7 ways car dealers make you pay extra

Narrated from Consumer Reports:

Your goal is to get the best car at the best price.

Mixing negotiation - Salespeople like to combine the vehicle price, trade-in, and/or financing negotiation, often asking you what you can afford to pay per month. This gives them more latitude to provide a favorable figure in one area while inflating figures in other areas. In the end, this could cost you more overall.

Avoid this trap by negotiating one thing at a time, starting with the price of the car. Approach this as if you were paying cash, with no trade-in. To get the best deal, you should go in with a starting price thats based not on the vehicles sticker price but on how much the dealer paid for it.

Make it clear to the salesperson that you want the lowest possible markup over your starting price, and that youll visit other dealerships selling the same vehicle and will buy from the one with the best price.

0 down, 0 interest, 0 payment for the first year - Be sure you know what the interest rate will be after the first year, and compare with rates that are currently available. Keep in mind that many buyers dont qualify for zero-percent loans and other low rates. Knowing the current rates can also help you avoid being talked into a rate thats higher than what you could get elsewhere.

Lease a car - Many leasing customers assume that the monthly payment the salesperson quotes is a nonnegotiable figure. Thats not true. The figure is often based on a vehicles sticker price with no discount, and can be negotiated just as if you were buying the car. In fact, to keep the transaction simple, you can negotiate the vehicle price before mentioning that you want to lease.

Other negotiable lease items include the down payment, annual mileage limit, and purchase-option price. Just as when buying, you can have dealers compete against each other, giving your business to the one that offers you the best deal.

Financing - Dealers like to arrange the financing for your vehicle because it gives them another source of profit. But the interest rate they offer may be higher than you could get elsewhere. Dont make financing a purchase-time decision. Before visiting the dealership, make sure you know how youll pay for the vehicle. Call ahead to find out what the dealers rate is, and compare it with what you could get from banks, credit unions, or other lending institutions. If you are preapproved for a loan, you can keep the financial arrangements out of the negotiations.

Knowing your credit score can also protect you if a disreputable dealer tries to give you a higher interest rate than you deserve. Any score over 700 should ensure you the lowest rates.

Add-ons and options - Salespeople will sometimes try to make up for a low price on a vehicle by talking you into a lot of optional equipment. Do your homework, so you know what options you want and which you can live without. Many options are available separately, but others can only be bought as part of a package. Consider these carefully. Option packages can make you pay for features you dont need to get a few you want. Its best to choose a vehicle trim level that gives you most of the options you want, then add other options separately. If a model doesnt have the features at the price you want, consider another.

Other extras gimmicks - fabric protection, rust protection, etc.

Extended Warranty - Consumer Reports does not recommend buying an extended warranty unless you plan on keeping a trouble-prone vehicle for an extended time after the original warranty runs out. Most manufacturer warranties are sufficient, with bumper-to-bumper coverage of at least three years or 36,000 miles and powertrain coverage thats often longer. If you want an extended warranty, ones offered by the auto manufacturer are typically better than those offered by third-party companies.

Mass layoffs at the highest level since 9/11

NEW YORK (CNNMoney.com) -- The number of layoff announcements involving at least 50 workers rose in September to the highest level since the Sept. 11 terrorist attacks seven years ago, the government said Wednesday.

There were 2,269 mass layoff actions, up 497 from August, according to statistics released by the Labor Department. That was the most mass layoffs since the 2,407 in September 2001.

China's Exposure to Wall Street Financial Crisis

NPR: Stephen Green, head of research at Standard Chartered Bank in Shanghai, speaks with host Liane Hansen about how the global financial crisis has hit China. China has close to $1.3 trillion invested in U.S. debt with up to $500 billion in agency securities.

According to web source, five banks: ICBC, BOC, CCB, CITIC, CMB invested USD $25B in Fannie Mai and Freddie Mac debt.

Repost "That Hissing Sound" by Paul Krugman

Krugman has just won 2008 Nobel prize. He warned about housing bubble in 2005. See detail.

Krugman said Monday that the global financial crisis is "terrifying," but expressed cautious hope that a corner is being turned.

Dutch government pledges $273 billion to EU meltdown plan

THE HAGUE, Netherlands (AP) -- Prime Minister Jan Peter Balkenende said Monday the Netherlands will guarantee 200 billion euros ($272.78 billion) in loans between banks to help ease the financial crisis.

The Dutch pledge is part of a raft of proposals to unblock frozen credit markets agreed on Sunday in Paris with other governments sharing the euro currency.

Individual packages already announced by the governments of Germany, France, Britain and others add up to well over 1 euro trillion.

Balkenende said the Dutch measure would be operational within days and should help the financial sector return to normal.

"Nearly all banks, however strong their position, are having trouble with liquidity," Balkenende said, blaming the problem on a lack of confidence.

"The government is prepared to guarantee a part of the loans between banks and between financial institutions and banks so that the money stream starts running again," he said.

The Dutch guarantee comes on top of a 20 billion euros fund the government set up last week to support financial institutions in the Netherlands.

Finance Minister Wouter Bos said last Thursday that money would be available to any "essentially healthy" company that requests it.

After the nationalization of the Dutch operations of Fortis NV and ABN Amro earlier this month, the only remaining large Dutch financial companies with stock market listings are bank and insurer ING Groep NV and insurer Aegon NV.

House GOP objects to spending in $150 billion stimulus package

WASHINGTON (CNN) -- House Republicans on Monday objected to new spending measures that congressional Democrats are considering as they draft a $150 billion economic stimulus package.

n a letter to House Speaker Nancy Pelosi, Ohio Rep. John Boehner, the top Republican in the House, called the proposed spending "an irresponsible, business-as-usual approach that has earned this Congress the lowest approval ratings ever recorded."

A Democratic leadership aide said the stimulus package Democrats were drafting would include "a heavy emphasis on help to state and local governments."

But in their letter to Pelosi, Boehner wrote, "nothing currently being discussed by the majority as 'stimulus' will stabilize the economy long-term."

"Nothing being discussed will ease the uncompetitive nature of our nation's tax rates. Nothing being discussed will bring a single dollar of private capital into our markets, which would help stabilize and restore American families' savings and retirement accounts. And nothing being discussed will help small businesses compete and thrive," Boehner wrote.

Instead, House Republicans proposed a number of measures that, they say, will "turn the corner towards real economic growth," including:

Removing legal barriers to speed up new offshore oil drilling. A law banning offshore drilling expired October 1, but Republican lawmakers say lawsuits could block new offshore rigs and want judges to quickly rule on the cases.

Lowering taxes on income that U.S. corporations earn from their overseas subsidiaries.

Eliminating capital gains taxes on the sale of homes up to $500,000 for a couple.

Suspending capital gains taxes on securities purchased during the next two years.

Extending government deposit insurance to business transaction accounts.

Directing the government to guarantee inter-bank loans.

The GOP letter was released as Pelosi met Monday morning with a group of economists, including Larry Summers, a treasury secretary in the Clinton administration, and Nobel Prize-winning economist Joseph Stiglitz.

After meeting with the economists, Pelosi, a California Democrat, said the goals of the stimulus package would be "to provide relief for the middle class, to encourage consumer confidence and to have regulatory reform by re-writing the rules for financial institutions."

Congress passed a $170 billion stimulus package in February after the economy showed signs of weakening. That package included a measure that sent a stimulus check of up to $600 to taxpayers who made less than $75,000 a year. The checks were mailed out this summer.

The stimulus package the Democrats are now working on would work differently: It could provide states with funds to cover mandatory Medicaid spending, which would help state governments avoid cuts to education and other programs, Democratic leadership aides said.

The aides also said the stimulus package could provide funds to help states struggling with their own budgets, as well as infrastructure money, an extension of unemployment benefits, food stamps and more money for low-income energy assistance -- all measures that have passed the House before.

Rep. Barney Frank, D-Massachusetts and the chairman of the House Financial Services Committee, said government jobs were one of the few bright spots in the economy.

"The only good sign on jobs for the year has been that state and local governments have been adding jobs, which only mildly offset the great loss in the private sector," Frank said. "If we do not go to the aid of state and local governments now, they will now become an added factor to the job loss rather than something of a mitigating factor."

The stimulus package would be separate from the $700 billion bailout package passed by Congress this month to help solve the credit crisis in the financial sector that has disrupted credit markets worldwide.

A Senate Republican leadership aide on Friday said Senate Republicans are skeptical of a second stimulus but did not suggest there is outright opposition to one.

Dutch government injects cash

AMSTERDAM, Oct 10 (Reuters) - Dutch banks and insurers on Friday welcomed the Dutch government's plan to set aside 20 billion euros ($27.5 billion) in capital to protect the country's financial sector, but reactions among them were mixed.

The following are the reactions from the nation's financials:

- ING said it welcomed the plans as "important and necessary steps to restore confidence and bring stability", adding that as a financially solid company it will assess the plan and the possible implications once more details are available.

- A spokesman for Aegon gave no comment on whether the insurer would tap into the Dutch government's funding, but said the group welcomed the measures. Aegon reiterated Thursday's statement that it is taking steps to enhance its capital position and reduce risk. The insurer had also said it expected to maintain a level of capital above AA requirements and a strong liquidity position.

- Mid-cap SNS Reaal said it did not need to use the government's funding. "Our bank does not have liquidity or solvency problems," spokeswoman Erna van der Neut said, adding that SNS can also obtain 500 million euros in capital from an independent foundation if necessary.

- Thierry Schaap, the chief executive of online brokerage BinckBank, said the company did not intend to use the cash, a comment echoed by Floris Deckers, chief executive of Dutch private bank Van Lanschot.

- Unlisted Dutch bank NIBC, whose merger plans with Kaupthing Bank were scrapped earlier this year, said it had solved its problems. "We were one of the first to take action and we solved our US problem quite definitely," an NIBC spokesman said. "NIBC is not the one they should be worried about at the moment."

Citi drops out; Wells wins battle for Wachovia

Wells Fargo & Co. has won the battle for Wachovia Corp.

Citigroup Inc. has withdrawn from negotiations brokered by federal regulators that sought a compromise to the competing bids from Wells and Citigroup. Wachovia's brokerage business is in St. Louis and employs 4,800 people.

The issue is likely to go to court. But New York-based Citigroup (NYSE:C) says it will no longer seek to block Wells’ proposed $15.1 billion purchase of Wachovia.

Timeline of the finance crisis

Friday September 12

6pm BST: With Lehman Brothers facing collapse, US officials struggle to find a buyer for the distressed investment bank.

Saturday September 13

2pm BST: Teams of bankers flood the New York Federal Reserve building for the weekend to explore options for Lehman. Bank of America and Barclays head list of potential purchasers.

Sunday September 14

2pm BST: Talks run into a third day. Traffic in New York snarls up under the sheer weight of backed-up, blacked-out limousines transporting the stressed-out bankers.

8pm BST: Barclays pulls out of the bidding and Bank of America turns its attention to Merrill Lynch.

Monday September 15

4am BST: Bank of America agrees a $50bn rescue bid for Merrill Lynch.

5.30am BST: Lehman files for bankruptcy.

7am BST: 4,500 Lehman staff at its Canary Wharf HQ are told it's all over.

9am BST: Shares in HBOS, Britain's biggest mortgage lender, crash 34% in early trading.

12pm BST: Shares plunge in a panicked morning on the London Stock Exchange, where the FTSE sheds almost 400 points.

2pm BST: Cardboxes are in demand at Canary Wharf as Lehman workers pack up and leave.

4.30pm BST: FTSE 100 closes almost 4% lower at 5,202.4, a 210 point drop, wiping out £50bn of value.

8pm BST: US authorities trying to put a rescue package together for insurance giant AIG agree a $20bn lifeline.

9pm BST: On Wall Street the Dow Jones industrial average plunges 504 points to close at 10917.51

Tuesday September 16

1am BST: Asian markets, which were closed yesterday, plummet in early trading.

7am BST: Japan's Nikkei index closes 570 points down at 11,609.

7.30am BST: Barclays confirms that it is still talking to Lehman about buying some assets.

8.30am BST: The FTSE plunged almost 100 points in early trading.

10am BST: HBOS shares halve in value to a low of 88p. Spokesman insists it is strong and well capitalised.

1pm BST: Wall Street titan Goldman Sachs reports 70% drop in profits.

1.50pm BST: FTSE 100 falls through the 5,000-point mark.

3pm BST: Pressure piles on HBOS, whose shares are still down 30%, with a downgrade from Standard & Poor's.

4.30pm BST: FTSE 100 slumps 178.6 points to close at 5025.6, wiping another £42bn off leading shares.

9pm BST: Dow finishes up 141.5 points at 11,059 after zig-zagging around all day.

10pm BST: Barclays seals deal for Lehman's US assets.

Wednesday September 17

7am BST: Nikkei rallies to 11,749, up 140 points.

2am BST: US government agrees to give AIG $85bn to keep afloat, in return for control of the company.

9am BST: Lloyds TSB and HBOS are locked in merger talks.

10am BST: Russia suspends stock market trading.

11am BST: More volatile trading on the FTSE, but silence from Lloyds and HBOS.

Noon BST: Libor - the borrowing rate banks charge each other - hits a seven-year high as the panic escalates.

1pm BST: Barclays hints that it might buy Lehman's UK assets too.

1.30pm BST: Lloyds finally confirms it is negotiations with HBOS.

3pm BST: Bank of England extends its special liquidity scheme, after pressure from banks.

4pm BST: Morgan Stanley shares fall 30%, as it become the latest bank under fire.

4.30pm BST: FTSE closes below 5,000 for first time since May 2005, down 113.2 points at 4912.4.

6.30pm BST: Merrill Lynch's John Thain defends $200m bonus pool for top brass.

7pm BST: Reports emerge that regulators are probing the practice of "naked" short sellers.

9pm BST: In fresh gloom on Wall Street, the Dow sheds 449 points to close at 10,609.

9.30pm BST: HBOS takeover is finalised.

Midnight BST: Morgan Stanley looks for salvation through a merger with Wachovia.

Thursday September 18

6am BST : Russian stock markets remain closed for a second day. More panic in Asia, where the Nikkei drops 260 points to 11,489.

7am BST: £12.2bn takeover of HBOS is announced to the City, amid fears of massive job cuts.

8.30am BST: As the FTSE keeps falling, the chancellor, Alistair Darling, insists we can ride out the storm.

9am BST: Gold is at a six-week high as investors flee shares and pile into commodities.

10am BST: Central banks around the world pump $180bn into the system in a concerted effort to end the crisis.

11am BST: India's stock market fluctuates wildly - with shares plunging before recovering after the government promises to help.

Noon BST: The Lloyds CEO, Eric Daniels: "This is a unique moment in time when we could make it happen."

1pm BST: Gordon Brown vows to end "irresponsible behaviour" in the City.

2pm BST: Christopher Cox, America's most senior financial markets regulator, takes aim at short sellers.

3pm BST: Goldman Sachs and Morgan Stanley shares fall sharply again on Wall Street.

4.30pm BST: London's relief rally does not last, as the FTSE 100 closes 32.4 points lower at 4880.0.

5pm BST: With £2bn wiped off the value of Lloyds, analysts question whether the deal makes sense.

6pm BST: UK's Financial Services Authority announces a ban on the short-selling of bank shares.

9pm BST: Wall Street closes 410 points higher as the US Federal Reserve starts briefing on an ambitious plan to create a federal "bad bank".

Friday September 19

7am BST: Asia starts the recovery, with the Nikkei closing up 431 points at 11,920.

8am BST: FSA names the 29 firms it hopes to save by banning short-selling.

9am BST: FTSE roars back, up 315 points in early trading to 5,195 thanks to the short-selling ban and the US "bad bank" plan.

10.30am BST: Russian stock markets bounce back after the government pledges 500bn roubles to fight the crisis.

Government rushes through increase in guarantees for British bank deposits to £50,000.

Wells Fargo scuppers Citigroup's takeover of Wachovia.

US jobs data are worse than expected.

9pm BST: On Wall Street, the DJIA closes at 11388.44, up 368.75 points.

Saturday September 20

The US treasury secretary, Henry Paulson, spends the weekend trying to thrash out his $700bn "bad bank" plan.

Sunday September 21

The Financial Services Authority holds crisis talks over a possible bail-out of Bradford & Bingley, which has seen its shares plunge 90% this year so far.

The administrator PWC battles to sell Lehman Brothers' UK operations.

Monday September 22

Morgan Stanley and Goldman Sachs give up their status as investment banks and become traditional commercial banks that accept deposits from ordinary people and businesses, marking a dramatic change in the make-up of Wall Street.

Japan's Nomura buys Lehman Brothers' Asian operations.

Robert Willumstad, the departing head of AIG, gives up his $22m (£12m) golden parachute.

Alistair Darling tells the Labour party conference that the City's bonus culture cannot continue.

Tuesday September 23

New figures show UK mortgage approvals hit a record low in August.

Political opposition to the $700bn bail-out plan grows in Washington, pushing shares prices lower.

Nomura buys Lehman Brothers' UK operations, saving 2,500 City jobs.

The FSA starts to name and shame the bank short-sellers.

Gordon Brown tells the Labour party conference this is a time for experience, not a novice in No 10.

Wednesday September 24

Warren Buffett invests $5bn (£2.7bn) in Goldman Sachs and warns that failure to agree a $700bn bailout could result in an "economic Pearl Harbour".

The FBI starts an investigation into Fannie Mae and Freddie Mac, AIG and Lehman Brothers over their role in the sub-prime mortgage crisis

CBI figures show high street sales continued to decline in August.

The Council of Mortgage Lenders admits that in the current turmoil it is "futile" trying to predict where house prices are headed.

Henry Paulson bows to intense pressure to include limits on what Wall Street bankers can be paid in his $700bn bail-out plan.

Gordon Brown tells world leaders in New York that an international regulator may be needed to stop the mess being repeated.

Thursday September 25

Dr Rowan Williams, the Archbishop of Canterbury, wades into the debate, calling for tighter regulation of a financial industry that has been allowed to run away with itself.

The owner of Canary Wharf sees the ongoing crisis knock a £500m hole in the value of its property portfolio, while Moss Bros predicts tough times ahead.

Ireland becomes the first state in the eurozone to fall into recession.

Jobless figures are up and orders are down in the US, signalling the dire state of the economy.

Even one of America's largest companies, GE, is not immune from the "unprecedented weakness and volatility" of the world's financial markets and profits slide

Bradford & Bingley axes 370 jobs, which adds to speculation that it is looking for a buyer.

HSBC adds to home owners' woes by raising its rates. Woolwich and First Direct follow suit.

Overnight the $700bn bail-out plan in the US appears to have stalled.

Friday September 26

America's biggest savings and loan company, Washington Mutual – or WaMu – is seized by federal regulators overnight and sold to JP Morgan for $1.9bn in a deal that sends shockwaves through Wall Street and main street alike.

In the UK, HSBC axes 500 investment banking jobs while home textiles retailer Rosebys calls in the administrators, putting 2,000 jobs at risk.

The Queen's dressmaker, Hardy Amies, teeters on the brink of collapse after its Icelandic backer stops funding it

In a speech at the UN, Gordon Brown calls for an end to the "age of irresponsibility".

Traders are worried about the possible failure of the $700bn bail-out plan and the FTSE 100 slides into the red again. The plan appears to be coming apart despite Paulson actually begging on one knee for the deal to be passed.

Saturday September 27

Desperate talks are held over the weekend between the FSA, Treasury and various banks to try and find a solution to the plight of Bradford & Bingley whose shares collapsed on Friday.

Sunday September 28

Spain's Santander buys Bradford & Bingley's 200 branches and £22bn savings book and the UK taxpayer gets lumbered with the mortgages.

MFI's managers ride to the rescue of the troubled furniture chain

In the US, the House speaker, Nancy Pelosi, pleads with representatives to pass the now 100-page plan to save Wall Street.

The Tory leader, David Cameron, tells the Conservative party faithful that Gordon Brown has "had your boom and now your reputation is bust".

Across the Channel, the storm clouds are growing over Belgian-Dutch financial group Fortis which is looking for a rescue partner.

Monday September 29

As news of the Bradford & Bingley rescue sinks in, the London stock market plummets in what will end up being one of the FTSE 100 index's worst ever trading days.

Banking shares plunge, putting the proposed rescue of HBOS by LloydsTSB in doubt.

Royal Bank of Scotland sees its shares lose a fifth of their value and remember: short selling is banned, this is not market spivs trying to make a packet but a growing realisation that no bank is safe.

As a result of the intense fear among bankers about which institution will be next to fold, the interbank lending rate goes through the roof despite desperate attempts by Central Banks to pump cash into the system.

New figures from the Bank of England show mortgage lending collapsed in August. Those people who do manage to sell are taking much lower prices for their homes.

In Iceland, the government is forced to take control of one of the nation's biggest banks.

The German government and other banks throw a €35bn (£28bn) lifeline to Hypo Real Estate, the second-largest commercial property lender in the country.

In the US, Citigroup snaps up troubled bank Wachovia.

Apple shares plummet as analysts worry about the lure of its gadgets at a time when consumers are facing home repossessions and fearing for the jobs.

George Bush takes the podium to urge the House of Representatives to pass the $700bn bail-out plan. His short speech falls on deaf ears and a few hours later the House of Representatives votes the bail-out down.

Wall Street has a fit. The Dow Jones plunges 777 points, its biggest ever fall in points terms.

Tuesday September 30

Asian stock markets are the first to react to the shock news that the $700bn Wall Street bailout has failed. When London opens it is carnage with banking shares clobbered.

The stock market's fall raises further questions about the LloydsTSB/HBOS deal.

The Irish government takes the unprecedented step of guaranteeing retail deposits for the next two years.

Dexia, the troubled Belgo-French municipal lender, has to be bailed out.

In the UK, the government's own statisticians admit that the economy has stalled, while a slew of banks slam the door shut on mortgage borrowers by pulling hundreds of packages.

It's worse in the US where July has reported the biggest ever fall in house prices.

Anyone who does have savings is trying desperately to find a safe haven with government-backed National Savings & Investments swamped by savers.

The banks themselves are finding it increasingly difficult to raise financing with the cost of inter-bank borrowing experiencing its biggest ever one-day rise.

Dominique Strauss-Kahn, the managing director of the IMF, believes a bail-out is the only option for the US economy.

Wednesday October 1

The FSA starts talks with the banks about raising its level of savings protection from £35,000 to £50,000 to stop the rot.

That may be too little too late for some people who are already moving their cash into gold.

Things are going from bad to worse at Fortis as the ailing Belgo-Dutch bank is forced to shelve the sale of around €3bn in shares because no one wants to buy them.

It's back to the 1970s in the UK as car manufacturers introduce reduced working hours and new data shows British manufacturing shrinking at the fastest rate since records began nearly 17 years ago.

Share traders are praying that a rescue package can still be put together in the US.

The high street fashion chain Miss Sixty goes under.

Reassuring words from Gordon Brown about the deal with LLoydsTSB help shares in HBOS recover.

Warren Buffett decides to snap up $3bn worth of General Electric as part of a $15bn fundraising by the industrial conglomerate.

Thursday October 2

The US Senate has voted in favor of the Wall Street bail-out.

European leaders are considering their own bail-out, which could cost up to €300bn (£237bn). The French president, Nicolas Sarkozy, leads the push.

Economists are certainly in favor of such a move.

Gordon Brown's imminent cabinet reshuffle is expected to create an emergency committee that will take charge of the government's response to the financial crisis.

Marks & Spencer becomes the latest retailer to feel the icy chill of the gloomy economic climate as it admits shoppers are going to cheaper rivals.

Hopes that the US deal may get through help shares prices recover somewhat in London.

But by the close of play, Wall Street still has the jitters.

Friday October 3

The government rushes through an increase to £50,000 of guarantees for British bank deposits.

Wells Fargo scuppers Citigroup's takeover of Wachovia.

US jobs data are worse than expected.

Saturday October 4

Brown attends an emergency summit in Paris to discuss the crisis with his French, German and Italian counterparts.

Sunday October 5

Angela Merkel, the German chancellor, says that deposits in German bank accounts will be secure.

Monday October 6

The FTSE sees its largest one-day points fall. Alistair Darling tells MPs he will do "whatever is necessary" to bring stability to the banking system, but does not announce specific new initiatives.

Tuesday October 7

Bank shares fall sharply. The Icelandic internet bank Icesave blocks savers from withdrawing money.

5pm BST: The prime minister, the chancellor, the governor of the Bank of England and the chairman of the Financial Services Authority hold talks at No 10. Darling says afterwards that he wants to "put the banks on a longer-term sound footing".

7.30pm BST: Darling confirms the government will make a historic announcement tomorrow on changes to the banking system. It is thought it will involve using £50bn of taxpayers' money to take a major stake in high street banks.

Wednesday October 8

7.30am BST: The Treasury announces what amounts to a £500bn bank rescue package to stop the country's financial system melting down. Most bank shares fall again.

8.30am BST: Darling confirms that the government will guarantee no retail depositor with the internet bank Icesave will lose their money.

12pm BST: The Bank of England, the US Federal Reserve and the European Central Bank all cut half a point off their key interest rates in the first unscheduled rate moves since the aftermath of 9/11.

12.15pm BST: Brown confirms at Commons question time that banks benefiting from the government's rescue package will be forced to accept strict conditions on bonuses.

Fed joins 5 central banks - cuts 1/2 point and cites 'intensification' of crisis

NEW YORK (CNNMoney.com) -- The Federal Reserve, working in coordination with other central banks worldwide, enacted an emergency interest rate cut on Wednesday.

The Fed lowered its fed funds rate by a half percentage point to 1.5%. The central bank's statement said the move was necessary because of the worsening crisis in global financial markets.

key provisions of the financial rescue plan

Source: money.cnn.com

Attacking credit crisis: The core of the plan the House voted on is the same as what it rejected on Monday: the Treasury's proposal to let financial institutions sell to the government their troubled assets, mostly mortgage-related. It will allow the Treasury access to the $700 billion in stages, with $250 billion being made available immediately.

Protecting taxpayers: The final law is also similar to the original House bill in that it includes a number of provisions that supporters say will protect taxpayers. One will direct the president to propose a bill requiring the financial industry to reimburse taxpayers for any net losses from the program after five years. And the Treasury will be allowed to take ownership stakes in participating companies.

In addition, over time, supporters say, taxpayers are likely to make back much if not all of the money the Treasury uses because it will be investing in assets with underlying value.

The law includes a stipulation that the Treasury set up an insurance program - to be funded with risk-based premiums paid by the industry - to guarantee companies' troubled assets, including mortgage-backed securities, purchased before March 14, 2008.

Curbing executive pay: The law will place curbs on executive pay for companies selling assets or buying insurance from Uncle Sam. For example, any bonus or incentive paid to a senior executive officer for targets met will have to be repaid if it's later proven that earnings or profit statements were inaccurate.

Oversight: The rescue plan will set up two oversight committees.

A Financial Stability Board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary.

A congressional oversight panel, to which the Financial Stability Board will report, will have five members appointed by House and Senate leadership from both parties.

Tax breaks: The Senate-version of the bill that the House passed on Friday included three key tax elements designed to attract House Republican votes.

It extends a number of renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels.

The law also continues a host of other expiring tax breaks. Among them: the research and development credit for businesses and the credit that allows individuals to deduct state and local sales taxes on their federal returns.

In addition, the law includes relief for another year from the Alternative Minimum Tax, without which millions of Americans would have to pay the so-called "income tax for the wealthy."

New accounting rules: The bailout plan underlines the Securities and Exchange Commission's power to change accounting rules on how banks and Wall Street firms value securities, and directs the agency to study the issue.

Some observers argue that tight accounting rules are a major reason for the credit crisis in the first place. Others contend that changing the so-called mark-to-market rules will just bury problems lurking beneath the surface and could further shake investor confidence in the already battered financial sector.

Shielding bank deposits: The law temporarily raises the FDIC insurance cap to $250,000 from $100,000. It allows the FDIC to borrow from the Treasury to cover any losses that might occur as a result of the higher insurance limit.

Federal bank regulators, who first floated the idea to Congress late Tuesday, said that bumping up the insurance limits will help improve liquidity at banks across the country. It may also provide a much-needed dose of confidence for consumers who may be worried about the health of their bank. (More about FDIC rules.)

The plan will also temporarily increase the level of federal insurance for credit union savings to $250,000 (note: expires in December 2009).

Mitigating foreclosures: The new law calls on federal agencies to encourage loan servicers to modify mortgages by a number of means - including reducing the principal or interest rate. It also extends a temporary provision that exempts from federal income tax any debt forgiven by a bank to a borrower in a foreclosure.

Cost: The law's tax provisions - the bulk of which come from the addition of tax breaks from other legislation - may reduce federal tax revenue by $110 billion over 10 years, according to estimates from the Joint Committee on Taxation. More than half of that is due to the one-year extension of AMT relief.

The Congressional Budget Office said it cannot estimate the net budget effects of the troubled asset program because of the many unknowns about that piece of the bill. However, the agency noted in a letter to lawmakers on Wednesday, it expects the program "would entail some net budget cost" but that it would be "substantially smaller than $700 billion."

Overall, the CBO said, "the bill as a whole would increase the budget deficit over the next decade."

A cruel September for 5 bank CEOs

WAMU: Alan Fishman; 18 days, signing bonus: $7.5M and $6M severance.
Wachovia: Robert Steel; 2.5 months so far.
AIG: Robert Willumstad; 3 months. Walked out and declined $22M severance.
Merrill Lynch: John Thain, 11 months. Bloomberg reported that Thain, the former head of the New York Stock Exchange and a Goldman Sachs veteran, and his top two deputies may exit with nearly $200 million.
Lehman Brothers: Richard Fuld, Jr., 15 years. Lehman gave him a $22 million bonus in March, and he pocketed about $500 million while leading the company

Source: money.cnn.com