in the home buying market. as you said the

fans are gonna keep interest rates close to zero for an extended period of time. what does that mean we talk to taught colvin of m of global and he thinks the fed is why keep rates at this level well into 2010 by the end of the first quarter as we may see these interest rates creep back up and taught colvin said he thinks that the federal reserve are not won a race to race until economic growth and until the jobs picture get better. all expectations and on a point will continue to rise even if the economy has turned a corner of the federal reserve still reluctant to give a green light. mortgage rates are back down to historic lows.. around 5% for the second time this year.... the last time we saw rates this low was back in the spring. it's causing another surge in home loan applications as potential buyers and those who want to refinance rush to lock in these low rates..

experts say the federal reserve's buying spree... is a big reason why mortgage rates are low. as we mentioned, the fed is in the process of buying more than one trillion dollars worth of mortgage backed securities... and that has created enough demand.. to help drive down mortgage rates near historic lows. experts say rates are likely to stay at these levels for the near future. i think until we see the job market turn around, until we see the economy pick up.. until we get through these stock earnings over the next 6 weeks... rates probably remain low.. but not low forever.. so people have to be opportunistic when they are looking to refinance mortgages and buy houses - but into year end.. we can expect rates to remain low. todd colvin of mf global says the federal reserve is likely to hold onto all of the mortgage backed securities it is now buying... he says if the fed were to unload them onto the market, it could cause a crisis. even though some signs may be

pointing to the end of this recession we didn't hear that out of the federal reserve this week. in its statement on wednesday, the fed made no explicit mention of this recession coming to an end... and it didn't even say that we may be seeing signs of a recovery. "....economic activity has picked up following its severe downturn. conditions in financial markets have improved further, and activity in the housing sector has increased." but the fed did say quote: "economic activity has picked up following its severe downturn. conditions in financial markets have improved.. and activity in the housing sector has increased." however.... the fed also said economic activity is likely to remain weak for some time.. because of ongoing job losses.. and tight credit.. businesses are also still cutting back on investment and staffing.. although at a slower pace. so it seems ... the fed's official statement is a little more positive from its last meeting in august.. but it's not nearly as optimistic as chairman ben bernanke's words just last week.

in a speech at the brookings institute last week, the fed chairman said the recession was very likely over.. and even said that forecasters agree... we are in a recovery. but he added.. that the economy is still likely to feel very weak... and that's exactly the sentiment we found on the streets of chicago... when we asked people whether or not they think the recession is over. no doesn't seem like it's over.. economy still staggaring.. jobs not filled... lot of pent up demand not beign satisfied.. no it's not over not by a long shot i work in air craft industry and things are pretty tough right now.. what would give you indication it is over.. if we started selling airplanes no not to me.. long way.. wall street going up.. average person.. long way to go.. so no i don't think it's over but we did come across a few people who say they are feeling a little more optimistic. things are still slow but i can see they are getting better.. like what? i work with smaller companies.. picking up

with them.. so getting there.. still slow i think it's improving see positive signs.. gm re hiring people.. housing sales improving many experts believe the continued job losses are likely to be a drag on consumer sentiment.. and keep spending in check. caught after all this said and done the federal reserve was able to punch the stock market of two new highs began selling pressure took gold in the last hour and a half was a trade date bahoric all along with us. describe the selling pressure late in the day on wednesday? what we get was exactly what we want from the second day fomc

meeting. to break support and some help for the home industry hopefully. " once money cassava, and get exactly what i was expected the market took the liberty to take money off the table. it's been a straight shucks' cayenne and of the day one was a bell 8900 but basically profit-taking and bear it or leave no real panic or concern it was a good trade. too early to call a reversal of the trend we've seen since march? i would think so with oil numbers that came out early if wednesday morning he saw a building across the board and crude oil gasoline and what a slight up and production this season also time they have a lot of inventory bear think that that affect the commodity sector and also the dollar. i'm glad you brought up to bring back here because we saw the dollar hitting the lows ahead of the federal reserve even right after the federal reserve and that has helped fuel not only gold and oil but in the dollar- denominated asset class stocks included. as we saw stock prices come off the most recent highs wednesday the dollar come off the most recent lows. as a firm

cox we have proper action in the equities at least how trade has been recently. but again even though you have been turned the currency today and there were active big quietude at the end of the day. certainly the ratios in you're looking as strange and equities in crude oil the ratios run the same by any means. ratios have gone out the bill back to march at that point. fundamentally speaking the truth remains in which is to the high side for equities federal reserve action notwithstanding here was next for traders to pay attention to? a lot of residential real estate figures come again. we will be focused on the fundamentals in a big way earnings season is pretty much done. will be looking for anything that is green that comes across the board. the market is going to get excited to seize any good news at all. i'm anticipating that we will make room for the love and handle within the next week or two. about 10,000? about 10,000. data out of the way sounds like we will date board trading . c o m over at the cme group always a pleasure town.

still to come two years into the credit crunch and the federal reserve still is stepping on the gas trying to get the economy going again. but first...the f-d-i-c in need of a bailout of it's own...as more and more banks collapse under the presure of the economy.

next week, top banking regulators will sit down and try to figure out how best to bailout one of their own...the f-d-i-c's banking insurance fund. that's the pool of money the f-d-i-c uses to insurance bank deposits against losses...and the cash has been drained thanks to the sharp increase in bank failures. two years ago, only three banks failed all year. that increased to 25 in 2008...and so

far this year, 94 banks have collapsed with the f-d-i-c guaranteeing those deposits against losses. rebel cole is a finance professor at depaul university and he was a visiting scholar at the f-d-i-c just this past july. he figures the agency will see upwards of 400 banks fail over the next year and a half. my guess is the insurance fund is going to be looking at losses of $50 billion to $100 billion in the next year...additional losses over and above what we have here...and that's assuming none of the 19 too big to fail institutions end up on the hook. in the second quarter of 2008, the f-d-i-c's insurance fund held $45 billion. a year later than had shrunk to less than $11 billion. usually, the f-d- i-c insurance fund holds about one dollar for every $100 in bank deposits in guarantees. now, it's closer to 25 cents of insurance for every $100 in insured deposits. still, depositors are protected...up to the first $250-thousand in an f-d-i-c insured bank account. so next week, the agency has foud options to boost its insurance balance. it would borrow from an existing half trillion line of credit from

the treasury,backed by taxpayers. it could issue bonds backed by taxpayers and sell those bonds to banks. it could levy an emergency assessment onto banks or it could have banks pay next year's insurance premiums now. the banks are on the hook but ultimately remeber that the banks are going to run those charges...they're going to pass those charges through to us the consumer. banks have become more sensitive to consumer fees though. just this week bank of america and j-p morgan chase announced plans to lower overdraft fees. even as the f-d-i-c looks to raise more money to protect against more banks going bad, the white house continues pushing for new banking rules. treasury secretary tim geithner went to capitol hill on wednesday to talk more about a financial overhaul plan. lawmakers say they want to solve the "too big to fail" problem... by enacting rules to allow large institutions to fail without hurting the overall financial system.. and requiring a taxpayer bailout. the treasury secretary also called for large financial companies... outside the

banking system... to be brought under the same rules as banks. "if you allow institutions that are essentially doing what banks do, to compete with banks with no adult supervision, no constraints are free to engage in unfair deceptive practices, then you will recreate again what this country went through" treasury secretary geithner told lawmakers that the obama administration's goal is to protect consumers from being forced to bear the burden of any more failures. $900 billion is the line in the sand for healthcare reform on capitol hill. that's the maximum price tag reform supporters are aiming for in order to get congressional okay. the latest version in the senate, in addition to requiring most americans to get health insurance, also pushes doctors and hospitals to make their systems more efficient. harvard economist david culter figures 10 percent of health care spending is wasted on unnecessary administrative costs by providers. he estimates another five percent is wasted on what he calls unnecessary overhead from insurance companies.

probably another 10 to 15 percent is people who are readmitted to hospitals they don't need to be back there iof they got better care outside of the hospital or people who get infections in the hospital that if you avoided the infections you avoid the spending. so its care that just doesn't need to take place if the system were working well. for instance, the senate bill creates a pilot program for health providers to better coordinate care across doctors and for all to be accountable for all the treatments provided. its been estimated that new information technology in the healthcare field could save $77 billion a year its so critical that in order to make our health system more efficient that we require physicians and hospitals to have electronic medical records in order to not only for billing purposed but clearly so they can identify what's in their practice, what patient needs are , where the quality is. the digitizing of medical records as long been a goal of those looking to find

efficiencies in the healthcare system. president bush pushed for computerized records within 10 years...and that was in 2004. the stimulus spending okayed earlier this year includes money to encourage doctor offices to computerize their records. online items uncle sam looks to take over the student loan business...what it would do to private lenders and why some education experts say it won't necessarily mean big savings for students. plus...why one author says it's time for companies to re-think their values if they're to survive the recession. and...the high cost of conflict....nine years and billions of dollars later - u.s. troops remain in afganistan... how much longer can the war continue? you can find those stories on our website at firstbusinessx.com. and straight ahead on the show... it's been two years since the start of the credit

crunch....steps the fed has taken to ease the pressure and have they really worked?

money from the federal reserve for banks has been essentially free for 10 months. it's been almost a year since the federal reserve cut its interest rate to a range of between zero and a quarter of one percent, the biggest signal it sends regarding the economy. and

even though the fed this week finds that economic has picked up, it continues to use a number of conventional and unconventional ways to try to get the u-s economy chugging again. while this month marks the one year anniversary of the collapse of lehman brothers, triggering a free fall in the stock market and economy, the fed has been trying to step on the economic gas pedal for more than two years now. it was in august of 2007 when the federal reserve first mentioned the credit crunch and began cutting its interest rate, which at that time stood at five and a quarter percent. it also took the first actions to pump billions of additional dollars into the banking system. by december of 2007, the fed's target interest rate had been cut by a full percentage point and it began its term auction facility as a way to allow banks to borrow money from the fed by using various collateral. that program continues to this day. 2008 began with more interest rate cuts as the fed tried to get out in front of the slowing economy and bursting of the

housing bubble but by march, it truly became the lender of last resort in the last minute deal for j-p morgan to buy bear stearns before it collapsed into bankruptcy. that was the first of what would be several bank bailouts engineered by the fed. for the first time since the depression, it also allowed investment banks to borrow from it and the fed launched several initiatives to provide liquidity to banks. and then september 2008. a month that saw fannie mae and freddie mac taken over by the government, lehman brothers' bankruptcy and the fed bailout of a-i-g....not once but twice. the fed also backstopped money market funds as investors made a dash for cash. and by the end of 2008, the fed had cut its interest rate to zero and announced plans to buy billions in mortgage and government bonds....buying which had been scheduled to end this year but now will stretch into 20-10.

call made in chart talk the stock market takes a dive after the federal reserve releases interest rate decisions on wednesday we will take a look at the charts coming up next.

the reaction from the stock market when s&p 500 and in the day down 1% and we came after the minute of the from reserve reaches decision. the fall to follow through and all through the day after. significant

selling pressure for the eyes of the days and a loaf was a to% drop home wednesday after the federal reserve decision. on the question is are so is gonna be enthused by this taking money off the table in the trend is still in from march to july in the month of september we are still moving hi. and the reaction on the fed base is really very lean because you have to look to the next day because this is thursday to see what the real reaction is from stock market. as you mentioned this trend is still up the fact whenever we see selling take place here is immediately been met by buyers in these little dips have been very shallow. for the first area of support here was the last rally that petered out back in the august $103 plus a writer's block that you're talking a psychological level. we want to hear from you comments at first business x. c o of a bill for about the voice mail leave us a message at 3126608397. see you online back

her next time. let's find out what people think

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