Word: rising
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Dates: during 1980-1989
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...cautious and circumspect breed, bankers are rarely surprising. Last week, though, U.S. lenders managed to startle some of the most seasoned financial experts. The first jolt came when Citibank and Chase Manhattan hiked their benchmark prime rate on loans to commercial customers from 7.5% to 7.75%, its first rise in nearly three years. Several major banks soon followed suit. Two days later, seven leading banks had announced that they would take the serious step of reclassifying their loans to Brazil to a "nonperforming" status. That means that the banks' books will no longer maintain the fiction that Brazil is still...
Both moves were surprising on several counts. A rise in the prime usually follows an increase in the banks' cost of borrowing. But this time these expenses have remained relatively stable. Says Nicholas Sargen, an economist at Salomon Brothers: "We were scratching our heads over why they did it." The timing of the Brazilian loan action was equally puzzling. Since Feb. 20, when Brazilian President Jose Sarney declared his country would suspend interest payments on $68 billion of its foreign debt, observers wondered whether banks would have to reclassify their Brazilian loans. But since federal regulations do not require such...
Businesses and consumers wondered whether the rise in the prime heralded a new and sustained climb in interest rates. Surprisingly, the stock market, which can panic at even a hint of high interest rates, discounted last week's move in the prime. After plunging early in the week because of the decline in the dollar and concern about a possible U.S.-Japan trade war, stocks rallied strongly. On Friday the Dow Jones industrial average skyrocketed 69.89 points, a new one-day record. The Dow closed at an all-time peak of 2390.34, up 54.54 points for the week...
...bulls of Wall Street seem to be betting that the Federal Reserve Board will not allow interest rates to rise sharply. Such a policy would endanger a vulnerable economy, which grew only 2.5% in 1986. Last week's employment report from the Labor Department offered evidence that the economy is still in the doldrums. Though the overall unemployment rate fell slightly, from 6.7% to 6.6%, the number of jobs actually declined in the important manufacturing and construction sectors...
Application Rise Stuns Administrators...