Word: lender
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Manufacturers Hanover denied that it suddenly needed to raise cash and called the rumors "absurd." Senior Vice President James Hambelton said the bank had one of the smallest portfolios of bad loans of any lender its size...
...their four-bedroom house at the daunting 15% going rate for a conventional mortgage. But with an ARM, the computer repairman and his wife paid an initial rate of just 11⅞% on their $85,000 home. Now they wish they had never heard of ARMS. Last January their lender boosted the rate to 12½%, raising the monthly payment from $750 to $825. The sudden increase, which amounted to an extra $900 a year, forced the strapped couple, who have four children, to visit a credit counselor and to cut back on expenses like hot lunches at work...
...Chicago, the harried Continental Illinois Bank had to dip deep into the largest rescue fund ever arranged for a U.S. lender. In Washington, D.C., World Bank officials warned that the latest jump in American interest rates will add $1.25 billion a year to the Third World's already crushing debt. In Paris, European moneymen lashed out at rising U.S. borrowing costs. On both sides of the Atlantic last week, such concerns were sending shock waves through the money world. Said Bank Analyst Stephen Berman of L.F. Rothschild, Unterberg, Towbin: "The U.S. banking system is suffering from a crisis...
...most visible trouble spot was Continental Illinois, the seventh-largest U.S. bank. Aggressive lending to energy firms and other ailing borrowers has filled its books with $2.3 billion in sour loans. After rumors that the bank was about to fail led to a run on the Chicago lender, Morgan Guaranty and 15 other big banks last week rushed to Continental's rescue with a $4.5 billion line of credit, the largest ever for an American bank. Its goal: to help avert what threatened to become the biggest collapse in U.S. banking history...
Nonetheless, Continental Chairman David Taylor suggested last week that still more moves may be forthcoming. Conceding that "we've had some rather serious earnings problems," Taylor said the institution may have to merge with another lender and has retained the Wall Street firm Goldman, Sachs to help it find a buyer. "The candidates open to us are numbered among the top 50 banks in the world," he added. For now, Taylor gave investors the disappointing if not wholly unexpected news that Continental plans to save $20 million by omitting its next quarterly common-stock dividend...