European governments announced a flurry of bank bailouts from Germany to Iceland on Monday, but the rescue deals only heightened fears that...
LONDON — European governments announced a flurry of bank bailouts from Germany to Iceland on Monday, but the rescue deals only heightened fears that the contagion from the U.S. credit crisis has much further to spread before the financial system recovers.
European shares fell heavily and money markets remained frozen with banks refusing to lend to each other for all but the shortest periods amid concern that a planned U.S. government $700 billion bailout package would not be enough to stem the crisis. A few hours later, the U.S. House defeated the rescue package by a vote of 228-205.
The governments of Belgium, the Netherlands and Luxembourg took partial control late Sunday of struggling bank Fortis, while Britain seized control of mortgage lender Bradford & Bingley early Monday.
Germany organized a credit lifeline for blue-chip commercial real-estate lender Hypo Real Estate Holding, while Iceland’s government took over Glitnir bank, the country’s third largest.
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Renate Brand, a banking analyst at SNS Securities, said that “it’s getting difficult for a lot of banks at once now, because mistrust is so great and so widespread.”
Ton Gietman from Petercam Securities said that markets had become so jittery that rumor and fact were being treated about the same.