Stilltitled

“This is a serious crisis. Something is systemically very wrong and we’re at a very dangerous moment.”

—David Goldman, senior portfolio strategist at Asteri Capital in New York and former head of debt research at Banc of America Securities LLC.

“Glass-Steagall protected bankers against themselves. Bankers are sheep. They don’t mind going over the cliff if everyone else goes over the cliff.”

—Jean-Marie Eveillard, 68, who runs the $21.3 billion First Eagle Global Fund in New York

“I believe the U.S. economy is now in recession. Could this become the worst recession we have seen in the post-war period? I think the answer is yes. I would emphasize the word ‘could’.”

“By almost every measure the U.S. economy is moving sideways or slightly down for the last few months…I think this recession could be substantially more severe”

—Martin Feldstein, president of the National Bureau of Economic Research, at the Futures Industry Association conference in Boca Raton, Florida.

“[The] risks have reached a point that the right thing is to act and act in a very serious way.”

—Robert Rubin, former Treasury secretary, chairman of Citigroup

Our liquidity position in the last 24 hours had significantly deteriorated.Alan Schwartz, CEO, Bear Stearns

Ms. Capalbo said that she was “shell-shocked” when her daughter called mid-last week and told her she had been working as an escort and was now in trouble with the law. She said she was not sure Ms. Dupre realized who Mr. Spitzer was when he was her client.

“[The Fed’s measures are] not a panacea, more like an aspirin for the dollar. There is a reasonable risk that this Fed move reflects the depth of their concern with U.S. asset markets, not a Fed formula to resolve U.S. asset- market difficulties.”
—Daniel Tenengauzer, New York-based head of global currency strategy at Merrill Lynch & Co

“We are not convinced that yesterday’s move will solve all the multiple challenges facing credit markets and the financial system.”
—Goldman Sachs analysts

“Credit concerns are likely to persist and averting a drawn out recession is becoming increasingly challenging.”
—Citigroup

Does the Fed Package Succeed?

“The U.S. government is not immune from the consequences of the credit crisis. Support for troubled financial institutions in the U.S. will be perceived as a weakening of U.S. sovereign credit.”

–Fabrizio Capanna, BNP’s head of high-grade corporate trading in London.

“The proliferation of credit risk transfer instruments was driven in part by an assumption of frictionless, uninterrupted liquidity.”

“more significant concentrations of risk were present than was apparent at the time.”

“Uncertainty about the future, and the greater complexity of leveraged structured products, created a dense fog around estimates of potential loss, making institutions and markets more vulnerable to an adverse surprise when conditions changed, and making it harder to manage the many principal agent problems inherent in the financial business.”

“As market participants have moved to reduce exposure to further losses, to step on the brake, the brake became the accelerator, amplifying the shock.”

“The rational actions taken by even the strongest financial institutions to reduce exposure to future losses have caused significant collateral damage to market functioning.”

“These measures—the Term Auction Facility and swap arrangements—have had some success in mitigating market pressures, in part by providing a form of insurance against future stress.”

“The regulations that affect incentives in the U.S. financial system have evolved into a very complex and uneven framework, with substantial opportunities for arbitrage, large gaps in coverage, significant inefficiencies, and large differences in the degree of oversight and restraint upon institutions that engage in very similar economic activities.”

Timothy Geithner, President and Chief Executive Officer, FRBNY

Remarks at the Council on Foreign Relations Corporate Conference 2008, New York City